[Senate Hearing 113-453]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 113-453

 
    AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION, AND
          RELATED AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2014
=======================================================================

                                HEARINGS

                                before a

                          SUBCOMMITTEE OF THE

            COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE

                    ONE HUNDRED THIRTEENTH CONGRESS

                             FIRST SESSION

                                   on

                           H.R. 2410/S. 1244

 AN ACT MAKING APPROPRIATIONS FOR AGRICULTURE, RURAL DEVELOPMENT, FOOD
 AND DRUG ADMINISTRATION, AND RELATED AGENCIES PROGRAMS FOR THE FISCAL
         YEAR ENDING SEPTEMBER 30, 2014, AND FOR OTHER PURPOSES

                               __________

                       Department of Agriculture
 Department of Health and Human Services: Food and Drug Administration
                       Nondepartmental Witnesses

                               __________

         Printed for the use of the Committee on Appropriations

   Available via the World Wide Web: http://www.gpo.gov/fdsys/browse/
        committee.action?chamber=senate&committee=appropriations

                               __________

                        U.S. GOVERNMENT PRINTING OFFICE

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                        COMMITTEE ON APPROPRIATIONS

               BARBARA A. MIKULSKI, Maryland, Chairwoman
PATRICK J. LEAHY, Vermont            RICHARD C. SHELBY, Alabama, Vice
TOM HARKIN, Iowa                         Chairman
PATTY MURRAY, Washington             THAD COCHRAN, Mississippi
DIANNE FEINSTEIN, California         MITCH McCONNELL, Kentucky
RICHARD J. DURBIN, Illinois          LAMAR ALEXANDER, Tennessee
TIM JOHNSON, South Dakota            SUSAN M. COLLINS, Maine
MARY L. LANDRIEU, Louisiana          LISA MURKOWSKI, Alaska
JACK REED, Rhode Island              LINDSEY GRAHAM, South Carolina
FRANK R. LAUTENBERG, New Jersey      MARK KIRK, Illinois
MARK L. PRYOR, Arkansas              DANIEL COATS, Indiana
JON TESTER, Montana                  ROY BLUNT, Missouri
TOM UDALL, New Mexico                JERRY MORAN, Kansas
JEANNE SHAHEEN, New Hampshire        JOHN HOEVEN, North Dakota
JEFF MERKLEY, Oregon                 MIKE JOHANNS, Nebraska
MARK BEGICH, Alaska                  JOHN BOOZMAN, Arkansas

                   Charles E. Kieffer, Staff Director
                Gabrielle Batkin, Deputy Staff Director
             William D. Duhnke III, Minority Staff Director
                                 ------

     Subcommittee on Agriculture, Rural Development, Food and Drug
                  Administration, and Related Agencies

                   MARK L. PRYOR, Arkansas, Chairman
TOM HARKIN, Iowa                     ROY BLUNT, Missouri
DIANNE FEINSTEIN, California         THAD COCHRAN, Mississippi
TIM JOHNSON, South Dakota            MITCH McCONNELL, Kentucky
JON TESTER, Montana                  SUSAN COLLINS, Maine
TOM UDALL, New Mexico                JERRY MORAN, Kansas
JEFF MERKLEY, Oregon                 JOHN HOEVEN, North Dakota
BARBARA A. MIKULSKI, Maryland        RICHARD C. SHELBY, Alabama
  (ex officio)                         (ex officio)

                           Professional Staff

                        Jessica Arden Frederick
                             Dianne Nellor
                        Stacy McBride (Minority)
                       Carlisle Clarke (Minority)

                         Administrative Support

                          Molly Barackman-Eder


                            C O N T E N T S

                              ----------

                        Thursday, April 18, 2013

                                                                   Page

Department of Health and Human Services: Food and Drug
  Administration.................................................     1

                         Thursday, May 9, 2013

Department of Agriculture:
    Office of the Secretary......................................    45
    Office of Inspector General..................................    82

                         Thursday, May 16, 2013

Department of Agriculture:
    Marketing and Regulatory Programs............................   115
    Research, Education and Economics............................   115
    Food Safety..................................................   115
    Food, Nutrition and Consumer Services........................   115

                         Thursday, May 23, 2013

Department of Agriculture:
    Rural Development............................................   157
    Natural Resources and Environment............................   157
    Farm and Foreign Agricultural Services.......................   157

    Material Submitted by Agencies Not Appearing for Formal Hearings

Nondepartmental Witnesses........................................   197


   AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION, AND
          RELATED AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2014

                              ----------


                        THURSDAY, APRIL 18, 2013

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 10:32 a.m., in room SD-124, Dirksen
Senate Office Building, Hon. Mark L. Pryor (chairman)
presiding.
    Present: Senators Pryor, Tester, Udall, Blunt, and Cochran.

                DEPARTMENT OF HEALTH AND HUMAN SERVICES

                      Food and Drug Administration

STATEMENT OF HON. DR. MARGARET A. HAMBURG, COMMISSIONER
ACCOMPANIED BY:
        NORRIS COCHRAN, DEPUTY ASSISTANT SECRETARY FOR BUDGET,
            DEPARTMENT OF HEALTH AND HUMAN SERVICES
        JAMES TYLER, CHIEF FINANCIAL OFFICER, FOOD AND DRUG
            ADMINISTRATION


               opening statement of senator mark l. pryor


    Senator Pryor. We will go ahead and call the meeting to
order.
    Let me call it to order and say that this is my first
hearing as chairman of this subcommittee. So let me start by
thanking my ranking member, Senator Blunt, who has already
proven to be a very good and effective partner and wise counsel
in many, many ways. And I look forward to working with Senator
Blunt and with everybody on the subcommittee staff and the full
committee, but I really value our working relationship.
    Roy, thank you for all that you have already done.
    I would also like to thank Commissioner Hamburg for being
here and joining us today. I appreciate the working
relationship that we have developed over the last few years,
and I look forward to continuing that work with you. And I know
that you are very serious about working with the subcommittee
and the full committee on a full range of issues. So we want to
thank you for that.
    I also want to take a minute to recognize the history and
significance of what we are doing here today. The first
appropriations bill was reported out of the Second Congress in
1791. A lot has changed since then.
    To illustrate one example of how times have changed, I have
a copy of that legislation in my office. And the entire bill is
4 pages. Can you believe that? Four pages. Right now, you
couldn't even get the table of contents on 4 pages on an
appropriation bill.
    But nonetheless, one of the things that hasn't changed is
our responsibilities to carry out the appropriations of this
country, just like we are mandated in our Constitution. The
function of this committee is actually mandated by the
Constitution. I think that is very significant, and it is a
responsibility that I and I know all the members of the
subcommittee take very seriously.
    So what I would like to do is get down to business today,
and that is fiscal year 2014 Food and Drug Administration (FDA)
budget. The President's overall funding proposal for FDA is
probably one of the most robust requests included in his
budget. This is important because the responsibilities of the
FDA are so vast, regulating consumer products worth 20 cents of
every $1 spent.
    In Arkansas alone, there is over 1,300 facilities regulated
by the FDA, as well as the National Center for Toxicological
Research, which is a unique and important center within the
agency that employs over 500 people in our State. And it is
really some of the best and the brightest folks in the State.
    The total request for FDA is nearly $4.7 billion, which
includes the budget authority that this subcommittee controls,
to establish user fees, and some user fees FDA is proposing.
Within that $4.7 billion, the budget request includes $2.558
billion in budget authority. This is an increase of nearly $48
million over the funding level provided last year without
factoring in sequester.
    As we all know, this is a very complicated budget year, and
we only finished our fiscal year 2013 appropriations bills last
month. That means the FDA budget for fiscal year 2014 was
written before you knew what you were getting in fiscal year
2013.
    Because of this, it appears that you have asked for many of
the same things this year that we ultimately were able to
provide in last year's budget. We understand that, and we
understand that we are going to have to work through that. But
that includes funding for increased inspections in China,
medical countermeasure activities, and funds to complete a lab
at your headquarters.
    So it is very important that we all do work together in the
coming weeks to ensure that the funds we provide to fiscal year
2014 reflect the most up-to-date information and make sure the
taxpayer dollars we are investing are used for the highest
priority needs at FDA. We certainly don't want to pay for the
same things twice, and we look forward to working with you
about these issues.
    In addition, I would also like to discuss the impact that
the sequester is having on the agency, including your user fee
program, and I am interested to hear from you regarding the
status of the new food safety user fees you are proposing.
    So we have a lot to talk about, but what I would like to do
first is turn it over to Senator Blunt for his opening
statement.
    Senator Blunt.


                     statement of senator roy blunt


    Senator Blunt. Well, thank you, Chairman Pryor.
    I look forward to working with you on this subcommittee. We
are already able to work together and get some things done on
the continuing resolution that allowed us to finish the
business that Chairman Kohl and I started last year, and on
this and other areas, you and I have been able to work closely
together. I look forward to your leadership on the subcommittee
and to working with you.
    I want to thank our witnesses for being here today.
Certainly, as we look at FDA and the imprint it has on the
country and on families, it is a significant one. The FDA
budget request for direct appropriations represents an increase
of almost $48 million above the fiscal year 2013 enacted level
and an increase of $174 million above the current operating
level because of the sequestration order once it is taken into
consideration.
    As we begin, Mr. Chairman, to formally review the
administration's budget request, we have to be mindful that our
fiscal house is not in order. When we held our hearing on this
budget 1 year ago, the national debt was at $15 trillion.
Today, it is almost at $17 trillion.
    Americans are concerned about this, and they should be. And
I think the appropriations process, along with the Budget
Control Act, is going to begin to reflect those concerns this
year, as it may not have in previous years.
    Commissioner Hamburg, the agency you head has authority
over approximately, I am told, 20 cents of every $1 spent in
America. Americans expect that the food they eat, the drugs
they take will be safe and effective. Similarly, your private
sector partners expect transparency and certainty from the FDA.
    The FDA's reach is vast. The agency has authority over more
than 300,000 foreign establishments, 185,000 domestic
establishments, ranging from food processing plants to
facilities that manufacture lifesaving medications. Almost
2,800 of those facilities are in Missouri, and the others, of
course, are all over the world.
    As FDA is implementing new requirements created by the Food
Safety Modernization Act and the menu labeling legislation, the
agency needs to be mindful that burdensome regulations and
requirements can stifle innovation and lead to unnecessary
expenses that limit the ability to create jobs. There is no
doubt that your job is complicated, has many constituencies,
and it is an agency that has to be careful to avoid the
trappings of one-size-fits-all requirements because we all know
that one size almost never fits anybody, let alone fitting
everybody.
    Small businesses suffer under the one-size-fits-all
practice, and too frequently, they have limited capital that
doesn't allow them to respond to lots of new requirements. For
example, when implementing menu labeling requirements, FDA
needs to ensure regulations do not overburden businesses while
still improving and providing customers with appropriate
information so they can make decisions.
    In addition, FDA is currently receiving comments on two
proposed rules required by the Food Safety Modernization Act.
One of these rules, the produce safety rule, is estimated by
the agency to cost over $460 million annually, which would be
on the average of somewhere between $5,000 to $30,000 per farm,
depending on the size of that operation.
    FDA readily admits the final rules resulting from the
proposed rule will have a significant economic impact on a
substantial number of small entities. Recent reports indicate
that some farmers find the requirements impractical and that
the agency misses the mark by focusing on products that have
historically not been the cause of food safety outbreaks. In
addition, some farmers report that some of the proposed
requirements may simply price them out of the market, by making
it impossible for them to compete with imports.
    As you are dealing with the final rules, these concerns
should be seriously considered. Our economic recovery is
fragile. 11.7 million Americans remain out of work. The labor
force is at its lowest participation rate since the 1970s, and
we need to be sure that we are not doing things that needlessly
make that problem worse.
    Mr. Chairman, I look forward to the testimony. I am also
pleased that joining us today we have the former chairman and
the former ranking member of both this subcommittee and the
full committee, and he continues to be very interested and
involved in the work that this subcommittee does, and we are
glad to have him join us today, I know.
    Thank you, Mr. Chairman.
    Senator Pryor. Thank you.
    Senator Cochran, my understanding you would like to put
your statement into the record?


                   statement of senator thad cochran


    Senator Cochran. Mr. Chairman, thank you.
    I am pleased to join you and our distinguished friend from
Missouri at this hearing.
    And thank the Food and Drug Administration officials for
being here and the hard work they do to carry out their
responsibilities.
    I ask that the balance of my statement be printed in the
record.
    [The referenced statement was not available at press time.]
    Senator Pryor. Okay. Thank you, Senator Cochran. Thank you.
    Dr. Hamburg, welcome.


           summary statement of hon. dr. margaret a. hamburg


    Dr. Hamburg. Well, thank you very much, Chairman Pryor,
Ranking Member Blunt, and Senator Cochran.
    And congratulations to you, Chairman Pryor, in your new
important position.
    And I also want to thank the subcommittee for your past
investments in FDA which have helped to reduce the gap between
our budget and the demands of our increasingly complex mission.
    I am joined today by Norris Cochran, who is the Deputy
Assistant Secretary for Budget at the Department of Health and
Human Services, and Jay Tyler, who is the Chief Financial
Officer at the FDA.
    Congress has given FDA responsibility for a vast range of
products that are central to the health, safety, and well-being
of every American. From spinach and breakfast cereals to
vaccinations that save millions of children's lives, to new
medicines that treat major killers like cancer and heart
disease, Americans rely on products overseen by the FDA every
single day.
    We also recognize that those who produce our Nation's food
and medical products are vital components of the U.S. economy,
as is a strong FDA. History shows that when the public trusts
FDA's oversight, these industries flourish, and when there are
problems with products, it can result in severe economic damage
across the industry involved, not just to the offenders, but to
non-offenders alike.
    I want to mention some of our measurable accomplishments
this past year. In 2012, FDA approved 39 novel medicines, the
highest number in over a decade. The majority of these drugs
were approved in this country before they were approved
anywhere else in the world and some in as little as 3\1/2\
months.
    The number of drug shortages were cut in half, compared to
2011. We successfully turned around a decade of lengthening
medical device reviews and backlogs. Working together with 45
State and territorial partners, we have conducted more than
158,000 inspections of tobacco retailers to ensure that they
are not selling cigarettes or smokeless tobacco to minors. And
we just published our first two food safety proposed rules, as
has been noted, as part of the implementation of the historic
Food Safety Modernization Act. All of this indicates, I think,
that FDA is a smart investment and a bargain, in fact.
    Consider, as all of you have commented, that the products
we regulate represent more than 20 cents of every $1 that
consumers spend on products in this country. But if you look at
our budget, every American effectively pays only a little more
than $8 a year for our services.
    And while FDA continues to oversee a multitude of products
vitally significant to all of us, our job has become
increasingly demanding. First, we are in the midst of dramatic
changes in the ways that food, drugs, biologics, and devices
are produced and reach the American public. We are witnessing
revolutionary advances in science and technology that hold such
promise to improve health and prevent disease, yet also bring
new scientific and regulatory complexities. And we are facing
the globalization of the food and medical product supplies,
demonstrated by a quadrupling of FDA-regulated products over
the past decade. For food, some 50 percent of fresh fruit and
about 80 percent of seafood that we eat here comes from other
countries. About 40 percent of finished drugs and 50 percent of
devices are manufactured elsewhere, but cross our borders to be
used in this country.
    Second, Congress has continued to expand our
responsibilities with new laws, including FSMA, the most
sweeping reform of our food safety laws in about 70 years; the
Family Smoking Prevention and Tobacco Control Act, the landmark
legislation giving FDA the responsibility to regulate tobacco
products; and most recently, the passage of the FDA Safety and
Innovation Act, or FDASIA, which, among other things, creates
two new user fees to speed the review of more affordable
versions of drugs, which are essential to holding down
healthcare costs and also puts important focus on important
aspects of advancing medical product innovation.
    As we look at our fiscal year 2014 budget needs, we must
respond to the demands of complex and increasing
responsibilities while recognizing the realities of a
constrained economic environment. Thus, we must focus on a set
of key mission-critical programs and activities and leverage
limited resources to the greatest degree possible.
    The President's proposed fiscal year 2014 budget request is
for a little over $4.6 billion, which includes $2.5 billion in
budget authority and $2.1 billion in user fees. This represents
an $821 million increase over fiscal year 2012, $52 million of
which is budget authority and $769 million in user fees,
including two new user fee proposals for food safety and
cosmetics.
    A central component of the budget request supports our
efforts to implement FSMA and create a modern food safety
system based on prevention rather than responding after a
problem occurs. FDA is committed to working with industry and
our partners at all levels of Government along with the
industry and produce community to put in place the necessary
risk-based flexible system that recognizes and respects the
varying needs of different components of our food enterprise.
    I want to thank you for the $40 million in one-time no-year
money that was part of the recent continuing resolution, which
will help us continue our outreach. For fiscal year 2014, our
budget request is for $43 million in budget authority and $225
million in proposed user fees for food facility registration
and inspection and imports.
    In addition, we must respond to and harness modern science
to advance the pipeline of new medicines and vaccines. We are
asking for about $18 million to equip a number of already
constructed buildings, including two labs, so that we can carry
out the work needed to accelerate the development, review, and
ongoing assessment of these vital medical products. Without
these funds, the labs cannot be used and the $300 million cost
of constructing them will be wasted.
    Also, in our efforts to safeguard a vast and increasingly
hazardous global supply chain, we are asking for $10 million to
expand our presence in China, a major and growing exporter that
has also been the source of contaminated food and medical
products in the past.


                           prepared statement


    I believe our fiscal year 2014 budget efficiently targets
our needs, focusing on programs that are essential to providing
Americans with the safe foods and effective medical products
they expect and deserve. I look forward to answering your
questions today and to working with you in the coming year.
    Thank you very much.
    [The statement follows:]
           Prepared Statement of Hon. Dr. Margaret A. Hamburg
    Good morning Chairman Pryor, Ranking Member Blunt, and members of
the subcommittee. I'd like to extend my congratulations to you,
Chairman Pryor, in your new role on the subcommittee. I am looking
forward to working with you and your staff. And I would like to thank
the subcommittee for its past investments in the Food and Drug
Administration (FDA), which have helped us meet the demands of our
broad and increasingly complex mission.
fda plays a vital role in the health of our citizens and our regulated
                               industries
    Congress has given FDA responsibility for a vast range of products
that are central to the health and well-being of every American. From
spinach and frozen dinners, to vaccinations that save millions of
children's lives, to new medicines for the treatment of major killers
like cancer and heart disease, Americans rely on products overseen by
FDA every single day. A short list of what FDA oversees includes:
  --the safety of most of America's food supply;
  --the safety and effectiveness of drugs, biologics, vaccines, and
        medical devices;
  --the safety of the blood supply;
  --the development of medical countermeasures to address chemical,
        biological, radiological, and nuclear threats, and infectious
        diseases;
  --the safety of products that emit radiation;
  --the quality of mammography facilities services;
  --the safety of dietary supplements and cosmetics;
  --the nutritional quality of infant formula;
  --the safety of animal food and feed as well as the safety and
        effectiveness of drugs for use in livestock, pets, and other
        animals; and
  --Most recently, FDA has been charged with reducing harm from tobacco
        use.
    The products we oversee are capable of producing great benefits:
sustaining human life, reducing suffering, treating previously
untreatable diseases, and extending lives. FDA's recent approval of the
first drug to treat one of the causes of cystic fibrosis, as well as
the first bionic eye system for a rare genetic condition, illustrate
the ability of these products to transform lives. Without proper
oversight, however, many of these products are also capable of causing
great harm. We need only look at the recent outbreaks of foodborne
illnesses from peanut butter or the newest report of counterfeit cancer
drugs being imported into the United States to understand those risks.
    FDA has a dual responsibility to the public health--to make safe
and effective products available to Americans as quickly as possible,
while at the same time protecting our citizens from those products that
injure or kill. Our citizens' health depends on both.
    We also recognize that the producers of our Nation's food and
medical products are vital to the health of our economy--and a strong
FDA is vital to their health as well. Our history shows that when there
is public trust in FDA's oversight, our industries flourish.
Conversely, when food and medical products cause serious harm, the
result is often severe economic damage across the industry involved--to
offenders and non-offenders alike.
  fda carries out its far-reaching responsibilities with few taxpayer
                                dollars
    FDA is a true bargain among Federal agencies. Added together, the
products we regulate represent more than 20 cents of every consumer $1
spent on products in the United States. Americans each pay about $8 a
year for FDA's appropriations, which is substantially less than the
amount Americans spend each year on snack chips alone.
    And putting money into FDA is a smart investment. For about 2 cents
a day, Americans get an extraordinary array of public health benefits,
including: (1) life-saving medicines approved as fast or faster than
anywhere in the world; (2) confidence in the medical products they rely
on daily; and (3) a food supply that is among the safest in the world.
But maintaining this level of performance for the American public,
especially related to food safety, demands a fully funded FDA.
    Although FDA continues to be an effective and efficient investment,
our job has become increasingly demanding. We are in the midst of
dramatic technological and market-based changes in the way that foods,
drugs, biologics, and devices are produced--from personalized medicine
and nanotechnology to the globalization of our food and medical product
supplies. Congress has also continued to pass new laws and expand our
responsibilities. While we welcome these new responsibilities, they
don't always come with added resources. These changes force us to
stretch our limited resources, while finding ways to ensure the safety
of a global supply chain. Our scientists must also adapt to, and even
drive, new science and technology so that we can accelerate medical
product innovation rather than impede it.
    Let me say a few words about the impact of globalization, which I
believe to be among our greatest current challenges. Not that long ago,
FDA's job was to oversee a largely domestic market of food and medical
product suppliers. Most of the facilities in which these products were
stored and manufactured were within our borders and relatively easy to
inspect and oversee. Most of our producers and manufacturers were
accustomed to operating under the rules of a modern regulatory system
and most lived up to our high standards.
    We have now entered a brave new world--a world in which, very soon,
the majority of our food and medical products will come in whole or in
part from foreign countries. In the last 10 years, the number of
imported shipments of FDA-regulated products has skyrocketed--in 2012,
approximately 28 million shipments of imported food and medical
products crossed our borders. That includes 50 percent of our fresh
fruits and 20 percent of our fresh vegetables, around 80 percent of our
seafood, and 40 percent of drugs on our shelves. Eighty percent of the
manufacturers of active drug ingredients are located outside the United
States, and more than half of medical devices are imported. Most of the
increase in imports is coming from China and India, countries with
limited regulatory oversight. Many other imports are from developing
nations with even less regulation.
    The vast increase in imported foods raises the risk of
contamination and illness. Of the imported produce and seafood refused
entry at the border, 70-85 percent is for potentially dangerous
violations, including the presence of disease-causing organisms and
chemical contamination.
    The global marketplace also increases the threat of deliberate
adulteration, fraud, and counterfeiting. Criminals exploit how hard it
is to inspect and track products through the global supply chain.
Chinese suppliers of heparin, a critical drug to prevent blood clots,
substituted a lower cost, adulterated raw ingredient in their shipments
to U.S. drug makers, causing deaths and severe allergic reactions.
Chinese suppliers of wheat gluten substituted melamine, an ingredient
used in making plastic, which was toxic when it was used in U.S. pet
food and dairy products. The contaminated food sickened and killed pets
across the United States and put many people at risk.
    The global supply chain itself is becoming increasingly complex.
Each product may pass through a number of foreign links in the chain,
and each additional link increases the risks to American consumers.
Consider canned tuna. Once primarily canned in the United States, tuna
processing and canning is now outsourced to foreign facilities, and
tuna often takes a circuitous journey through processors and canners in
Southeast Asia, Africa, and/or Latin America, before it is ultimately
shipped to the United States for distribution to our grocery store
shelves.
    The world has changed and our historical regulatory approaches and
tools--such as hoping to intercept products at our borders--are
outdated and often inadequate. Border inspections will remain important
but they cannot guarantee the safety of even a small fraction of our 24
million food and medical imports a year. Globalization demands a major
change in the way FDA fulfills its mission. If we are to continue to
promise Americans a safe food and drug supply, FDA must continue to
transform itself--from a primarily domestic agency to one that uses
innovative global strategies to secure a vast global supply chain.
Although challenges lie ahead, we have already made strides toward this
goal using the resources you have provided.
        fda is delivering results that help americans every day
Implementing Major New Laws
    We are partners with Congress in implementing the policies in three
major new laws and several smaller ones that add to FDA's
responsibilities in advancing the health of Americans.
    The Food and Drug Administration Safety and Innovation Act
(FDASIA).--With the passage of FDASIA last year, Congress granted us
important new authorities, reauthorized human drug and device user
fees, and authorized new user fees for generic human drugs and
biosimilars. These authorities and fees are intended to increase the
speed and predictability of medical product reviews, better protect the
drug supply chain, reduce drug shortages, and speed the review of more
affordable versions of drugs that are essential in holding down
healthcare costs. We are working hard to implement FDASIA and achieve
these important goals.
  --Drug Approvals.--We continue to run a state-of-the-art drug
        approval process that brings important new drugs to Americans
        quickly and safely. In 2012, FDA approved 39 novel medicines,
        and the great majority were approved in the United States
        before any other country in the world. The drugs included 13
        treatments for cancer patients, 13 orphan drugs, and the first
        brain imaging agent to help rule out Alzheimer's disease.
        Recognizing the need to bring safe, lifesaving drugs to
        Americans as quickly as possible, FDA approved some of them in
        as little as 3\1/2\ months.
  --Medical Device Approvals.--Over the past decade, important
        indicators of the efficiency of the FDA's medical device review
        program, including the average length of review and the size of
        the backlog of overdue applications, had steadily worsened.
        Since 2011, FDA has worked intensively to turn this around.
        Almost every major indicator has now reversed: review times are
        getting shorter and backlogs are shrinking. This important
        turnaround will allow the industry to bring safe and effective
        devices to market more quickly and at lower cost.
  --Drug Safety.--FDA has also used your investments to improve our
        oversight of the safety of marketed drugs. The new Mini-
        Sentinel system allows us to quickly assess potential drug
        safety problems using data from over 130 million patients. FDA
        used Mini-Sentinel to assess reports that a new blood thinner,
        Pradaxa, was causing more bleeding than similar drugs. The
        results gave reassurance that bleeding rates were not higher
        with Pradaxa than with the other drugs.
  --Drug Shortages.--FDA prevented 282 drug shortages in 2012--87 more
        than in 2011. Early notification to FDA of potential shortages
        has made a huge difference in our efforts. In 2012, we cut the
        number of new shortages by more than half (117 v. 251).
  --Affordable Drugs.--FDA is working to provide Americans with better,
        quicker access to affordable generic drugs and is also
        implementing an abbreviated pathway for approval of biological
        products shown to be ``biosimilar to'' or ``interchangeable''
        with an FDA-approved biological product. Biosimilars are
        products that are similar to approved biologics, and while
        biologics are among the most important drugs Americans use
        today, they are also the most complex and expensive. We are
        developing a science-based process for bringing safe and
        effective biosimilar and interchangeable products to market,
        which should increase competition and create substantial
        savings for patients, healthcare providers, and insurers.
    The FDA Food Safety Modernization Act (FSMA).--Even though the U.S.
food supply for humans and animals is among the safest in the world,
the current rate of foodborne illness remains too high--according to
CDC estimates, roughly one in six Americans (or 48 million people) get
sick, 128,000 are hospitalized, and 3,000 die of foodborne diseases
each year, leading researchers to estimate a cost of more than $75
billion due to medical expenses and lost productivity. This does not
include costs to the food industry or public health agencies. These are
preventable human and economic costs, and they reflect an outdated food
safety system. FSMA, the most sweeping reform of our food safety laws
in more than 70 years, creates a modern food safety system that shifts
our traditional focus--responding to contamination after it occurs--to
preventing it before it happens. This new prevention strategy involves
all participants in the food system, domestic and foreign, government,
industry, and consumers, doing their part to minimize the likelihood of
harmful contamination.
    FDA is working on regulations on the kinds of risk-based measures
food producers and importers should put in place to reduce the risk of
contamination. We take pride in our release earlier this year of two
proposed rules that set science-based standards for the prevention of
foodborne illnesses--one on safe growing and handling practices for
produce and another on prevention practices in facilities that process,
handle, and store food. Before drafting the proposed rules, FDA
conducted extensive outreach with farmers, manufacturers, consumer
groups, State and local officials, and the research community. We have
just completed three public meetings across the country to get
additional input from stakeholders.
    The proposed rules are built on existing voluntary industry
guidelines and recognized best practices for food safety. Many
producers already follow these guidelines, so compliance will be less
of a burden. For those who need to add new food safety practices to
their operations, FDA, in collaboration with USDA, will offer technical
assistance and guidance.
    FDA is committed to working with industry members to provide the
support they need, especially the smallest businesses. We know that our
rules and oversight practices must be responsive to the diversity of
operations covered by FSMA, be risk-based and flexible, and address
small business concerns. That's why we've included a number of
exemptions for small businesses, including one for farms. The produce
rule would also exempt low-risk products, like potatoes that are rarely
consumed raw, or that will be further processed with a step that kills
bacteria--like vegetables that will be canned. We've also proposed that
small farms and other small business be given extra time to come into
compliance with both rules.
    The Family Smoking Prevention and Tobacco Control Act (Tobacco
Control Act).--The Tobacco Control Act gives FDA responsibility to
reduce death and disease caused by tobacco and to lessen tobacco use,
especially the initiation of smoking, by children and teens. This
program is entirely supported by tobacco industry user fees. Since
enactment, FDA has worked to enforce a ban on cigarettes with candy and
fruit flavors, to make them less appealing to kids; prohibit claims
like ``light'' or ``mild'' that misleadingly imply products are safer;
and enforce new smokeless tobacco warnings. FDA has also joined with
States and Territories to enforce laws against under-age sales. We have
conducted over 131,000 retail inspections and sent over 6,800 warning
letters and 420 civil money penalty complaints to retailers.
    Other New Authorities.--FDA is also implementing other recently
enacted laws. Last month Congress passed the Pandemic and All-Hazards
Preparedness Reauthorization Act, strengthening FDA's authority to
prepare for chemical, biological, radiological, and nuclear threats, as
well as infectious disease emergencies like pandemic flu, and to
support rapid deployment of medical countermeasures. FDA is also
carrying out new requirements in the Affordable Care Act, including
provisions on biosimilars and nutrition information on menus.
Safeguarding the Global Supply Chain
    Using the public's investments, the agency is working to transform
itself into a public health agency capable of preserving the safety of
our food and medical products in a complex global marketplace. We are
developing better enforcement and regulatory tools, encouraging greater
industry responsibility, increasing transparency and accountability in
the supply chain, and increasing collaboration with international
regulatory counterparts and other third parties.
    Foreign Posts.--To enhance our ability to oversee import safety, we
now have 12 permanent FDA overseas posts in key locations around the
world: three in China, two in India, three in Latin America, two in
Europe, one in the Middle East, and one in South Africa.
    Foreign Inspections.--FDA conducted over 2,700 foreign inspections
in fiscal year 2012, the largest number ever, exceeding last year by 23
percent. We are on track to surpass that record this year.
    Border Screening.--To make the most of our limited border
inspection resources, FDA developed PREDICT, a sophisticated computer
screening system that uses intelligence from many sources--such as
intrinsic product risks, past inspection results, and information about
such threats as extreme weather that could spoil a shipment--to flag
the riskiest imports before they arrive. This allows FDA to focus its
border resources on those imports that are most likely to pose a
danger, and at the same time easing entry of low-risk products. PREDICT
has helped stop many contaminated products at the border. Recently,
PREDICT flagged a large shipment of cucumbers from the Dominican
Republic, which were contaminated by salmonella. PREDICT has also
identified products with illegal pesticides, heavy metal contamination,
filth, and decomposition, as well as substandard medical devices and
improperly canned food.
    FDA also developed mobile handheld devices that allow our
investigators to immediately identify products that may be counterfeit
or adulterated. The counterfeit detection device uses light waves to
detect irregularities in the chemical composition or labeling of a
drug, while the chemical detection (IMS) device identifies
inappropriate chemical compounds in a product. The IMS recently
identified an unlawful prescription drug--one taken off the market
because it can cause heart attacks and strokes--in a large number of
imported dietary supplements for weight loss. We hope to fund the
development and use of more such mobile handheld devices.
    Collaboration With Other Nations.--To address the vast number of
imports successfully, we must build a global public health safety net
by partnering with other nations. FDA has signed over 120 international
arrangements with foreign counterparts to create mechanisms for
information sharing and collaboration. We are actively using
information from, and conducting joint inspections with, trusted
foreign counterparts, and engaging in harmonization efforts on foods
and medical products. For example, we have signed an arrangement with
Brazil, Canada, and Australia to implement a Medical Device Single
Audit pilot program under which a medical device inspection done by one
regulator can be relied on by other regulatory agencies. Such programs
can cut duplicative requirements for industry and allow us to better
allocate our resources.
Supporting Biomedical Innovation
    The U.S. food and biomedical industries are among the most
successful and respected in the world and FDA plays a key role in that.
FDA is sometimes viewed as a barrier to the economic success and
innovation of both industries, but that does not take into account the
benefits FDA regulation brings them. Public confidence in a strong FDA
fosters consumer trust in the safety, effectiveness and quality of the
products we regulate. This, in turn, helps producers build their
markets. For example, as FDA became the model for science-based drug
approval around the world, its high standards spurred decades of
medical advances and turned the U.S. pharmaceutical industry into the
world leader in innovative medicines.
    As you know, I have made it a priority to help U.S. biomedical
companies maintain their status as world leaders in innovation. It is
well known that advances in biomedical research are not being
translated into real world products as swiftly and surely as we all
would hope. The time and costs of developing new drugs has been
increasing. Yet despite increases in research and development, the
pipeline of new, innovative drugs remains disturbingly limited. Serious
public health needs, such as treatments for autism and Alzheimer's
disease, are not yet being met, despite years of research and
investment. And many drugs are not revealed to be unsafe or ineffective
until the last stages of development, wasting valuable time and
resources. Through its regulatory science programs, FDA is committed to
helping to develop new knowledge and tools that can help translate
basic scientific discoveries and approaches into life-saving medicines,
and reducing the time, complexity and cost of drug and device
development.
    Investment in FDA allows our scientists to support innovation
through a range of activities, including:
  --the Innovation Pathway, which cuts the time and cost of developing
        and reviewing breakthrough device technologies--the first to
        benefit from the Pathway was a robotic arm controlled by a
        microchip in the brains of patients with spinal cord injuries
        or amputations;
  --greater use of genetic data to advance personalized medicine,
        especially in cancer therapies;
  --new scientific tools and partnerships to learn earlier in
        development whether a drug or device will work and be safe,
        saving time and money now wasted on late-stage product
        failures;
  --more guidance to industry early in technology development to help
        bring important new products, like the artificial pancreas, to
        market more quickly; and
  --more collaboration with companies earlier in development. When
        companies come to us for help early in the process of testing
        their products, experience shows that they can shave up to 5
        years off their development time. That's a dramatic shortening
        of the path to market.
Stretching Budget Dollars
    We have also made belt-tightening a priority. We have consolidated
our information technology infrastructure and administrative functions
across FDA, and put in place controls to cut the cost of travel,
training and conferences. We are avoiding additional rent costs by
making better use of existing office space through telework and office-
sharing, and we are reviewing contracts to cut service and product
duplication.
                        current budget requests
    The budget includes $4.7 billion, an $821 million increase from
fiscal year 2012. Of this requested increase, user fees account for 94
percent ($770 million). Mindful of the need to reduce spending, we seek
a reduced budget authority in several areas, including a $15.4 million
decrease for human drug, biologic, and medical device programs. We are
also asking for a small number of increases, which are necessary to
meet our growing duties and preserve the safety of our food and medical
products:
  --An additional $43 million to carry out our responsibilities under
        FSMA and to modernize our food safety system. These resources
        will go to building prevention-based food and animal food and
        feed safety systems, to reduce the toll of foodborne illnesses.
  --An additional $10 million, above fiscal year 2012, for overseeing
        the safety of goods from China. This increase will add 16 new
        inspectors in China, who can conduct more inspections and train
        Chinese counterparts, strengthening our ability to prevent
        safety problems before products reach the United States.
  --An additional $3.5 million, above fiscal year 2012, to improve the
        development timelines and success rates for medical
        countermeasures intended to protect against chemical,
        biological, radiological, and nuclear threats and new
        infectious diseases. The top priorities for these funds include
        care for U.S. soldiers suffering from traumatic brain injury,
        treatment of acute radiation syndrome, and supporting rapid
        deployment of critical medical countermeasures in emergency
        situations.
  --An additional $17.7 million to permit us to equip and obtain
        certification for four already-constructed buildings, including
        two labs, on the White Oak campus, so that they may begin
        carrying out research to support biomedical advances. Without
        these funds, the labs cannot be used and the $300 million cost
        of constructing them will have been wasted. Moreover, we will
        need to continue to pay rent for the old space occupied by FDA
        staff.
    Under agreements negotiated with industry, we seek an increase in
current law user fees of $500 million to support our drug, device,
animal drug, animal, food and feed, color additive, export, and tobacco
product programs. We also seek $269 million in proposed user fees,
including $225 million for food facility registration and inspection,
and imports, $31 million for animal drug application fees that are up
for reauthorization this year, $19 million to strengthen our oversight
of cosmetic safety, and $15 million for reinspection of medical product
facilities.
    I know that some of you have expressed concern that proposed user
fees for food producers will impose unexpected burdens, especially on
small producers. Please be assured that food-related user fees, if
authorized, will be developed in close cooperation with stakeholders.
                               conclusion
    FDA's oversight of our food and medical products supply is
indispensable to the health and well-being of every American. We carry
out our broad public health responsibilities effectively and with few
taxpayer dollars--even as those responsibilities are expanding as a
result of new legislation, technological advances, and a globalized
marketplace. Our fiscal year 2014 budget targets our spending
efficiently, on programs that are essential to providing Americans with
the safe foods and effective medical products they expect. I look
forward to answering your questions today and to working with you in
the coming year.

    Senator Pryor. And I know you have a couple of colleagues
there to help if we get too bogged down in the weeds here. So
we want to welcome them to the subcommittee as well. I know you
introduced them.

                             BUDGET REQUEST

    Let me start here and just jump right in to your budget
generally. As we have talked about a few moments ago, you
prepared this budget before we passed the fiscal year 2013
budget. That puts you at a real disadvantage, and we understand
that. We are sensitive to that.
    We are not going to ask you to clarify that today, but I do
hope that you and your team will work with us and our teams
here on the subcommittee to try to update your requests and try
to find the balance we need to find as we go forward. And I
assume you are perfectly willing to do that and would agree to
all work together on that?
    Dr. Hamburg. Absolutely. Willing and eager.
    Senator Pryor. Well, thank you very much. And again, we
appreciate that. We just understand the circumstances, and I
think everybody understands the circumstances we are in.

                             SEQUESTRATION

    Let me ask about the sequester. This is something obviously
that has been in the news a whole, whole lot. We know how
important it is. We also know that there have been news reports
about the FDA losing the ability to conduct approximately 2,100
domestic and foreign facility inspections for consumer safety.
    And now that the sequester is here and now that the cuts
are taking effect, can you please provide us with an update on
how the sequester is affecting your agency?
    Dr. Hamburg. Okay. Well, of course, the sequester is of
significant concern to us, and overlaid on the additional issue
of expanding responsibilities, these cuts will come at a cost.
The sequester is about $209 million in terms of cut to FDA,
$126 million in budget authority, and it is important to note
also $83 million in user fees.
    We, at the present time, are trying to absorb the impact of
sequester in ways that will have the least impact on the health
of the public and our ability to move forward with critical
programs. We are decreasing travel and conferences, training
programs, cutting back on a range of consulting contracts and
grants.
    Sad to say, we are already not at our full-time equivalent
(FTE) caps, and so we won't be able to hire up as much as we
would like. But we won't have to furlough anyone because we are
under where we would like to be, where we think we actually
need to be. But that is another area in which we will absorb
some of the sequester cut.
    The issue around the user fees I think is an important one
because we did work carefully with industry and with Congress
to develop a program for the use of user fees in key areas of
our medical product programs. And we will not be able to use
all of those user fees to achieve the performance goals that
were negotiated with industry, and I think that will be
reflected in a slowing of some of our ability to build up key
programs, to advance medical product review programs in
critical ways. And I do think that this is a set of concerns
for all of us.

                               USER FEES

    Senator Pryor. You anticipated my next couple of questions
about the user fee because I think a lot of people would be
surprised to know that you can't use a user fee, something you
negotiated with the industry and everybody understands the
parameters and how they will be used.
    Do you think--have you thought about how that is going to
affect your negotiations and discussions with the industry
going forward?
    Dr. Hamburg. Why, of course, I am very concerned about
that. The process involves us sitting with industry and also
the engagement of a broader set of stakeholders to really
identify what are the critical issues and concerns, how can we
strengthen programs and activities, and what are our key
performance goals to measure, and then how do we measure
progress toward those goals?
    Industry clearly expects that the money that they are
putting forward to the FDA will support these critical goals
and programs and activities, and I think industry has been
surprised, as have been many others, that they would be the
subject of cuts in the same way as budget authority. And I do
think that it is something to think about the next time we sit
down across the table to discuss these fees.
    Nonetheless, without these user fees, our programs would be
seriously compromised in our overall resources to do critical
tasks.

                          FOOD SAFETY USER FEE

    Senator Pryor. Yes, and I see that also with food safety
user fees that you are proposing, and I have that concern that
if--we can't act unless it is authorized by other committees
here, and I am not sure those will be authorized.
    And I am wondering if you have thought through the
possibility that they not be authorized, therefore not be
appropriated. And how can you do the things you need to do on
the food safety side if those user fees aren't there?
    Dr. Hamburg. Well, as we look at the program for food
safety and the implementation of the Food Safety Modernization
Act, clearly the goals of food safety modernization and moving
toward this preventive model is a shared set of goals for
industry and for the benefit of the American people, and I do
think it is appropriate that our budget reflect a combination
of a budget authority commitment and user fees.
    We have begun discussions with industry in this arena, and
I think that those will be important discussions as we try to
achieve what has been proposed in the President's budget and as
we work with Congress in shaping the fiscal year 2014 budget.
And the issue of how those user fees are authorized and
appropriated is, of course, an important one, and there will
need to be, of course, a legislative pathway for that.
    And I hope we can do it in a way that will maximize the
benefits for everyone and protect those user fee funds for
their intended use.
    Senator Pryor. Yes. Well, and I think, just as this
develops over the course of the year, we just need to keep
talking, and it is very important for us to know about your
priorities. And we will work through all the ``what ifs'' as
they come up.
    But again, thank you.
    I know we have been joined by several colleagues here. So I
am going to turn it over to Senator Blunt and let you ask
questions, and then we will move down the line.
    Thank you.
    Senator Blunt. Thank you, Mr. Chairman.

                             BUDGET REQUEST

    On maybe the biggest issue that we will need to work
together on regarding the budget is getting the request in
synch with what you need now. Because as the chairman
mentioned, some of your requests were met in the continuing
resolution.

                           WHITE OAK FACILITY

    For example, the move into the White Oak facility, I think
that money is there now. Is that right?
    Dr. Hamburg. Well, we, in the continuing resolution--and we
appreciate it greatly--there were monies given to us for the
White Oak consolidation. We do have continuing needs.
Unfortunately, those were not one-time only needs in terms of
the White Oak consolidation.
    And as----
    Senator Blunt. But the move-in needs were one-time only,
and the completion needs were one-time only, right?
    Dr. Hamburg. There are additional needs in order to
complete the buildings.
    Senator Blunt. We need to talk about what those are.
    Dr. Hamburg. We would be delighted to sit down with you on
that.
    [The information follows:]

    The additional needs to complete the White Oak Campus are as
follows:
    FDA has $17.6 million in additional requirements in fiscal year
2014 over the 2013 appropriation for the Offices and the Life Sciences-
Biodefense Complex, also known as the LSBC. These funds will ensure
final commissioning and certification of specialized laboratories prior
to occupancy. This includes installing and testing specialized
equipment ($1.3 million) for building automation, operation and
monitoring, conducting high-efficiency particulate air filter,
pressurization control, and power tests, installing air sensors,
determining primary bio-containment device effectiveness, and providing
special containment equipment for the Biosafety Level-3 labs, also
known as BSL-3 labs. The BSL-3 labs containment equipment and the
vivarium's pH waste neutralization system are specialized systems that
will also be maintained with this request.
    The fiscal year 2014 increase also includes decommissioning ($8
million) the laboratories FDA is vacating at the National Institutes of
Health and at Nicholson Lane, some of which we have occupied since the
1960s. Decommissioning activities include complying with environmental
regulations and mitigating any contamination caused by chemical,
radiological and biological materials.
    Funds are also needed for critical operational and logistical
functions on the White Oak Campus, including completion of the
remaining campus security infrastructure. FDA will experience, as part
of the LSBC and office move, a 50-percent growth over the current
campus population as well as a 50-percent increase in building square
footage that must be supported. Specifically, these funds will be used
to develop and implement additional safety programs ($3.1 million) to
support complex laboratories, including high containment specialty
laboratories, expand the Central Utility Plant to support the new LSBC
and Office Complex, and increased operational and logistical functions
($5.2 million), including hazardous materials storage, handling,
processing, and distribution.
    FDA must make this investment in early fiscal year 2014 to ensure
that the offices and LSBC are operational and ready for occupancy.
These buildings must be operational and meet safety requirements to
serve critical CBER and CDER programs that help combat emerging
infectious diseases and bioterrorism threats and ensure the safety of
blood, tissues, stem cell therapies, vaccines and drug products.

                             SEQUESTRATION

    Senator Blunt. All right. We need to talk about what those
are. And what amount of money did you say was being sequestered
in fees?
    Dr. Hamburg. It is about $83 million.
    Senator Blunt. Eighty-three million?
    Dr. Hamburg. Million, uh-huh, and that is across a number
of user fee programs in the medical product arena.
    Senator Blunt. And your overall shortage in these areas
between now and September 30 would be less than the amount of
money you think you need to complete the year?
    Dr. Hamburg. Well, we will have cuts through sequester to
the user fee and the budget authority component of programs----
    Senator Blunt. Right.
    Dr. Hamburg [continuing]. That support our medical product
review. So, overall, the sequester impact is $209 million.

                               USER FEES

    Senator Blunt. Assuming we went forward with the Budget
Control Act, would you be supportive of the user fee categories
being exempt from sequester?
    Dr. Hamburg. I don't know that I am the best person to
speak to the overall policy, but I would be very eager to see
the user fee monies protected in terms of their intended use,
which, as I have mentioned before, were negotiated very, very
carefully with industry in terms of a set of critical programs
and activities and performance goals.
    Senator Blunt. And again, for the rest of this year for the
FDA budget, the user fee sequester is $83 million. So this is a
big amount of money.
    Dr. Hamburg. It is a big amount of money.

                             MENU LABELING

    Senator Blunt. All right. What about the easy to deal with
topic of menu labeling? Where are you on that? When do you
expect the FDA to issue its final rule?
    Dr. Hamburg. Well, we hope to issue that final rule soon.
As you know, it has been an extended process. We have talked
before about how I naively thought that menu labeling would be
one of the easier to implement components of the law, but in
fact, it has been very challenging.
    But we have had the opportunity for a process of notice and
comment rulemaking, and we--in response to the proposed rule
that we put forward, we did receive a very large number of
comments. We are currently going through all of those and
trying to finalize a final policy document, and we will be
getting that out certainly by the end of this year, although,
knock on wood, and as soon as we possibly can.
    Senator Blunt. By the end of this calendar year or by the
end of this fiscal year?
    Dr. Hamburg. I was saying calendar year, but it is a high
priority. We are trying to move forward with it. I can't tell
you exactly when. And whenever I do make those kinds of
statements, I always regret it.
    But we are moving into the home stretch, and I know that
you have had many concerns about aspects of it. And we have
heard those concerns, and they were reflected in the comments.
But it has been a complex rulemaking process.
    Senator Blunt. Well, you and I both have learned a lot more
about this than we would have ever expected to learn.
    Dr. Hamburg. Yes, exactly.
    Senator Blunt. And things like the small chain grocery
stores, the food they have available in the store, drive-
throughs, locations that are almost exclusively delivery
locations, how much posting do they need to do at the location,
all those are things that obviously people are going to look
very closely at when that rule does come out.

                           COSMETIC USER FEE

    The cosmetics industry, I understand that the FDA has been
involved in some discussions with the industry looking for a
science-based framework that would establish a uniform national
standard. Do you want to comment on that at all?
    Dr. Hamburg. Well, we have had a number of discussions with
industry about their desire for greater harmonization of
approaches. There is an international forum for some of those
discussions that meets regularly with other regulatory
authorities engaged as well.
    We think it is an important set of activities, although
different countries do have different legal regulatory
frameworks for oversight of this area, which will not enable
total convergence. But we think that these are important
discussions to be having.
    We also do believe that there are opportunities for us to
coordinate more closely with the cosmetics industry, and we
expect to be having some more targeted discussions in the
context of the proposed user fees.
    Senator Blunt. I think the industry is growing more
concerned that there might be a lot of conflicting State laws,
and some Federal definitions that were overriding would be
helpful there.
    I know this is the second year in a row that you have asked
for these cosmetics industry user fees. I think this year you
estimate the fee would cost the industry a little over $19
million. I am glad to continue to talk about that. I was
opposed to that at the end of our discussions last year and
probably will be again this year, but it is a topic that I am
willing to talk to you about.

                            MEDICAL DEVICES

    On the medical device manufacturers, I understand that a
number of countries have a country of origin first step. If you
haven't been approved in the country the device is made, you
just automatically cannot be approved in a number of countries
around the world.
    Costa Rica appears to have been a very big beneficiary of
this. I know there are 14,000 medical device jobs in San Jose
now. Most of them are pretty new, and mostly because that
government, more quickly than our Government, will give them
the country of origin approval.
    Have you got some thoughts on how we deal with the medical
device process going more quickly than it has been going? And
they have a fee already that they are willing to pay. Is that
right?
    Dr. Hamburg. Yes. Well, with respect to the issue of where
manufacturing occurs, it often is a decision of companies in
terms of costs of manufacturing, price of labor, and other
incentives. And as you know, when the country requires that you
be approved in that country in order to sell in that country,
that is an important incentive as well.
    Senator Blunt. Yes, but to be sure we are talking about the
same thing. This is where other countries require as their
first step that you had to have approval in the country where
the device was made before you could even apply for approval in
the country you would like to sell it in.
    Dr. Hamburg. Well, that is a national policy. I do think
with respect to Costa Rica, it is interesting to note that they
accept the U.S. approval for devices as an approval within
their own country because they do look to us in many ways as a
gold standard for approval of these products.
    But we are working very hard with industry and within our
own program processes and procedures to try to find ways to
streamline our device review process as much as possible, to
make it as clear and predictable as possible. We don't want it
to be overly cumbersome, but we want it to provide appropriate
protections to make sure that products are as safe and
effective as possible for their intended use.
    We want to find ways to encourage manufacturers to remain
in this country, to do their work in this country. And I think
that we remain as a Nation a leader in medical device science
and technology and continue to have strong exports in this
area. But we want to make sure that our regulatory programs
support that, but also, of course, address what is our core
mission, which is the review of safety and efficacy.

                              TISSUE BANKS

    Senator Blunt. Two quick questions I will ask for the
record unless we have time for a second round. One is, first of
all, to preface a question on tissue banks, I want to thank you
for personally taking time to get involved in that. I think
there were four areas, following up on their meeting with the
agency, that you all were looking at.
    One was to reissue the jurisdictional update guidance
document and allow for a formal comment period. Two was to stop
publishing FDA's descriptions of Tissue Reference Group (TRG)
decisions that they felt had in the past sometimes been
misleading. Three, review the FDA's TRG process to ensure that
it is appropriately addressing current challenges. And four,
your very generous commitment to see that they were meeting
with your organization twice a year.
    So just your sense of the time on those four issues----
    Dr. Hamburg. Yes.
    Senator Blunt [continuing]. At some time when you could
tell me that would be helpful.
    Dr. Hamburg. Okay. Terrific. I think we have had some good
discussions and very useful to hear their concerns, and I think
we are addressing them in a coordinated way.
    [The information follows:]

    1. Reissue the Jurisdictional Update guidance document and allow
for a formal comment period.
    Answer. We have heard that some stakeholders have questions about
this policy document, and we understand that there is a need for
improved communication regarding regulatory policy in this area. We are
currently considering how best to address this concern. We agree to
look at this issue and report back on how we are addressing stakeholder
communications regarding the policies described in this document.
    2. Stop publishing FDA's potentially misleading descriptions of
Tissue Reference Group (TRG) decisions.
    Answer. The TRG was established in 1998. Since then, we annually
have been publishing on our Web site summaries of TRG recommendations.
We instituted this practice in recognition of the public interest in a
transparent TRG process, an interest that was reiterated by Congress in
the last appropriations report directing us to now publish these
updates on a twice-yearly basis. Ending this practice would not serve
important interests in transparency. However, we understand that
industry has concerns that some readers generalize inappropriately from
the summaries that we post on the Web site. In order to address that
risk, we have added the following language to the TRG Web page where
the updates are posted:
    Please keep in mind that updates to the TRG Annual Reports are
stated in general terms in order to avoid revealing confidential
information protected from disclosure. The TRG's recommendations are
based on specific facts, which may not be provided in the updates. For
these reasons, it may not be appropriate to generalize broadly from the
updates. If you have questions about your specific product, please
contact [email protected].
    3. Review the FDA's TRG process to ensure that it is appropriately
addressing current challenges.
    Answer. An inter-center working group has analyzed and revised the
TRG procedures, taking stakeholder comments and concerns into
consideration. FDA has posted an updated Standard Operating Policy and
Procedure (SOPP) for the TRG, and it is publicly available on the FDA
Web site.
    4. Conduct two liaison meetings per year. (We understand the
Commissioner has agreed to this item.)
    Answer. This request was made in 2012, and CBER/Off ice of
Cellular, Tissue and Gene Therapy (OCTGT) agreed then to a twice yearly
schedule for meetings with AATB. The Commissioner confirmed this
arrangement when she met with AATB in early 2013.

                     FOOD SAFETY MODERNIZATION ACT

    Senator Blunt. And on the Food Safety Modernization Act
rules, FDA took 2 years to draft the rules, yet they are
allowing only 120 days for interested parties to comment. A
number of those parties have requested an extension. I am
hoping that you are looking at that extension, and I will be
glad for some follow-up on that as well.
    Dr. Hamburg. Well, we appreciate that these are complex
rules, the proposed rules, to go through and analyze, and we do
intend to extend the comment period so that we can hear all of
the concerns and address them fully. And I think it is a
reasonable request.
    Senator Blunt. What are you going to extend by, 180 days?
    Dr. Hamburg. I think 120 days.
    Senator Blunt. So you are going to double the comment
period?
    Dr. Hamburg. Yes.
    Senator Blunt. Okay. Thank you, Mr. Chairman.
    Senator Pryor. Thank you.
    Senator Cochran.

                             MENU LABELING

    Senator Cochran. Mr. Chairman, Madam Commissioner, I
understand the Food and Drug Administration is having some
difficulty in complying with or figuring out how to respond to
the requirement that menus be labeled to show various things
for the consuming public. Food retailers in my State of
Mississippi have expressed some concerns, too, about how this
affects them and how they are supposed to comply.
    What type of establishments do you foresee will be affected
or governed by these new requirements?
    Dr. Hamburg. Well, the law was quite explicit about chains
of 20 or more restaurants or vending machines in terms of the
applicability of FDA regulatory oversight. Defining exactly
what a--restaurant is fairly straightforward. A restaurant-like
establishment is a more complex challenge in our modern world,
with fast food stores and pizza delivery and the different
kinds of models of in-grocery store cafes, et cetera.
    And that is really where the greatest challenges have come
and where we have gone through an extended process of putting
out proposals, asking questions, and seeking public comment.
And we are trying now to go through all of that and compile the
issues and concerns and reflect those back in a final rule,
which we hope will be published very soon.
    Senator Cochran. Thank you.
    One other concern of importance in my State is with the
catfish industry and the fact that labeling and certification
of the wholesomeness of foods that are going to wind up being
sold in stores or restaurants, whether or not these apply to
foreign fish that come in and are imported into our country.
    To what extent are you involved in trying to sort through
those challenges? What is the status of that?
    Dr. Hamburg. Well, I think that it is the case that in
terms of seafood in particular, as you mentioned, there is a
growing component of seafood in this country that is coming in
from overseas, and we play a critical role in the oversight of
all of that. And the import of seafood is one of the areas that
surprised me in terms of the shifting of more and more imports
coming from overseas.
    You mentioned catfish. That is a particular area of some
regulatory complexity because, as I understand it, several
years ago, Congress actually asked to shift the oversight of
catfish to USDA from FDA, and that process is still in
transition.
    And until Food Safety and Inspection Service (FSIS) at FDA
fully takes it over, we are continuing to provide oversight in
that area as well. We work with our partners to try to ensure
the safety and quality of the seafood that Americans eat,
wherever it comes from.
    Senator Cochran. Well, we hope that that can be resolved at
an early date. I know it may be complex and challenging, but a
lot of producers and those who are in business here in the
United States are worried that it is being unfairly--or it may
be unfairly applied to domestic producers, as compared with
foreign importers.
    So, anyway, your personal oversight of that would be
appreciated.
    Dr. Hamburg. Thank you.
    Senator Cochran. Thank you.
    Senator Pryor. Senator Tester.
    Senator Tester. Thank you, Mr. Chairman.
    And I want to thank Dr. Hamburg for being here and her
service. And I just want you to know that bringing Thad
Cochran's son to the subcommittee is not going to sway this
subcommittee in the questions and answers. I assume that is
correct, right, Thad?
    At any rate, welcome.

                     FOOD SAFETY MODERNIZATION ACT

    Look, I want to talk about the Food Safety Modernization
Act a little bit, too. And I appreciate the ability to visit
with you off the grid, too. I thank you very much for that.
    During the debate over the Food Safety Modernization Act,
we had a very healthy discussion about where consumer risk
comes from. One key question was whether the smallest
companies, operating locally, selling at the farmer's market or
at a local grocery store, pose the same kind of risk as the big
national companies do.
    And while there were strong feelings on both sides of this
debate, and they were strong, one thing that was lacking was
any epidemiological data to support applying the same rules to
small producers in isolated markets as we do to the big guys
whose mistakes could reach every corner of the country in a
very short order.
    So Congress, in order to avoid putting small producers out
of business, did not apply those rules to qualified facilities.
Congress did, however, require a study of the food processing
sector, including facilities collocated on farms, and this
report was to be completed before the promulgation of the new
rules, and the rules were intended to be informed by the study.
And correct me, if I am wrong on that.
    However, FDA did not release the study until January--
correct?--along with the proposed preventive control rule. Yet
the study was dated November 2011.
    Can you please speak to why the agency did not release that
report and seek comment on it before a proposed preventive
control rule was released? It is about 13 months space.
    Dr. Hamburg. We are, as I said, trying to go forward with
an open process with input from all stakeholders, and the
opportunity to bring the best possible science to bear and data
to bear and experience to bear on our rulemaking. I will have
to get back to you on the specifics of the review process for
that report.
    [The information follows:]

    Section 103(a) of the FDA Food Safety Modernization Act (FSMA)
instructed FDA, in consultation with the Secretary of Agriculture, to
conduct a study of the food processing sector. Section 103(a) of FSMA
also instructed FDA to submit to Congress a report describing the
results of the study not later than 18 months after FSMA's date of
enactment. However, FSMA also required us to promulgate regulations to
establish ``science-based minimum standards for conducting a hazard
analysis, documenting hazards, implementing preventive controls, and
documenting the implementation of preventive controls'' and to define
the terms ``small business'' and ``very small business.'' The
regulations were to be promulgated not later than 18 months after
FSMA's enactment. Under contract with FDA, RTI International conducted
the study, consistent with the FSMA requirements. Also consistent with
FSMA, we have consulted with the U.S. Department of Agriculture (USDA)
about the study. We also included the Food Processing Sector Study as a
reference in the recently issued proposed rule for preventive controls
for human food. The study provides information on the number of
establishments and average sales per establishment by industry and size
of operation. We used the study to inform the proposed rule's
definitions of ``small business'' and ``very small business.''
    Although section 103(a) of FSMA did not require us to do so, we
released the study for public comment along with the proposed
preventive controls rule and the proposed definitions of ``small
business'' and ``very small business.'' We took this action so that we
could evaluate and address the comments, before we reported to Congress
on the results of the study.
    In the preamble to the proposed rule, we described our plan as
follows:

Consistent with section 418(l)(5) of the FD&C Act, FDA has consulted
with USDA during its study of the food processing sector (Ref. 31). The
study is available in the docket established for this proposed rule
(Ref. 32). We request comment on that study. In section X.B.4 of this
document, we discuss our proposed definitions for small business and
very small business. We will consider comments regarding the study, as
well as comments regarding our proposed definitions for small and very
small business, in any final rule based on this proposed rule.

    78 FR 3646 at 3658. Thus, because the study is part of the
administrative record for the rulemaking, we will consider comments on
the study in the same manner as we would consider comments on any other
reference in the administrative record.

    Senator Tester. I would like to because----
    Dr. Hamburg. Yes.
    Senator Tester [continuing]. In my review, it appears that
the FDA did not examine any actual epidemiological data, but it
relied on the process of expert elicitation. And essentially,
academics in the field of food safety and research were
surveyed on their experience.
    I think it is--well, point well taken. You will get back to
me.
    Dr. Hamburg. I think we can have a rich conversation on all
of the data that has gone into the development of these rules.
    Senator Tester. Super. And I thank you for that.

                     FOOD SAFETY MODERNIZATION ACT

    One question that arose during the consideration of the
Food Safety Modernization Act was again whether farms that sell
directly to consumers from farm stands on their own farms
should be treated the same as farmers who sell directly to
consumers out of a truck at a farmer's market, and it is
essentially the same thing.
    Under the existing rules, this question has never been
clear. A farmer that sells from his or her own property is
considered a retail food establishment and not a food facility.
The Food Safety Modernization Act required FDA to adjust the
definition of a retail food establishment to ensure that a
farmer selling his or her own food at a market would be treated
the same way.
    Can you explain why the rules that were proposed last
January do not address this issue, and do you plan on
addressing it in the final rule?
    Dr. Hamburg. Well, of course, in the Food Safety
Modernization Act there was what we finally call the ``Tester
exemption,'' which speaks to some of these issues. But we have
also been trying to build in flexibility in terms of the
proposed rules and how they would be applied, depending on the
activities that were being undertaken and the level of risk.
    We have really tried to engage in a lot of outreach and
discussion to understand, noting that there is not a one size
fits all. This is a complex and diverse enterprise, the food
enterprise, and the needs of the produce-growing community are
very different, depending on what you are growing, who you are
growing it for, the size of the facility, et cetera. And so, I
think we are really striving to reach the right balance.
    And food safety matters to the American public, whether you
are big or small. But I think in terms of our regulatory
oversight role, we do not want to have a one size fits all. We
recognize the differences. We are trying to achieve a risk-
based approach that really does recognize the differences, and
we are not striving to be unnecessarily burdensome. We are
trying to find the right balance to protect health.
    Senator Tester. I very much appreciate particularly the
statement the one size does not fit all. Because one size
really doesn't fit all, and it doesn't fit all in most parts of
Government and especially here.
    And where you have--and that is the whole thing. We want
our food to be safe, no mistake about that. We are silly if we
don't. But by the same token, we need to, just as we do in the
financial area, fit the regulation to the risk.
    And so, I thank you for that. We will continue to follow
up. My staff will continue to follow up with your staff on ways
we can make this thing work because I think we both want it to
work in the end and work well for the consumer without putting
a bunch of folks who don't pose much of a risk at all out of
business.
    So thank you for that.
    I talked to you a bit ago about a petition that was in
front of the FDA that had over 1 million signatures on it that
dealt with labeling of GMO [genetically modified organism]
foods.
    Dr. Hamburg. Mm-hmm.

                       GENETICALLY MODIFIED FOODS

    Senator Tester. I am going to back up a little bit. When we
talk about chemicals that are applied to food, they go through
a rigorous, and I mean a rigorous, bunch of tests. The GMO
issue is fairly new, 15 to 20 years, and in my perspective,
from my opinion as a dry land dirt farmer, I will tell you that
the amount of testing that is done on genetically modified
foods is slim to none, and slim just left town.
    And so, my question to you is, is that with this petition
in hand, it was originally submitted about 1\1/2\ years ago,
November 2011, what are your plans? And I know in previous
conversations, you talked about the plant where their corn,
soybean, cotton, whatever, is really not changed much. But I
don't know if there is tests to prove that.
    It is certainly a different plant than it was initially
because there are traits in the environment. So what is your
opinion on labeling? Is it something FDA is going to do?
    Dr. Hamburg. Well, we certainly understand that there are
concerns about safety and environmental issues related to
genetically modified foods in the public at large, and it has
been the focus of a lot of scientific work and investigation.
We support a consumer's right to know and voluntary labeling of
genetically modified foods.
    Senator Tester. The problem is, is that I am not sure
voluntary labeling is ever going to happen, or it would have
already happened. Just a point.
    Thank you, Mr. Chairman.
    Senator Pryor. Thank you, Senator Tester.

                               COSMETICS

    I have a few follow-ups, if you don't mind, Dr. Hamburg?
And that is on cosmetics. You know, we talked about user fees
in other contexts. I am not sure we mentioned user fees in
cosmetics.
    I know that you have been in negotiations with the industry
on these. My understanding is they are concerned about timely
and fairly rapid reviews of things and make sure that we have
safe products to find that right balance we need.
    But are you in a position today to talk about your status
of your negotiations with the cosmetics industry?
    Dr. Hamburg. You know, I think that we are at a very early
stage in terms of some of the specifics, but we expect now that
the President's budget has come out and there is a target as
well, that we will be sitting down with the cosmetics industry
in a much more focused way. And of course, we will be also
bringing the fruits of our discussion to Congress as we move
forward.
    Senator Pryor. Are you talking about setting up a national
standard for regulation of cosmetics?
    Dr. Hamburg. Well, that, I think what we would be talking
about with respect to the user fees would be more trying to
define a shared agenda in terms of what are a couple of
critical priorities in terms of our oversight of them in areas
where the cosmetic industries think that they would benefit and
where we think that through additional resources and
identification of some key areas of activity, we could
strengthen our program.

               NATIONAL CENTER FOR TOXICOLOGICAL RESEARCH

    Senator Pryor. Let me also just change the focus here for
one moment to the National Center for Toxicological Research. I
know that they do a lot of things in the nanotechnology world,
which is very important. But this is a facility that also is
looking at the safety of some high-profile issues like BPA and
also antibiotics in food processing animals, pediatrics
anesthetics, even something that is very current this week,
ricin, trying to find the best inactivating agent for that.
    So, obviously, it does a lot of important work. And they
certainly benefit your mission and are important to your
mission. And I also know that you have a memorandum of
understanding between the State of Arkansas, led by Governor
Beebe, and also yourselves about trying to make sure that this
is just a first-rate facility all the way around with a lot of
collaboration and help going both ways between you and the
University of Arkansas.

              VIRTUAL CENTER OF EXCELLENCE--NANOTECHNOLOGY

    Could you talk just a little bit about that memorandum of
understanding (MOU) and the virtual Center of Excellence
established by the MOU and just an update on that, please?
    Dr. Hamburg. Sure. Well, we are very excited about this
project and the incredible support that we have gotten from the
State of Arkansas and its outstanding academic institutions. It
is an MOU with five academic institutions in the State, as well
as the Government, and really enables us to move forward in a
couple of critical ways.
    One is that we have created a training program in
regulatory science, one of the first formal programs in the
country, and we will be graduating our first group of
accredited students in this area. And that really matters today
and for the future, of course, in terms of really making sure
that we have the strongest science-based regulatory programs.
    It also enables us to really focus on some critical issues
like nanotechnology and study them at a very basic science
level as well as all the way through the set of issues that
arise, including clinical experience with the assessment of
safety and efficacy of some of these products. So it really is
a very unique resource.
    And as you note, the National Center for Toxicology
Research is a unique entity in the country in terms of its
focus, the kind of work it does, and its impact on critical
issues to the American people. So I think this is really an
outstanding program that we expect will yield a lot of benefits
going forward.

                             NANOTECHNOLOGY

    Senator Pryor. Well, and I know that nanotechnology is
really an emerging field, and it is a rapidly developing field.
Do you feel like the FDA has the resources necessary to stay on
top of all the changes that are coming with nano materials and
nanotechnology?
    Dr. Hamburg. Well, of course, we could always use more. But
we have a strong program. Nanotechnology is a very challenging
area for us in the sense that nanotechnology is emerging and
nano-based products are emerging across many domains of our
activity--drugs, devices, foods, cosmetics. And in these
different areas, they may raise different concerns.
    So I think it is very, very important that as this field is
evolving, we are very engaged from the get-go in terms of
thinking about both some of the safety concerns that are
important to address, but also how best to harness this new
technology and approach to benefit the American people.

                        BUILDING AND FACILITIES

    Senator Pryor. Right. I am not going to ask you to go
through all the details on the answer to this next question.
But I would ask you to provide us the documentation for your
building and infrastructure needs. And I know you have been
doing that, and obviously, it needs to be updated and made
current.
    But I see the request that you have made, and I think it is
important for us on the subcommittee to see all of your needs
and look and see if there are ways that we can help with that,
and we would like to really kind of do a top-to-bottom review
of that and work with you on that because that is very
important. And you can just submit that for the record when it
is ready.
    Dr. Hamburg. Okay. Terrific.
    [The information follows:]

    The Building and Facilities (B&F) Program provides funding to
construct, renovate, repair and improve FDA's 86 owned buildings and
the associated infrastructure for at six sites where operations
critical to FDA's public health mission are conducted. A total of
approximately 1,400 staff and contractors are employed at these sites.
FDA's owned assets include numerous laboratory facilities and a
substantial amount of site infrastructure. It is critical to ensure a
safe working environment for FDA employees. Improving the physical
condition and operational reliability of these assets is also vital to
supporting FDA's work to protect the Nation's health, security, and
safety.
    FDA currently has an estimated Backlog of Maintenance and Repair
(BMAR) of $120 million, which represents a comprehensive list of
maintenance and repair deficiencies for buildings and site
infrastructure. In addition, B&F funding is also needed to bring owned
buildings into compliance with sustainable building standards and to
accomplish renovations needed by FDA programs to meet regulatory and
mission requirements.
    The Jefferson Lab Complex (JLC) site provides an excellent example
of FDA's needs. FDA conducts mission research at its JLC site, which is
occupied by the National Center for Toxicological Research (NCTR) and
the Office of Regulatory Affairs' (ORA) Arkansas Regional Lab (ARL).
This site represents more than 50 percent of FDA's owned square footage
and BMAR. More specifically, there are at least seven laboratory and
animal holding facilities that are in urgent need of attention with
architectural, HVAC, electrical, and plumbing systems that have reached
the end of their useful life. These buildings are in need of repairs
and improvements to meet code and make them safe to meet FDA's mission.
A Master Plan, which will identify required improvements and
renovations to buildings and site infrastructure, and will propose a
strategy to implement them over the next 5 to 20 years, is almost
complete. In addition to addressing some of the above noted needs, the
Master Plan also addresses critical needs for the construction of a
Nanotechnology Core Facility and an addition to an existing Imaging
Core Facility as well as initiating utility infrastructure support for
a proposed Biotechnology Park (a.k.a., Bioplex) being spearheaded by
The Economic Development Alliance of Jefferson County Arkansas of which
FDA is an active member. Such vital improvement, renovation and
construction projects cannot be completed without adequate B&F funding.
    Investing in FDA-owned facilities provides space for expansion and
the ability to renovate and retool infrastructure to support the
complex FDA mission while saving funds. By utilizing its owned space to
maximum capacity, FDA can reduce the amount of rented space it
requires. Jefferson Laboratories alone has approximately 40,000 square
feet of space available for renovation and use, and 490 acres of land
that could be made available for future construction.
    FDA ensures its mission support capabilities are resourced
adequately to achieve program success and, in the past, has been able
to defer its maintenance, repairs, and facilities improvement needs as
program needs were of higher priority. But the scale has recently
tipped due to the continuous decreased funding for the B&F Program. FDA
has determined that years of underfunding this program has resulted in
a risk to its mission and to the safety of its employees.
    The Agency can no longer defer its maintenance needs as we are
experiencing system failures in our buildings and infrastructure which
not only impact reliability and mission-critical research activities
but also the health and safety of our employees. Funding is needed now
for critical buildings and infrastructure projects to ensure mission
accomplishment and a safe working environment for its personnel. FDA
leadership is also weighing these needs heavily in the formulation of
our fiscal year 2015 budget request.
    Below is information regarding FDA's six owned sites and the
critical work conducted at these sites in support of FDA's public
health mission:
    Jefferson Labs Complex (JLC)--Jefferson, Arkansas.--This site is
occupied by NCTR and ORA's Arkansas Regional Lab. NCTR conducts
critical research at this site that focuses on toxicity and risk
assessment, nanotechnology, biomarker development, non-invasive
imaging, and studying the extrapolation of data from animal studies to
humans. ARL conducts testing and analysis in support of post market
surveillance. ARL also conducts research, collaborative studies,
regulatory inspections, and scientific consultations to support
enforcement activities.
    Gulf Coast Seafood Laboratory--Dauphin Island, Alabama.--FDA's Gulf
Coast Seafood Laboratory site is used by the Center for Food Safety and
Applied Nutrition (CFSAN) to conduct research programs related to
seafood safety, especially FDA-regulated seafood harvested from the
Gulf of Mexico.
    Muirkirk Road Complex (MRC)--Laurel, Maryland.--This is a campus
shared by CFSAN and the Center for Veterinary Medicine (CVM) to conduct
research programs related to food and animal drug safety, toxicology,
microbiology, and molecular biology. In addition, laboratories at this
site are used as part of the Laboratory and Food Emergency Response
Networks.
    Winchester Engineering and Analytical Center (WEAC)--Winchester,
Massachusetts.--WEAC is an ORA specialty laboratory used to test the
safety and performance of medical devices, microwaves, and
radiopharmaceuticals; to conduct radionuclide testing with food
samples; and to ensure seafood freshness.
    San Juan District Office and Laboratory--San Juan, Puerto Rico.--
The San Juan District Office is responsible for compliance with FDA
regulations in the Commonwealth of Puerto Rico and the U.S. Virgin
Islands (St. Thomas, St. Croix, and St. John). The San Juan District
Laboratory is a National Servicing Laboratory that specializes in the
testing and analysis of human drugs (pharmaceutical analysis) and
provides support in team inspections as well as conducting independent
inspections of contract laboratories, domestic and foreign.
    Los Angeles District Office and Pacific Regional Laboratory SW--
Irvine, California.--This location houses the Los Angeles District
Office, which serves as ORA's inspection and compliance activity in
Southern California and the State of Arizona. The pacific Regional
Laboratory SW is a multi-functional laboratory performing predominantly
import work in the Foods, Drugs, Cosmetics, Veterinary Feeds, and
Medical Devices program areas. The lab also has specialized
capabilities in the areas of Entomological basis of Filth and
Sanitation, Regulatory Mass Spectrometry, and Regulatory Molecular
Microbiology and Virology.

                            DRUG COMPOUNDING

    Senator Pryor. And the last thing I have really is I
understand that you recently made an appearance before the
House of Representatives, and maybe the issue of drug
compounding came up over there?
    Dr. Hamburg. This is true.
    Senator Pryor. And I, like everyone else in the country,
certainly on this subcommittee is very, very concerned about
the fungal meningitis outbreak that we saw linked to the New
England Compounding Center. And I also notice that in the
budget, you are requesting, what is it, $3 million, if I am not
mistaken?
    Dr. Hamburg. In the continuing resolution fiscal year 2013
budget, we intend, with the agreement of this subcommittee and
support of this subcommittee, to spend $3 million for issues
related to expanding activities with respect to oversight of
compounding pharmacies.
    We are, as you may know, very deeply involved in
discussions with Congress, particularly on the Senate side,
with respect to legislation that would give us new authorities
that we very strongly feel we need to be able to provide better
protection for some of the highest risk compounding facilities
that are making sterile products that represent a greater risk,
making them in advance of or without a prescription and selling
them across State lines.
    We don't know what that legislation will look like. I am
very hopeful that we will get it. But we will need to come back
to you with additional requests over time as we really
determine the nature and scope of our responsibilities in this
area and what we will need to have the kind of strong and
sustainable regulatory regime to address the safety of
compounding pharmacies.
    Senator Pryor. Compounding pharmacies are a very important
piece of the puzzle, and certainly we want those drugs to be as
safe as they can be, just like all drugs. And obviously, a
problem like we saw at the New England Compounding Center
raises concern, and we look forward to working with you on
that.
    Senator Blunt.
    Senator Blunt. Okay. Let us stay with that topic a little
while. The $3 million that you would expect to commit between
now and the end of this fiscal year on drug compounding, under
what authority would you be getting more involved or do you
need legislation to get involved? What would you spend it on?
    Dr. Hamburg. No, we have authority with respect to
compounding pharmacies, but it is far more limited than the
authorities. For example, we have over conventional
manufacturers. As you probably know, compounding pharmacies
have historically been regulated on a routine day-to-day basis
by the States.
    But we are increasingly concerned that there are many large
compounding pharmacies out there that are making these high-
risk sterile products, and we feel an obligation to be as
aggressive as possible with our existing authorities to know
who is out there making what and to make sure that there are
not serious sterility concerns and other concerns that would
put the American people at risk.
    We do not feel we have all of the authorities that we need
to regulate this arena of compounding pharmacies and
particularly these large compounding pharmacies that are
behaving essentially as outsourcers to hospital networks and
providing critical products to the healthcare system and to
patients. And that is why we are seeking legislation.
    We don't have the authority, for example, to require that
all of these facilities register with us and tell us what they
are making. We don't have the authority to go in and fully
inspect them, get access to their records and take samples. We
don't have the authority to hold them to a uniform set of
national standards or the authority to require that these
compounding pharmacies report adverse events to us when they
learn about them and about their products.

                      DRUG COMPOUNDING LEGISLATION

    So we think that everyone would benefit by legislation that
would clarify and strengthen the FDA oversight role.
    Senator Blunt. Now I would think, and I would be pleased to
have your comments on this, that there is an argument to be
made on the manufacturing side where a compounder is making a
significant quantity of a compounded product to then be sold,
as opposed to the pharmaceutical side where a pharmacist is
compounding one product for one prescription.
    That obviously would take a whole lot more oversight than
on specific manufacturing facilities. Am I off base there in
looking at that that way?
    Dr. Hamburg. Well, we recognize the role of traditional
compounders, and we do not want to oversee all compounding
pharmacies in this country. But the industry has been evolving,
and the healthcare system needs have been evolving. And there
is this new sort of hybrid of compounding pharmacies that are
making larger volumes and higher risk products, and we do feel
that that is a gap in our current regulatory framework.
    If we were, as has been suggested by some, to treat this
group of compounding pharmacists and pharmacy facilities as
manufacturers, because they are doing some things that look
more like manufacturing in many ways in terms of volume and
some of the kinds of products that they are making, that would
have very, very serious implications for the healthcare system
and patient needs.

                APPROACH TO DRUG COMPOUNDING REGULATION

    You spoke earlier about the need for sort of a thoughtful,
balanced approach to regulation. Our current authorities might
push us to treating a range of compounding pharmacies like
conventional manufacturers, and that would almost certainly put
many of those companies out of business, both the good actors
and the bad actors.
    We don't want a system that will unnecessarily compromise
important industry and important manufacture of critical
medical products, but we also want to make sure that those
compounding pharmacies are appropriately regulated. We believe
that we can find a balanced approach that will require those
pharmacies that are making the high-risk sterile products in
advance of or without a prescription and shipping to other
States in a way that fits appropriate safety standards and good
manufacturing practice for the products they make so we can
assure quality.
    We want to be able to know who they are and what they are
making and to routinely inspect them and get access to
everything that we need. We want to make sure that these
compounding pharmacies are making safe, high-quality products.
But we also don't want to apply a sledgehammer if that isn't
what is needed.
    And that is why we want to work with Congress to achieve
the kind of regulatory authorities that we need to best serve
the American people at the end of the day.
    Senator Blunt. Well, I think it is very important how you
define the role you want to play for the FDA in the future so
that this doesn't later become: We have the right to go in and
check on every pharmacist in America and how they filled every
prescription.
    Dr. Hamburg. Believe me.
    Senator Blunt. You may have some right to do it, but
clearly, the tools to do that would be, in my view, beyond our
reach.
    Do you have any idea how many of these kinds of facilities
there might be? Are we talking about hundreds or dozens?
    Dr. Hamburg. Well, we don't really know the full landscape
because they aren't required to register with us in terms of
these higher risk compounding pharmacy facilities. We know
there are about 28,000 compounding pharmacies across the
country, or at least these are the estimates that we get from
industry.
    Of those, there are probably about 7,500 specialty
compounders, and a subset of those, some 3,000 are making the
higher risk sterile products that I was just talking about.
    Senator Blunt. Well, my thought on this would be to let us
draw this line as appropriately and tightly as we can, if you
really want to get this done, as opposed to broaden the scope
to the point that so many people are so concerned that nothing
happens.

                   DRUG COMPOUNDING ISSUE IN MISSOURI

    We had a problem in Missouri with this, as I mentioned to
you, on some cancer drugs. As I recall about 20 years ago a
pharmacist was knowingly not giving the right prescriptions and
saving the cost of those drugs.
    We have very tight laws because of that. I think we are one
of only two States that give pharmacists a specific license to
make a specific compounded product and that was a result of
that problem. And still, if a pharmacist wants to violate the
law and eventually run the risk of going to prison, they could
still not do what they are legally obligated to do.
    I don't know what is in a pill or what is in a compounded
product, either one. I have to trust somebody in that process,
and I think there may a place that we can define this in a way
that allows us to do that.

                        DRUG COMPOUNDING FUNDING

    I still don't quite know what you are going to do with the
$3 million between now and the end of the year. So why don't
you have somebody prepare that information.
    Dr. Hamburg. Okay. Well, we would be happy to. But we are
going to use it to continue some of the inspections that we
have been doing, follow up on the inspections and----
    Senator Blunt. Maybe when I see how you are going to spend
that money, I will know what you are able to do now, compared
to the gap that is still out there to be filled. And do you
have an estimated cost of what it would take to regulate these
manufacturers of the kinds of products you have described?
    Dr. Hamburg. Well, we are certainly looking at those costs.
What an overall program would cost depends on ultimately how we
move forward with legislation and new authorities and defining
this category of nontraditional compounders that we were just
discussing. Because as I said before, we understand the
importance of traditional compounders, and we have no interest
and clearly don't have the resources to take on the whole
activity, and it has historically been a State responsibility.
    But we do have real concerns about the safety of the
American people in light of an evolving industry, and we do
feel that we do need additional legal regulatory tools and
authorities and we will, in order to implement that, need
additional resources as well.

                  GENETICALLY MODIFIED ORGANISM FOODS

    Senator Blunt. Right. And on the topic that Senator Tester
raised, I heard, I thought, two pretty different views of that.
One was on the testing of GMO foods, he said the testing was
somewhere between slim and none, and slim has left town. So I
guess that means none.
    You said a lot of scientific work and investigation here.
You do have to decide whether these products can become part of
a consumable food product. Is that right?
    Dr. Hamburg. We do provide oversight of the safety and
wholesomeness of foods, whether they are genetically modified
or not, yes.
    Senator Blunt. And the scientific basis, the science that
you look at has led you to believe that any of these products
that are in our current food supply are safe, or they wouldn't
be there?
    Dr. Hamburg. We do not believe that there are existing
threats to health from these products.
    Senator Blunt. As I understand it, the Department of
Agriculture is involved at deciding what products can be
planted and grown, and then you come in at some point and
decide what the potential food uses of those might be, as
opposed to other uses?
    Dr. Hamburg. Well, there are many components to this
question.
    Senator Blunt. If you want, the one question I will ask
that maybe narrows that. Where does USDA leave off in a GMO
product and you take over?
    Dr. Hamburg. Well, we don't proactively review the product
in the way that we review a drug on a routine basis. We are
reviewing now GE salmon, which I am sure you are aware of. And
actually that is being reviewed under our veterinary drug
program, and it is the first in its class in terms of a
genetically modified product that is coming before us.
    And that is being reviewed in terms of safety clearly. But
our overall food program, I mean, not every food that goes into
the marketplace is reviewed and approved by the FDA for safety,
but we monitor safety issues, of course.
    Senator Blunt. Then this is one of the topics you would be
monitoring, along with lots of others?
    Dr. Hamburg. Genetically modified foods? We are responsible
for overall safety, quality, wholesomeness of the food supply.
With respect to those areas in the FDA domain, of course, as
you know, USDA regulates meat, poultry, and processed eggs.
    Senator Blunt. Right. One of the few products we don't grow
in our State, and I think Arkansas, is sugar beets. We grow no
sugar beets. But I know there was a sugar beets case a few
years ago. After the product was approved by USDA, within 5
years about 95 percent of the crop was this product. If you
bought sugar beets, you were almost certain to be buying that
sugar beet because it did whatever apparently the sugar beet
growers wanted a sugar beet plant to do, and 95 percent of the
crop was sugar beets.
    And there was a court case that was not about food safety,
but whether it had been properly tested by USDA on
environmental standards. A Federal judge said I think they
ought to test it some more. USDA appealed that. The higher
judge said, no, you have done all you needed to do to test it.
    But in the interim, there was some question about whether
all the sugar beets in the country, or 95 percent of them,
could be harvested and sold that year. But the question was not
about the food quality or the food safety. It was about whether
there were other environmental impacts, and higher court
decided, no, there weren't.
    But I thought that there was a lot of science on this, and
you apparently think so, too.
    Dr. Hamburg. I do.
    Senator Blunt. I thank you, Chairman.
    Senator Pryor. Thank you.
    Senator Cochran, do you have anything further?
    Senator Cochran. Mr. Chairman, I would like to express our
appreciation to the panel for being here today and for the job
you are doing, heading up this very important agency.
    Thank you for cooperating with our subcommittee.
    Dr. Hamburg. Thank you.
    Senator Pryor. And thank you.
    Dr. Hamburg, I would like to thank you again for being here
and bringing your team here. I look forward to working with
you. This was a great hearing.
    And Senator Blunt and I and the whole subcommittee here
look forward to working with you on this year's bill as we go
through that process.

                     ADDITIONAL COMMITTEE QUESTIONS

    And for members of the subcommittee, if you have any
additional questions that you would like to ask for the record,
we would ask that you get those within 1 week. So that is
Thursday, April 25.
    And Dr. Hamburg, if you could make your responses available
within 4 weeks of that time, that would be very much
appreciated.
    [The following questions were not asked at the hearing, but
were submitted to the Department of response subsequent to the
hearing:]
              Questions Submitted by Senator Mark L. Pryor
                     proposed food safety user fees
    Question. If the new proposed user fees aren't authorized, what
does that mean for FDA's ability to implement the food safety law?
    Answer. The proposed user fees are critical to ensure that FDA is
able to fully implement the FDA Food Safety Modernization Act of 2011
(FSMA). The two major food safety user fee proposals, a Food Import Fee
and a Food Facility Registration and Inspection Fee, are estimated to
generate $166 million and $59 million, respectively. Not having this
$225 million in fees authorized and appropriated will severely limit
FDA's ability to implement FSMA and to create a modern food and feed
safety system that is prevention-oriented, science- and risk-based, and
efficient. In particular, FDA would not have the resources necessary to
modernize the import system by improving the accuracy and efficiency of
inspections. Without additional resources, FDA will not have sufficient
capacity to develop the guidance documents necessary to support
implementation of the preventive controls and produce safety
regulations and to conduct outreach and educational activities for
industry and regulatory partners. FDA will not be able to hire and
train investigators for import oversight, nor will it be able to
modernize compliance programs and inspection practices to improve
efficiency and overall effectiveness of FDA's public health activities.
FDA will not be able to develop a network of shared State and Federal
laboratory data and perform planned assessments of States enrolled in
the Manufactured Food Regulatory Program Standards.
    We hope to continue to work with Congress and industry on this
important issue.
    Question. Assuming we are working under the same budget restraints
as you are, please send us information as quickly as possible on what
the highest priority activities are that would have been funded with
the user fees.
    Answer. FDA's highest priorities for the fiscal year 2014 food and
feed safety program are developing and implementing preventive control
and produce safety standards, increasing the frequency and accuracy of
domestic and foreign inspections, training of regulatory partners in
new inspection protocols, building the capacity of FDA State partners,
and implementing FDA's new import authorities. Of these important
priorities, FDA's efforts in import safety would be the most adversely
affected if the new user fee proposals are not authorized and
appropriated.
    The fiscal year 2014 resources would support comprehensive,
prevention-focused import food and feed safety programs that will place
greater responsibility on those in the food supply chain--food and feed
manufacturers, processors, packers, distributors, transporters, and
importers--to ensure that imported food and feed are as safe as those
produced domestically. Without these resources, FDA would not able to
develop and implement a variety of approaches to ensure the safety of
imported foods and feeds, including assessments of foreign food safety
systems and capacity building for foreign industry and regulatory
partners. FDA would also not be able to use data generated by these
activities to prioritize FDA food and feed safety monitoring activities
and thereby enhance the safety of the U.S. food and feed supply. Not
having these additional resources would hamper FDA's efforts to improve
consumer protection by allowing FDA to make better informed decisions
about the admissibility of imported food and feed products.
                     building infrastructure needs
    Question. Please provide the Committee with the funding that would
be required to address the current backlog of essential maintenance and
repairs at all FDA-owned facilities.
    Answer. FDA currently has an estimated Backlog of Maintenance and
Repair (BMAR) of $122 million, which represents a comprehensive list of
maintenance and repair deficiencies for buildings and site
infrastructure. In addition, the Building and Facilities (B&F) Program
funding is also needed to bring owned buildings into compliance with
sustainable building standards and to accomplish renovations needed by
FDA programs to meet regulatory and mission requirements.
    The B&F Program provides funding to construct, renovate, repair and
improve FDA's 85-owned buildings and the associated infrastructure for
six sites where operations critical to FDA's public health mission are
conducted. Approximately 1,212 staff and contractors are employed at
these sites. FDA's owned assets include numerous laboratory facilities
and a substantial amount of site infrastructure. It is critical to
ensure a safe working environment for FDA scientists. Improving the
physical condition and operational reliability of these assets is also
vital to supporting FDA's work to protect the Nation's health,
security, and economy.
    The Agency can no longer defer its maintenance needs as we are
realizing system failures to our buildings and infrastructure, which
not only impact reliability and mission-critical research activities
but also the health and safety of our employees. Funding is needed now
for critical buildings and infrastructure projects to ensure mission
accomplishment and a safe working environment for our personnel.
    Question. Please list the amount of maintenance and repairs
necessary, by location, in order of the Facility Condition Index.
    Answer. The table below provides a breakdown of the BMAR for each
of the FDA's six owned locations in order of their respective site
Facility Condition Index scores.

  FOOD AND DRUG ADMINISTRATION OWNED ASSETS--BACKLOG OF MAINTENANCE AND
            REPAIR (BMAR) AND FACILITY CONDITION INDEX (FCI)
------------------------------------------------------------------------
                  Site                      Total BMAR       Site FCI
------------------------------------------------------------------------
Winchester, MA..........................       7,168,893           47.86
Jefferson, AR...........................      92,897,341           72.79
San Juan, PR............................       2,936,248           77.88
Laurel, MD..............................      17,368,120           80.91
Dauphin Island, AL......................         775,482           82.96
Irvine,CA...............................         945,339           97.01
                                         -------------------------------
      Total.............................     122,091,423  ..............
------------------------------------------------------------------------

                       highly compliant importers
    Question. The Committee included report language in fiscal year
2012 which strongly encouraged FDA to ``establish a pilot project to
expedite imports for highly compliant importers.'' In addition, section
713 of the FDA Safety and Innovation Act directed FDA to establish a
partnership program for highly compliant importers by January 2014. Can
you update us on FDA's efforts to implement both of those pieces of
guidance? Will you meet the January 2014 deadline and if not, why?
    Answer. FDA has implemented the PREDICT program that facilitates
entry of lower risk products while targeting higher risk projects for
additional review. Additionally, FDA is in the process of developing
two programs that should help to facilitate the import entry of
products from highly compliant importers: the Voluntary Qualified
Importer Program (VQIP) for Food and Feed and the Secure Supply Chain
Pilot Program for pharmaceuticals.
    VQIP is a voluntary program under which food and feed importers may
submit an application for expedited review of entries, based on the
risk of the food being imported.
    FDA continues to work on the operational design of VQIP authorized
under FSMA and is close to completion. Currently, IT requirements are
being addressed and importer user fees are in development.
    The Secure Supply Chain Pilot Program will increase the likelihood
of expedited entry for pharmaceuticals that meet the criteria for
selection under the program. The Secure Supply Chain Pilot Program
should allow FDA to assess the various entities and processes involved
in a repetitive-type import chain, and if found acceptable and if all
information is accurately submitted at the time of entry, would allow
for expedited processing of entries.
    FDA plans to announce the start of a pilot program in order to
evaluate the Secure Supply Chain Program. FDA also is planning a public
meeting to gather additional input on all the provisions of section 713
which is a much broader authority than the development of partnership
programs. The information provided through the pilot program and the
public meeting will help inform the regulations that need to be
developed. FDA is developing a timeline for full implementation that
ensures we have adequate public input.
    Question. How many importers have expressed their intention to
enroll in the Secure Supply Chain Pilot, and has pursuing the pilot
prevented FDA from implementing a partnership program like that
described in section 713 of FDASIA?
    Answer. As the pilot program has yet to be announced, we do not
have definite numbers on how many firms would be likely to participate.
FDA intends to limit participation to 100 qualified applicants during
the pilot phase.
    Question. Would FDA consider establishing an advisory panel,
similar to the Commercial Operations Advisory Committee at the Customs
and Border Protection, on import operations? The goal would be to help
FDA incorporate or account for best practices of U.S. importers, as
well as help coordinate import operations among its Centers.
    Answer. FDA would consider establishing an advisory panel.
                      sequester for generic drugs
    Question. Specific to the newly enacted Generic Drug User Fee Act,
how will sequester of the user fee funds affect the progress of FDA's
implementation of the new program?
    Answer. Sequestration may threaten FDA's ability to fulfill the 5-
year performance commitments made under the Generic Drug User Fee
Amendments of 2012. Delays in addressing the backlog of generic drug
applications will slow patient access to new, more affordable generic
drugs.
    Question. As you know, the program was enacted to address the
previous backlog of more than 2,700 generic drug applications and to
provide parity in domestic and overseas facility inspections. It was
anticipated that approximately 900 new full-time equivalents (FTEs)
would be added to FDA staff to address this backlog, and that 25
percent of these FTEs would be added in fiscal year 2013. Could
sequester of the user fee funds delay hiring of these new FTEs and
further delay addressing the backlog and providing parity in facility
inspections?
    Answer. As a result of sequestration, FDA may be unable to fully
implement the new user fee program. The fiscal year 2013 hiring goal of
25 percent is expected to be met, but the Agency's commitments to
improving review timelines for generic drug submissions--including
reviews of the previous backlog of applications--may not be achievable,
including achieving risk-adjusted parity between domestic and foreign
facility inspections. If sequestration continues to impact user fees
after fiscal year 2013, the hiring goals outlined in the 5-year GDUFA
agreement with industry may not be achieved.
                        sequester implementation
    Question. With the implementation of sequester, including the user
fees paid by industry, how are you working to continue to meet
performance goals set under the various user fee acts?
    Answer. As a result of the sequester, FDA will have fewer resources
than we had assumed when we agreed to the performance goals in our user
fee program commitment letters. Consequently, FDA may not be able to
meet some of these performance goals. FDA continues to look for more
efficient ways to use the resources we receive, and to apply those
resources to the highest priority activities that will protect and
promote public health by providing timely access to safe and effective
medical products. In the short term, we have had to delay some less
urgent yet still important activities, such as some of the new
enhancements to our user fee programs, as well as certain training and
professional development activities that allow our staff to stay
current with emerging science and technology.
    Question. Are you prioritizing activities not directly related to
drug and device review in such a manner to ensure that you are making
the best effort to continue to meet those performance standards?
    Answer. Yes, FDA is setting priorities, using a risk-based
approach, for both drug and device review goals and goals not related
to review, to help ensure the health, safety, and well-being of the
American people while we manage our programs with fewer resources than
planned. We must balance our efforts to meet drug and device review
performance goals with our responsibility to monitor the safety of the
products that are already available, and our need to respond to
emerging safety problems.
                     dietary guidelines for seafood
    Question. FDA has not yet updated its 2004 advice to pregnant women
on seafood consumption, despite new USDA dietary guidelines and
multiple commitments from the Agency to Congress to do so. Can you
commit to issuing this updated advice this summer, and if not, by what
date will this be issued?
    Answer. FDA first issued fish consumption advice relating to
methylmercury in 1994. The advice was updated in 2001 and again in
2004. The 2004 advice was issued jointly by the Food and Drug
Administration and the Environmental Protection Agency. Its purpose was
to protect against the possibility of neurodevelopmental harm to the
fetus and to infants from methylmercury as a result of their mother's
consumption of fish and to protect young children from the possibility
of neurodevelopmental harm from methylmercury as a result of their own
consumption of fish. Since then, studies published in the scientific
literature indicate that, under certain circumstances, fish consumption
by pregnant women and young children may actually improve
neurodevelopment. The Dietary Guidelines for Americans 2010, the
Government's nutritional recommendations issued every 5 years by the
Departments of Health and Human Services and Agriculture, have already
taken this development into account by recommending that pregnant and
nursing women eat at least 8 and as much as 12 ounces per week of fish
lower in mercury. The 2004 FDA/EPA advice does not contain this
consumption target nor does it mention a potential neurodevelopmental
benefit from fish since the evidence for it did not exist in 2004. We
are devoting a significant effort to update the fish consumption advice
and to complete a quantitative assessment of the net effects of fish
consumption during pregnancy on neurodevelopment in order to have a
sound analytical underpinning for that advice. These continue to be top
priorities for FDA. FDA will update the Committee when specific
information about the timing of the release is available.
                                 ______

                Questions Submitted by Senator Tom Udall
                         sunland peanut company
    Question. It is my understanding that Sunland worked very closely
and cooperatively with the FDA to address the issues found at the
peanut butter plant and that they will be coming back on line with the
FDA's stamp of approval.
    Could you outline for the Committee how this use of new authority
worked in New Mexico, and your thoughts on where the new authority was
helpful in ensuring a safe product in the end?
    Answer. By using our new authority provided by the FDA Food Safety
Modernization Act to suspend facility registrations, FDA was able to
ensure the safety of public health by not allowing Sunland to
distribute its peanut and nut butter products until appropriate action
was taken to remedy the salmonella contamination in its facilities. The
new tool allowed FDA to take swift action to prevent continued
distribution of food that had a reasonable probability of causing
serious adverse health consequences or death.
    Question. Has the FDA used this same authority to revoke operating
certificates elsewhere since the process was carried out in New Mexico?
    Answer. FDA has not used this authority elsewhere.
    Question. Has the experience with Sunland led to any improvements
in how the FDA will carry out this new authority in the future,
especially as it relates to interaction with companies or businesses
who are in violation of food safety standards?
    Answer. FDA has continued to refine our internal processes for
utilizing the new suspension of facility registration authority based
on the valuable experience acquired during the Sunland activity. This
acquired knowledge and experience will facilitate further use of this
new authority for companies or businesses that present a significant
risk to public health.
                       small producer/processors
    Question. In writing the Food Safety Modernization Act, Congress
included a number of provisions to ensure that small and very small
farms and food businesses were not unduly burdened by new regulations.
I am pleased to see that the agency has included in its proposed rules
longer compliance periods and modified requirements for certain small
farms and businesses.
    Could you tell me what kind of feedback the FDA is getting from
small farms and businesses on the proposed rules?
    Answer. FDA has engaged in extensive outreach efforts to inform
farmers and businesses of the provisions of the proposed produce safety
rule and the proposed preventive controls rule for human food. In
addition to three public meetings held across the country, there have
been six State-sponsored meetings (Ohio, Michigan, North Carolina,
California (2), Georgia) about the proposed produce safety rule and
numerous other outreach sessions via meetings and webinars. These
efforts have allowed the FDA to answer questions regarding the proposed
rule and to hear feedback from its various stakeholders. Organizations
and groups whose stakeholders include small farms and businesses have
been included in this outreach plan. Some small farms and businesses
have expressed interest in the agency's compliance and enforcement
plans for the proposed rules as well as the process of a withdrawal of
a qualified exemption. Questions have been raised about the potential
cost of compliance with the rules, particularly certain water testing
requirements in the proposed produce safety rule. Additionally, small
farmers have asked questions about the requirements in the proposed
produce safety rule for application of untreated biological soil
amendments of animal origin. FDA's outreach efforts have provided a
platform to provide information regarding these and other questions.
Generally, this particular stakeholder segment has indicated their
interest and appreciation for the flexibility that was built into the
proposed rules, such as the fact that the proposed rules would not
apply to certain small farms and businesses and the establishment of a
framework for alternatives to certain requirements of the proposed
produce safety rule. Small farmers and businesses have also inquired
about the availability of technical assistance or potential avenues
that can provide such assistance. It is important to note that the
comment period for the proposed rules will remain open until September
16, 2013, and we anticipate receiving further feedback. FDA is
committed to continuing to work with small farms and businesses, to
address their concerns and ensure that the final rules are flexible and
practicable while enhancing public health protection.
    Question. I am concerned about the cost of compliance that FDA
estimates for small businesses. I understand that FDA estimates that
the costs to comply with its proposed produce rule for farms with less
than $250,000 in annual revenue will face over $22,000 in compliance
costs. These additional costs could make or break a small business.
    Do you expect that these estimates are accurate?
    Answer. Based on the data available and FDA's understanding of the
current practices of the produce industry, these estimates represent
the most accurate costs for a farm to comply with the proposed rule.
The $22,000 estimate cited is actually an average cost for farms
between $25,000 and $250,000 in annual revenue. This means that the
cost of compliance may be higher for some farms closer to the high end
of that distribution and lower for those farms closer to the low end.
We recognize that the potential costs of the regulation are not trivial
and that some covered farms, especially those that need to make
significant changes in their practices to comply with the risk-based
provisions of the rule, may find it difficult to comply. Therefore,
when the rule is finalized we intend to offer considerable technical
assistance to small farms, and to help them comply through later
compliance dates for small and very small farms, guidance documents,
and the efforts of the Produce Safety Alliance, a public-private
partnership dedicated to the development and dissemination of science-
and risk-based training and education programs.
    Question. Could you discuss what the agency plans to do to assist
small businesses, including businesses operated by limited resource
producers and beginning producers, in complying with the proposed rules
and in easing this cost burden?
    In updating our Nation's food safety laws, Congress also recognized
that training is an important part of a modern food safety system.
Unfortunately, the current budget environment has made it difficult to
provide additional funding for much-needed training for farmers and
food processors on food safety practices.
    Answer. Regarding the proposed produce safety rule, FDA is
committed to working with the produce community and with partners in
the U.S. Department of Agriculture (USDA), State agencies, and foreign
governments to facilitate compliance through education, technical
assistance and regulatory guidance. The agency recognizes that the time
needed to comply will vary and as such, the rule proposes to phase in
compliance dates based on farm size. FDA has, together with USDA's
Agricultural Marketing Service, established a jointly funded Produce
Safety Alliance (PSA), a public-private partnership, housed at Cornell
University, that will develop and disseminate science- and risk-based
training and education programs to provide produce growers and packers
with fundamental food safety knowledge. A first phase of PSA's work is
intended to assist farms, especially small and very small farms, in
establishing food safety programs consistent with the Good Agricultural
Practices Guide and other existing guidances so that they will be
better positioned to comply when we issue a final produce safety rule
under section 419 of the Federal Food Drug and Cosmetic Act.
    In addition, FDA has also entered into a memorandum of
understanding with USDA's National Institute of Food and Agriculture to
establish a competitive grant program to provide food safety training,
education, extension, outreach, and technical assistance to: (1) owners
and operators of farms; (2) small food processors; and (3) small fruit
and vegetable merchant wholesalers. FDA is currently working with USDA
to execute the competitive grant program, which will prioritize
projects that target small and medium-sized farms.
    Regarding the proposed preventive controls rule for human food, FDA
is committed to working with the food industry, especially small and
medium-sized businesses, to facilitate compliance. The rule proposes to
have later compliance dates for small and very small facilities. In
addition, FDA, in cooperation with the Institute for Food Safety and
Health, has created the Food Safety Preventive Controls Alliance to
develop training courses and materials to help industry, particularly
small- and medium-sized companies, when the rule is finalized.
    Question. Could you discuss how FDA is addressing this need and
what resources FDA would need to work with other agencies and
organizations to address the need for training of processors and
producers?
    Answer. FDA is committed to working with the food industry and with
partners in the U.S. Department of Agriculture, State agencies, and
foreign governments to facilitate compliance through education,
technical assistance and regulatory guidance.
    We plan to work with our stakeholders to develop a network of
institutions that can provide technical assistance to the food industry
(including the farming community), especially small and very small
businesses, as they endeavor to comply with the provisions of the final
rules.
    FDA intends to further facilitate compliance with the final rules
through the development and dissemination of guidance, in multiple
languages.
    Additionally, FDA staff will continue engaging in various outreach
efforts including listening sessions, webinars, teleconferences, and
presentations as these provide the agency with an immeasurable
opportunity to hear feedback from its various stakeholders.
    FDA has requested $27 million and 21 FTEs in the fiscal year 2014
President's budget for the development of science-based standards and
guidance documents that support industry adoption of preventive
controls for food processing and produce safety standards, as well as
to provide training and outreach to regulatory partners and industry on
these new FSMA standards.
                                 ______

                Questions Submitted by Senator Roy Blunt
    Question. Commissioner Hamburg, in addition to providing incentives
for innovation, the Biologics Price Competition and Innovation Act was
intended to expand access and lower the cost of life-saving and life-
improving medicines.
    How is the FDA progressing on implementing the pathway?
    Answer. FDA continues to develop rigorous scientific standards to
ensure that all biosimilar and interchangeable products meet these
statutory requirements, and thus will be safe and effective. Some of
this effort is reflected in three draft guidances FDA issued in 2012
that provide FDA's scientific recommendations on demonstrating
biosimilarity, and we have begun developing guidance on additional key
scientific issues as well. FDA is actively engaging with sponsors
interested in developing biosimilar products to ensure that the
development programs will provide the necessary scientific evidence to
meet the statutory requirements for biosimilarity. Healthcare
professionals and consumers can be assured that FDA will require
licensed biosimilar biological products to meet the Agency's exacting
standards of safety and efficacy.
    Question. Have applications been filed or other significant actions
taken by potential applicants?
    Answer. To date, FDA has not received an application for a proposed
biosimilar product. The Center for Drug Evaluation and Research (CDER)
continues to meet with sponsors interested in developing biosimilar
products. As of May 21, 2013, CDER has received 56 requests for initial
meetings to discuss development programs involving 12 different
reference products and has held 38 initial meetings with sponsors. Many
biosimilar development programs that have had an initial advisory
meeting with CDER have moved into the development phase and are
requesting biosimilar product development (BPD) meetings. CDER is
actively engaging with these sponsors, including holding BPD meetings
and providing written advice, for ongoing development programs for
proposed biosimilar products. To date, CDER has received 17
Investigational New Drugs (INDs) for biosimilar development programs,
but several additional development programs are proceeding under a pre-
IND.
    Question. As to the naming of biosimilars, it is my understanding
that the FDA in 2006 issued a statement in support of the international
naming regime. Is that still the policy position of the FDA? If not,
please explain what has changed and why?
    Answer. FDA is currently considering the appropriate naming
convention for biosimilar and interchangeable products licensed under
the pathway established by the Biologics Price Competition and
Innovation Act of 2009 (BPCI Act) enacted as part of the Affordable
Care Act. FDA is carefully reviewing and considering the comments
submitted to FDA's biosimilar guidance and public hearing dockets. We
will take into consideration all received comments as we move forward
in finalizing the guidance documents and developing future policies
regarding biosimilar products and interchangeable products.
                                 ______

             Questions Submitted by Senator Mitch McConnell
    Question. In my home State of Kentucky, prescription drug abuse is
responsible for about 100 drug overdose deaths a month. I have received
letters from law enforcement and public health officials expressing
their concern with the effects this epidemic is having throughout my
State. In light of these grave statistics, I would appreciate answers
to my questions regarding FDA's recent activity to prevent further
misuse and abuse of prescription drugs. FDA has informed Members of
Congress that it has the authority under the Federal Food, Drug, and
Cosmetic Act to require that generic versions of an innovator drug with
abuse-deterrent features also include similar features as a condition
of approval. In addition, FDA has stated it has the authority ``to
initiate procedures to withdraw non-abuse-deterrent versions already on
the market.'' When and how will FDA act on this acknowledged authority
to require non-abuse-deterrent drugs to be withdrawn from market?
    Answer. If FDA concludes that an extended-release opioid drug
product has abuse-deterrent properties, it has authority under the
Federal Food, Drug, and Cosmetic Act (FD&C Act) to require generic
versions of that product to also have abuse-deterrent properties. FDA
recently approved labeling regarding the abuse-deterrent properties of
one product, OxyContin (oxycodone hydrochloride) controlled-release
tablets, and determined that a previous formulation of OxyContin was
withdrawn for safety and effectiveness reasons, thus precluding
approval of a generic version of the previous formulation. Because
there were no approved generic versions of the previous formulation,
there was no need for a withdrawal. FDA will continue to review other
purportedly abuse-deterrent opioid drug products on a case-by-case
basis and will take regulatory action regarding each product as
appropriate.
    Question. FDA's new drug product exclusivity regulations (21 U.S.C.
355(c)(3)(E)(iii)) prohibit the approval of an abbreviated new drug
application (ANDA) for 3 years if certain criteria are met. While
abuse-deterrent products are an important piece of prescription drug
abuse prevention, providing access to lower cost, generic abuse-
deterrent drugs is important for legitimate users. Does a new drug
product applicant need to apply for additional exclusivity, or does FDA
make the exclusivity determination regardless of the applicant's
request?
    Answer. FDA determines whether any of the available exclusivity
periods under the FD&C Act applies to a given drug product at or after
the time of approval of a new drug application (NDA). An NDA applicant
is not required to specifically request exclusivity.
    Question. Beyond Fast Track and Priority Review status, how does
FDA plan to incentivize the development of generic and innovator abuse-
deterrent formulations?
    Answer. FDA is working in variety of ways to incentivize the
development of abuse-deterrent formulations of drugs with the potential
for abuse, with a focus on opioids. First, as called for in FDASIA
section 1139 and in the Office of the National Drug Control Policy
National Plan on Prescription Drug Abuse, we published a draft guidance
entitled Abuse-Deterrent Opioids: Evaluation and Labeling, in January
2013. In it, in addition to laying out the studies and analysis the FDA
is looking at when we consider new formulations for their effects to
reduce abuse, we also included FDA's current thinking on how we will
reflect those data in labeling. The goal of this last activity is to
incentivize the development of new formulations of opioids that we
determine to be abuse-deterrent, by including a clear description of
their effects on abuse in labeling. To further this work, we are
participating in a public meeting in the Fall to discuss the draft
Guidance and solicit scientific input on improving it. We know that
there is broad interest in the development of generic drugs with abuse-
deterrent properties, and we are working internally on the science
needed to give guidance on how we will evaluate those products. We also
intend to discuss generics at the meeting in the fall. Finally, the
FD&C Act also provides for certain periods of marketing exclusivity if
the applicable criteria are met.
    Question. What process and timeline will FDA use to make
determinations on other innovator products on the market as to whether
or not they meet the definition of abuse-deterrent and warrant a label
change?
    Answer. FDA plans to make determinations regarding other
potentially abuse-deterrent opioid drug products as promptly as
possible using our standard review processes. For a labeling change,
for instance, a sponsor will normally submit an application to request
approval of labeling describing a product's abuse-deterrent properties
and FDA would notify them in a letter whether their proposed labeling
language is approved once our review and decisionmaking is completed.
    Question. How will these guidelines apply to generics seeking to
come to market with abuse-deterrent features?
    Answer. FDA has not published any guidelines regarding generic
versions of opioid products with abuse-deterrent features. As stated
previously, if FDA determines that an extended-release opioid drug
product has abuse-deterrent properties, it has authority under the FD&C
Act to require generic versions of that product to also have abuse-
deterrent properties.
    Question. How does FDA plan on monitoring the marketing of new
abuse-deterrent products to ensure that unintended consequences of
aggressive marketing tactics do not occur due to a label change?
    Answer. FDA will monitor drug marketing practices with that concern
in mind. FDA will apply the standards applicable to promotional claims
concerning any prescription drug; that is, among other things, all such
claims must be truthful and not misleading. 21 U.S.C. 352(a) and (n).
                                 ______

            Questions Submitted by Senator Susan M. Collins
    Question. Dr. Hamburg, I am pleased that the FDA issued the final
guidance in November 2012 for the development of artificial pancreas
systems. As you know, many of my colleagues and I are very interested
in seeing that these potentially life-changing systems are made
available to patients as soon as possible, with proper consideration
given to safety and effectiveness. In development across the country
but not yet approved by the FDA, these systems have the potential to
address the serious problem of blood glucose control that exists for
many people with type 1 diabetes using current treatments. Artificial
pancreas systems could also save taxpayer dollars--a recent study found
that Medicare could save almost $1 billion over 25 years with the use
of this technology in adults. The FDA's official guidance is an
important stepping stone in accelerating the development of the
technology, as it provides the FDA's general expectations for
conducting human outpatient clinical trials and for marketing approval
of the devices. Dr. Hamburg, could you tell me how the FDA plans to
support this momentum when new submissions for clinical trials or
product approval are brought to you so that these innovative systems
can be tested without delay and made available to those with type 1
diabetes in the near future?
    Answer. We believe that the development of an Artificial Pancreas
(AP) is within technological reach and have assigned significant
resources to facilitate such development. At the beginning of 2012, we
streamlined the AP application review structure. This has resulted in
quicker reviews of investigational protocols and premarket submissions.
Among those, we have approved several outpatient studies in adults and
a diabetes camp study in children.
    We co-sponsored a public workshop with the National Institutes of
Health (NIH) and Juvenile Diabetes Research Foundation (JDRF) in March
2013. The workshop initiated a multidisciplinary discussion which will
help to accelerate the development and delivery of an AP. We continue
to pursue outreach efforts with researchers, clinicians, policymakers,
manufacturers and patient advocates to help clarify expectations, and
to help solve challenges as they arise. This collaborative effort is
helping the FDA to make more rapid decisions on studies and will help
to ensure that patients will receive these technologies as soon as
possible. We look forward to working together with the diabetes
community to advance quickly towards an approved AP.
    Question. I also would like to inquire about the rules recently
published for public comment by the FDA under the Food Safety
Modernization Act. The proposed rule governing standards for produce
safety includes most fruits or vegetables while they are in their raw
or natural (unprocessed) state. Apple growers in Maine are concerned
that some of the new requirements might be overly burdensome and
expensive to implement. They also question the inclusion of apples in
the rule since apples are not a fruit which has been responsible for
any significant food-borne disease outbreaks in our country. I realize
that the comment period for the rule has been extended, Dr. Hamburg,
and I am interested to hear your comments on this issue.
    Answer. The proposed rule's regulatory approach is aligned with the
FDA Food Safety Modernization Act, which directs the Secretary to set
forth procedures, processes, and practices that the Secretary
determines are reasonably necessary to prevent the introduction of
known or reasonably foreseeable hazards into produce and to provide
reasonable assurances that the produce is not adulterated. As explained
in the proposed rule, we tentatively concluded that an approach that
considers both the risk associated with the commodity and that
associated with the agricultural practices applied to the crop under
the conditions in which it is grown would provide the most appropriate
balance between public health protection, flexibility, and appropriate
management of different levels of risk.
    The Produce Safety rule, as proposed, does not cover produce that
is documented to receive commercial processing that adequately reduces
the presence of microorganisms of public health significance. An
example of commercial processing that meets this requirement is
processing apples into juice in accordance with the Juice HACCP
regulation (21 C.F.R. Part 120). In addition, the types of produce the
Agency proposed to cover have one or more pathways through which they
can become contaminated. FDA is proposing that farmers control only
pathways that are relevant to their crop. For example, generally, water
used for drip or furrow irrigation in apple orchards would not be
subject to the proposed rule's requirements for agricultural water
because the water is unlikely to contact the harvestable portion of the
crop.
    We considered covering only those produce commodities or commodity
groups that had been associated with foodborne illness outbreaks.
Because only a small percentage of outbreaks are both reported and
assigned to a food vehicle, outbreak data may not provide a complete
picture of the commodities upon which we need to focus to minimize
current and future risk of illness.
    Our data show that the patterns of outbreaks associated with
produce commodities change over time. Occasionally a produce commodity
that has not previously been linked to foodborne illness is associated
with an outbreak. For these and other reasons discussed in detail in
the proposed rule, our regulatory approach does not rely solely on a
static list of commodities prepared solely from a history of outbreaks.
In the Produce Safety proposed rule, we explicitly seek comment on our
tentative conclusions related to our proposed regulatory approach. FDA
will reach its final conclusions on this issue after considering
comments received. The comment period for the proposed rule closes on
September 16, 2013.
    Question. I would like to ask for your thoughts on a topic that has
received a great deal of news coverage in recent years and one that is
of much interest to many of my constituents, which is the issue of
antimicrobial resistance. I have been working with Senator Gillibrand
on legislation that, among other things, would call for the FDA to
conduct a pilot study to better determine relationships between sales
and use data of food animal drugs, and trends in antimicrobial
resistance. As you know, each year the FDA's Center for Veterinary
Medicine publishes sales data on the total volume of antibiotics used
in the United States in food animals. Section 105 of the Animal Drug
User Fee Act of 2008 requires antimicrobial drug sponsors to annually
report not only the amount of antimicrobial active ingredient in the
drugs they sold or distributed for use in food-producing animals, but
also requires animal drug sponsors to list the target animal and
production class specified on the approved labels of the products. The
summary data that the FDA publishes each year, however, reports only
total sales volume. Is FDA able to provide more specificity in this
summary data in future reports, to include target animal species and
production class, since this data is already required to be reported?
    Answer. On July 27, 2012, FDA published an Advance Notice of
Proposed Rulemaking (ANPRM) to solicit comments from the public on
possible enhancements to the existing requirements related to the
collection of antimicrobial drug sales and distribution data. The ANPRM
also solicited input on alternative methods for monitoring
antimicrobial use in food-producing animals.
    Based on comments received, FDA is currently developing
enhancements to the content and format of its annual summary report on
the sale and distribution of antimicrobial drugs intended for use in
food-producing animals. These enhancements would be consistent with
current requirements. For example, FDA is exploring alternative
approaches for reporting the data it currently receives. This includes
approaches suggested in comments submitted in response to the July 2012
ANPRM, including presenting the data by dosage form, medical
importance, and marketing status (i.e., over-the-counter drugs,
prescription drugs, or the Veterinary Feed Directive Guidance). FDA
expects to use such an enhanced format when it summarizes the data
reported for 2012.
    FDA also expects to utilize the rulemaking process to enhance
existing requirements related to the collection of drug sales and
distribution data. For example, FDA is examining the feasibility of
establishing requirements for obtaining estimates of sales broken down
by animal species. Currently, sales data is not required to be reported
by target animal species.
    To supplement the sales/distribution data that it already receives,
FDA is also exploring possible mechanisms for collecting additional
information that would be more reflective of what antimicrobial drugs
are actually being used in food-producing animals, including
information that could be used to correlate drug use practices with
trends in antimicrobial resistance.
    Question. Are you able to provide the Committee an idea of when the
final version of Guidance for Industry No. 213 might be published?
    Answer. A final version of Guidance for Industry No. 213 is
currently undergoing review and clearance. Although FDA does not have a
specific timeline, publication of final Guidance for Industry No. 213
remains a top Agency priority for 2013.
                                 ______

             Questions Submitted by Senator Lamar Alexander
    Question. The budget for FDA includes an unprecedented amount of
funds from industry user fees. Just last year, we established a new
generic drug user fee program to help get more of these products to
patients more quickly. However, I have heard from a constituent that
the generic drug establishment fee would put them out of business, and
they had no time or idea they needed to plan for the over $170,000 bill
they received in March.
    How can we work together to make sure that all parties that will be
affected are involved in the user fee negotiations, and how can we
ensure that in the first year of new user fee programs that adjustments
can be made as necessary to protect small businesses from unintended
consequences?
    Answer. FDA engaged in significant public outreach, including
convening a number of public meetings with industry and other
stakeholders, to discuss GDUFA and the progress of negotiations.
    A fee waiver was considered during negotiations and rejected
because it would have diminished the number of companies required to
pay the fees which, in turn, would have raised the fees for the fee-
paying companies. Unlike brand manufacturers, the majority of generic
companies are small businesses.
    Furthermore, an exemption would have added to the administrative
cost of the program by requiring additional staff to determine which
companies met the exemption and handle disputes. This would have
diverted user fee funds away from activities in support of meeting the
goals contained in the user fee agreement, or would have required
higher fees to accommodate the increased administrative complexity.
    Small and large generic companies alike are expected to benefit
significantly from reductions in the review time needed to
commercialize their products and from the certainty associated with
GDUFA performance review metrics and program efficiencies.
    FDA does not have the current authority to create a fee waiver or
reduction provision for small businesses.
    During the next round of generic drug user fee negotiations, FDA
will again invite industry trade associations to participate in
negotiations and hold open public meetings to provide a forum for
industry, and other stakeholder input. All interested parties are
encouraged to provide input.
    Question. In 2009, Congress passed the President enacted the Family
Smoking Prevention and Tobacco Control Act, providing FDA broad
authority to regulate tobacco products. I have a few questions on the
implementation of this law.
    How did your department adjust and align FDA's new authority with
the authority of other HHS agencies to reduce duplicative programs and
target resources?
    Answer. FDA's responsibility with respect to tobacco control
activities is to protect the public health by regulating the
manufacture, distribution, and marketing of tobacco products, and
educating Americans, especially young people, about tobacco products
and their dangers. FDA works closely with other Federal public health
agencies to ensure the various tobacco programs are coordinated and are
not duplicative.
    The Tobacco Control Act authorizes FDA to collect quarterly fees
from the tobacco industry. These fees are to be available only for the
purposes of paying the costs of activities that support the regulatory
mission of FDA-related to tobacco products. Furthermore, the Tobacco
Control Act specifies that these tobacco user fees are the only funds
authorized to be made available for FDA's tobacco regulation including
research, compliance and enforcement, and science-based public
education campaigns addressing the dangers of tobacco use.
    FDA has put a comprehensive financial stewardship plan in place to
ensure that tobacco user fees only support its regulatory activities.
Although many agencies and offices in HHS, including FDA, are working
together to address the significant public health concerns created by
the use of tobacco products, FDA does not, for example, provide direct
cessation services or engage in community-based tobacco prevention
activities, as some other HHS agencies do.
    Question. It is my understanding that there hasn't been a single
product approved under this new law. Innovation will be necessary to
reduce harm and give people who can't quit less risky alternatives. FDA
focuses a lot on innovation, and how does that focus relate to the
concept of tobacco-related harm reduction?
    Answer. To date, FDA has not received any new tobacco product
applications and none of the modified risk tobacco product applications
it has received have been accepted for filing. However, FDA has
received over 3,000 ``provisional'' substantial equivalence (SE)
reports for tobacco products introduced into interstate commerce
between February 15, 2007, and March 22, 2011, for which a report was
submitted prior to March 23, 2011. These provisional products can
remain on the market unless FDA finds that they are ``not substantially
equivalent.'' FDA has also received more than 500 ``regular'' SE
reports for new products that manufacturers intend to introduce to
market.
    FDA reviews all SE reports as expeditiously as possible and will
continue to do so; however, FDA has observed deficiencies in nearly all
initial SE reports reviewed to date from different tobacco product
manufacturers. As the quality of reports improves and FDA gains more
experience reviewing them, FDA expects both the review times and the
backlog to decrease.
    With respect to innovation, tobacco companies have recently
introduced newer forms of tobacco products. FDA is funding research to
better understand these newer products with regard to their relative
risks compared to other tobacco products. It is critically important to
evaluate these products not only in terms of the relative health risks
to individuals, but also to consider the likelihood that nonusers will
start using the product, users who would otherwise stop using tobacco
products will switch to the new product, tobacco users may use the new
tobacco products in combination with other products, and former users
will begin using the new product.
    The Modified Risk Tobacco Product provisions of the Tobacco Control
Act may be valuable tools in the effort to protect public health by
reducing the morbidity and mortality associated with tobacco use,
particularly if tobacco product manufacturers can adequately
demonstrate that product changes will substantially reduce, or even
eliminate altogether, either the toxicity or addictiveness of tobacco
products, or both.
    FDA is also funding research on reduced nicotine cigarettes,
smokeless tobacco products, and the diversity of tobacco products
including new and emerging tobacco products to inform the advancement
of harm reduction at both the individual and population level.
                                 ______

              Questions Submitted by Senator Daniel Coats
    Question. Medical device manufactures, while supportive of unique
device identifiers (UDIs), remain concerned regarding implementation of
the Proposed UDI Rule. These concerns include the FDA requirement that
UDIs be applied to products in their existing inventory, as well as the
requirement that UDIs be applied directly onto each implantable
product, otherwise known as Direct Part Marking (DPM). Many medical
devices have a significant shelf life allowing for products to remain
in inventory for longer periods of time. Additionally, some segments of
the medical device industry utilize the consignment model, meaning that
devices remain under company control and are not sold to the customer
until they are used or implanted. This method is used to ensure
patients have the most appropriate options. Should the Proposed UDI
Rule apply to these products, device manufacturers would be forced to
recall each device to apply a UDI, potentially interrupting patient
care. Additionally, because the UDI should already be in the patient
record at the time of implantation, there doesn't seem to be any
additional utility to place it directly on an implantable device.
    Please describe what steps the FDA is taking to consider the
effects this UDI rule may have on patient quality and choice, as well
as the burden placed upon medical device manufacturers and customers.
    Answer. FDA has reviewed the comments submitted to the UDI proposed
rule--including a significant number that addressed the existing
inventory issue and the direct marking requirement for implants.
Although FDA cannot discuss how it will address these comments while
the rule remains in clearance, we wish to assure you that we take these
concerns very seriously and note that FDA's goal is not to require
device manufacturers to recall or re-label already finished medical
devices. Requiring manufacturers to mark medical devices with unique
identifiers will improve postmarket surveillance and patient safety.
Device tracking will ensure more efficient device recalls by assisting
manufacturers, providers, hospitals and patients with quicker
identification and remediation of faulty devices. We believe that the
final rule appropriately strikes a balance between the needs of
patients, clinicians, the healthcare system, and FDA--and the concerns
of the medical device industry.
    In addition, FDA is taking a number of steps to ensure that the UDI
will support patient safety, quality and choice. FDA's Global Unique
Device Identification Database (GUDID), which will contain a robust set
of data for every device marked with a UDI, will be publicly available
and will allow patients and clinicians to search for the appropriate
device. In addition to our work with the medical device industry FDA is
also working with numerous stakeholders, including the Brookings
Institution, National Coordinator for Health Information Technology
(ONC), Centers for Medicare and Medicaid Services (CMS), private
payers, solution providers, hospitals and Integrated Delivery Networks
(IDNS) on the adoption and implementation of UDI throughout the
healthcare system and the lifecycle of medical devices.

                          SUBCOMMITTEE RECESS

    Senator Pryor. This subcommittee will meet again on
Thursday, May 9 at 10 a.m. in this room, where we will have
testimony from Secretary Vilsack regarding USDA fiscal year
2014 budget.
    Again, I want to thank everyone for being here, and this
hearing is recessed.
    Dr. Hamburg. Thank you.
    [Whereupon, at 11:46 a.m., Thursday, April 18, the
subcommittee was recessed, to reconvene at 10 a.m., Thursday,
May 9.]

 
   AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION, AND
          RELATED AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2014

                              ----------


                         THURSDAY, MAY 9, 2013

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 10:40 a.m., in room SD-124, Dirksen
Senate Office Building, Hon. Mark L. Pryor (chairman)
presiding.
    Present: Senators Pryor, Johnson, Tester, Udall, Merkley,
Blunt, Cochran, Moran, and Hoeven.

                       DEPARTMENT OF AGRICULTURE

                        Office of the Secretary

STATEMENT OF HON. THOMAS J. VILSACK, SECRETARY
ACCOMPANIED BY MICHAEL YOUNG, BUDGET OFFICER

               OPENING STATEMENT OF SENATOR MARK L. PRYOR

    Senator Pryor. We'll go ahead and call this hearing to
order. I want to thank everyone for coming and being here
today.
    We have two panels today. The first will be Secretary Tom
Vilsack, who will be accompanied by Mike Young, the Chief
Budget Officer. I'd like to welcome you both and say thank you
for being here, and we appreciate hearing from you today.
    Secretary Vilsack, we've visited many times and a few times
even since I have become the chairman of the subcommittee. And
I think that we've been able to accomplish some really good
things together. And I look forward to continue working with
you on all manner of things that relate to your Department and
very important policies that you have to deal with in these
very challenging times. So I look forward to doing that with
you and thank you again for being here.
    And on the second panel, we'll hear from the USDA Inspector
General Phyllis Fong. We appreciate her being here, and we look
forward to hearing from her as well.
    And there's an old saying that a person with food has many
problems, but a person with no food has only one problem. I
think that that really sums up the importance of USDA and
highlights the reason it's referred to as the people's
Department.
    American farmers not only feed this country but they feed
people around the world. The challenges facing America's
farmers, however, are rapidly growing and changing. When USDA
was established by President Lincoln in 1862, almost one-half
of the U.S. population lived on farms. Today, it's about 2
percent. Yet, the world's demand for food and feed and fiber
continues to increase, and it is expected to double by the year
2050.
    Our population at that point supposedly is going to be
about 9 billion people. So the farmers have to produce more and
do more with less. They're going to have less land. There's
going to be greater competition for bioenergy and other uses of
agricultural products. There's going to be a laser-focus on
stewardship of the land and, unfortunately, increasingly
unpredictable weather patterns.
    And I have no doubt that America's producers will rise to
the occasion. They're working harder and smarter than ever
before. There's a reason why Thomas Jefferson called
agriculture science of the very highest order.
    And I know in a few moments, Secretary Vilsack is going to
want to talk to some about research and innovation and the
science involved in what he does. And at this moment in time,
America's investment in agriculture is clearly paying off.
    Adjusted for inflation, 2013 net farm income is expected to
be the highest since 1973. The United States has exported $478
billion worth of agricultural products over the last 4 years.
    In Arkansas, for example, agriculture is our number one
industry. It's going to be either number one or, in some
States, number two, but always in the top three in every single
State of the most important industries in that State.
    Our farmers produce more than 50 percent of U.S. rice.
We're also number two in poultry and eggs. We have over 49,000
farms. We have a big timber presence. We have a very diverse
portfolio in Arkansas, as most members here on the subcommittee
do.
    And so agriculture is a big deal in our States, and it's
something that we want to do well. But the challenges remain.
The USDA must do everything it can to continue to support
farmers and rural America, because their hard work supports all
of us.
    So let's take a look at USDA budget for 2014. Overall, the
funding is less than that of 1 year ago. And within that total,
there's a $100 million increase for Rural Development, Rental
Assistance Grant. There's an increase for Farm Service
agencies. There's an increase for competitive research and the
Women, Infants, and Children (WIC) program.
    However, the downside would be that we're seeing some
decreases in water and waste grants. There's approximately $500
million less to make loans for single-family homes. The Public
Law 480 program, which has fed more than 3 billion people in a
150 countries since its inception in 1954 is dismantled in this
budget.
    There's, obviously, much more in the budget than these few
points I mentioned, and I look forward to hearing from the
Secretary and all of the Senators and others about what we're
going to go into here in this hearing.
    So I hope that we'll discuss the impact of the sequester. I
know that's something that the Secretary is vitally interested
in. And I share the view that I think most do, that the
sequester is a very imprecise, not very smart way to do this.
We need to be more targeted and smarter about how we do our
cuts. But nonetheless, that's where we are today.
    So we have a lot to cover, and I want to cut my comments
short here and go ahead and recognize Senator Blunt for his
great work and recognize him for his opening statement.

                     STATEMENT OF SENATOR ROY BLUNT

    Senator Blunt. Thank you, Chairman. I'm very pleased to be
on this subcommittee and pleased to be serving with you,
looking forward to your leadership of the subcommittee.
    This is, actually, the second hearing we've done since
Chairman Pryor took over the chief responsibility for this
subcommittee, and we have worked together on other things
before. And I look forward, certainly, to working with him and
the other members of the subcommittee to do what needs to be
done and to do our best to get what needs to get done
accomplished in the right way.
    Secretary Vilsack, Mr. Young, we're certainly glad that
you're here today. I might have a couple of other comments
before we get to the second panel. But I think I'll just
restrict my comments right now to the overall view of what I
think we need to be thinking about.
    Certainly, as the chairman has already said, agriculture
plays a critical role in our country. It's been an unbelievably
competitive industry in exports as well as feeding the American
people.
    In Missouri, agriculture is always considered the number
one driver of our economy. And in every State, agriculture is
high on the list of things that make the economies of those
States work.
    Challenges are out there. Last year, about 80 percent of
agricultural land across America experienced drought. It was
the most extensive drought since the 1950s. All 114 Missouri
counties were declared a disaster area because of that drought,
and many of them with such dry conditions that they ranked
among the worst in the country.
    The effects of the drought had been far-reaching,
particularly on the livestock industry, which is important in
all of our States. And there's not the kind of robust risk
management program in livestock like there is in crop
insurance, particularly with the expiration of the livestock
disaster program in 2011. These producers really haven't had a
safety net to rely on for almost 2 years.
    As a result, there has been a lot of liquidation of herds
resulting in the lowest number of U.S. cattle since 1952.
Missouri's cattle herd declined by 300,000 last year. And of
course, that has lots of far-reaching consequences whenever
young cows are sold off and don't become part of the
replenishing crop of cattle and livestock.
    I've introduced legislation that would extend the livestock
disaster programs so that these producers receive some
assistance. I hope we're able to discuss that today and after
today.
    We all know the size of Government has grown beyond its
means, which is why we have to prioritize what we do. The
President actually proposed a budget that is lower than the
fiscal year 2013 funding levels for the U.S. Department of
Agriculture. Most of this reduction, however, was a result of
the administration's proposal to shift about $1.5 billion in
funding for the Food for Peace Program to the accounts that
would be administered differently than Food for Peace under
State and Foreign Ops.
    I actually think Food for Peace has been a cornerstone of
America's humanitarian assistance since the mid-1950s. It plays
a vital role in linking the American farmer with the developing
world, and it's the largest and most consistently supported
food and agriculture development assistance program we provide.
I think the polling would indicate it's the most popular of all
the foreign assistance programs.
    I have what I believe to be a legitimate concern that the
proposed changes are shortsighted. I hope we continue with Food
for Peace and a more traditional view of Food for Peace. And
I'm sure we can talk about that today, as well.
    If you actually put Food for Peace back in the USDA budget,
it's a little higher. There's a net increase over last year,
and I would think that would be the right thing to see happen
here.
    So I'm looking forward to your testimony. We look forward
to the chance to ask questions and work with the Department,
both in research and management. The fact that USDA has been
able to work with the line-by-line budget changes without
having to furlough employees says a lot about your management,
Mr. Secretary. And, again, I'm glad you're here and grateful to
the chairman for leading this discussion in this hearing today.
    Senator Pryor. Thank you, Senator Blunt.
    And would anybody else would like make an opening
statement?

                    STATEMENT OF SENATOR TIM JOHNSON

    Senator Johnson. Mr. Chairman, I'm pleased to join you in
welcoming the distinguished Secretary to our hearing, and I ask
unanimous consent the balance of my remarks be printed in the
record.
    [The referenced statement was not available at press time.]
    Senator Pryor. Without objection. Thank you.
    Thank you all for being here, and we'll put everyone's
statements in the record.
    Secretary Vilsack, welcome to the subcommittee. We're glad
to have you here and look forward to hearing from your
testimony.

              SUMMARY STATEMENT OF HON. THOMAS J. VILSACK

    Secretary Vilsack. Mr. Chairman, thank you very much. And I
appreciate your comments, as well as Senator Blunt's comments.
    I appreciate the opportunity to be here this morning. And
first of all, I probably should thank you and Senator Blunt and
the members of this subcommittee for your assistance and help
on the food inspection issue, which was critically of concern
to us. And you all helped us get through that process, and I
want to thank you for that.
    Budgets are very difficult and challenging work, especially
in this environment. You're balancing the need to expand
economic opportunity and to help America's farmers and ranchers
at the same time we're dealing with constrained budgets.
    I'd like to talk to you for just a few minutes about this
budget and then be happy to answer questions.
    Let me point out that, currently, we are working with a
budget in 2013, and this would also be true if our budget were
passed in 2014, that will be below the discretionary budget
authority that I had when I became Secretary in 2009.
    Currently, we're dealing with a budget that is about $1
billion below where it was in 2009 in terms of our
discretionary authority. We're also taking a look at a reduced
workforce, roughly 8,000 fewer workers at USDA than when I
became Secretary.
    But the level of service that's being provided by those at
USDA continues to be at record levels. In fact, you can take a
look at agricultural exports, you can look at conservation, you
can look at the Farm Service loan portfolio, or Rural
Development's loan portfolio, and what you will see is at or
near or exceeding record levels of activity.
    So, essentially, what we're proposing is a continuation of
our effort to try to rebuild the rural economy and to continue
to provide assistance and help to the greatest farmers,
ranchers, and producers in the world.
    Let me specifically tell you what this budget does. It
continues to allow the extension of credit to 134,000 producers
in this country with a focus on beginning farmers and ranchers.
It makes a strong commitment to a strong safety net, $9.6
billion in crop insurance assistance. And, as Senator Blunt has
suggested, it also provides for a reinstatement of the Disaster
Assistance Programs that were discontinued in 2011 that are so
vital to our livestock and dairy industry.
    It aggressively continues our effort to promote trade.
Mention was made of the fact that we're now at historic levels
in terms of agricultural trade. We want to continue to promote
trade around the world, and we want to continue to reduce
sanitary and phytosanitary barriers that are being constructed
that are not science-based and not rules-based.
    This budget supports a fair and transparent market system.
It continues our efforts to protect our crops and plants and
animals from deadly pests and diseases and, specifically,
proposes a $20 million initiative reducing feral swine.
    It modernizes our research facilities, especially a poultry
facility, which we are suggesting needs to be modernized and
built in Georgia.
    It significantly increases our commitment to agricultural
innovation. The reality is that we have flat-lined research for
far too long in this country in terms of agriculture. And if we
continue along that trend, we'll see a decline in productivity
at a time when we need to continue to increase agricultural
productivity.
    This budget simplifies our conservation programs but will
add 26.3 million acres to our record number of acres enrolled
in conservation, and will help 80,000 farmers and producers do
a better job of conserving the land and the water.
    It will continue to support all levels and all types of
agricultural production, including organic production, a
rapidly growing and expanding area of agriculture. And it will
continue our commitment to improving technology in our Farm
Service Agency offices through the MIDAS program. We anticipate
and expect this year we'll begin to see significant positive
movement in MIDAS with a completion in 2014.
    For those who are looking to expand economic opportunity in
rural America, this budget commits nearly $1 billion to support
small-business development and expansion, with particular
emphasis on clean and renewable energy opportunities, bio-based
manufacturing, and local and regional food systems.
    It commits nearly $7 billion to improving utility services,
providing cleaner water, expanding renewable energy
opportunities, as well as broadband, the basic infrastructure
for rural America. It will support 1,700 community facility
improvements and will make homeownership a possibility for
174,000 rural families.
    This budget also focuses on our efforts to renew our
forests and provide our working lands with a greater resilience
to a changing climate. It protects our families through
improved food safety. It supports our efforts to provide
nutritious food to all Americans, particularly those in need
and particularly our children. It focuses and proposes a
significant opportunity to extend dietary guidelines for
children 0-2. And it increases and improves significantly our
SNAP integrity efforts.
    Finally, I would say that we're also cognizant of the need
for us to contribute to deficit reduction. This budget
basically identifies $39 billion over a 10-year period in
deficit reduction. There are issues relating to crop insurance
and conservation at water projects that this subcommittee may
want to talk about. But I'd like to specifically talk about two
briefly.
    One is that we are not providing additional funding for
payments to Brazil, the cotton dispute that emanated from a WTO
ruling. We've been paying about $140 million a year for the
last several years. It is important and, I think, necessary
that we get a 5-year farm program to solve this Brazilian
cotton problem, so that we stop paying the Brazilians.
    Mention has been made of the food aid issue. I'm sure that
we'll talk about that further, but I do need to point out that
what is being proposed will allow us to feed 4 million more
people, probably shaves somewhere between 11 and 14 weeks off
getting aid to folks but still provide opportunities for the
purchase and utilization of American agriculture. At least 55
percent of the money will be spent with American agriculture.
    So I look forward to the opportunities. I'll just leave you
with two interesting statistics that I think speak to the
challenge that we face in rural America. Thirty-two thousand
farm families--32,000 farm families--are responsible for 50
percent of the agricultural production in this country. And
that suggests and speaks that there's just been extraordinary
increases in productivity and efficiency.
    The problem with that, obviously, is that we, obviously,
have fewer farmers today than we've had in some time. And that
has reflected itself in a statistic that, for the first time,
we've actually had a decline in rural population.
    So I think the challenge for all of us in this area is to
continue to figure out ways in which we can complement American
agriculture and productivity to be able to provide
opportunities for young people to live, work, and raise their
families in rural communities.

                           PREPARED STATEMENT

    I believe this budget basically lays a strong foundation
for doing that, and I look forward to answering the questions
the subcommittee has.
    Thank you, Mr. Chairman.
    [The statement follows:]
              Prepared Statement of Hon. Thomas J. Vilsack
    Mr. Chairman and distinguished members of this subcommittee, I
appreciate the opportunity to appear before you to discuss the
administration's priorities for the Department of Agriculture (USDA)
and provide you an overview of the President's 2014 budget. I am joined
today by Joseph Glauber, USDA's Chief Economist, and Michael Young,
USDA's Budget Officer.
    The USDA under President Obama's leadership has taken significant
steps to strengthen the rural economy and provide a foundation for
continued growth and prosperity. These efforts have had a significant
impact in rural America, where the seasonally adjusted unemployment
rate fell to 7.7 percent for the third quarter of fiscal year 2012--
down from a peak of 9.5 percent in late 2009. In particular,
agriculture remains a bright spot in our economy. The resilience of
American farmers and ranchers has helped to support 1-in-12 U.S. jobs.
Net farm income remains strong, and the farm debt-to-asset ratio is at
a record low today. Fueled by new trade agreements with Panama,
Colombia, and South Korea, American agricultural exports are surging--
with more than $478 billion in exports over the last 4 years. Our
farmers and ranchers achieved these results even in the face of the
worst drought in generations, and the uncertainty posed by the lack of
a comprehensive, multi-year food, farm and jobs bill. Challenges still
remain for agriculture--especially for America's livestock and dairy
producers, who continue to struggle today with low margins and high
input costs.
    With the passage of the Consolidated and Further Continuing
Appropriations Act, 2013, we appreciate that Congress provided the
funding necessary to avoid a costly and disruptive nationwide shutdown
of meat and poultry plants. Congress also enabled USDA to continue
providing nutrition assistance, education and other services to improve
the nutritional status and health of the total 8.9 million low-income
women and children estimated to participate in the Special Supplemental
Nutrition Program for Women, Infants, and Children (WIC). However, the
act not only continued the across-the-board reduction for most programs
as required by sequestration, it added on two separate across-the-board
rescissions for agriculture programs. As a result of these actions, the
Department's total discretionary operating budget for 2013 has been
reduced by over $570 million below the 2012 enacted level and over $1
billion below fiscal year 2009.
    These reductions in USDA's operating budget come at a time when our
staff are doing more work than ever before. Over the past decade,
USDA's agencies have leveraged efficiencies to manage a workload that
has increased due to a greater number and complexity of programs and
higher participation levels, while staff resources to manage that
increased program activity have declined by over 12 percent. For
example, the Risk Management Agency (RMA), Food and Nutrition Service
(FNS), Rural Development (RD), and Farm Service Agency (FSA) have all
seen increases in workload, while staffing has decreased in all of
these agencies during that time. The scope and complexity of USDA
programs reflects the challenge we face to manage taxpayer dollars
effectively and deliver record levels of service.
    I am proud of USDA staff for stepping up and getting the job done.
Over the past 4 years, USDA has achieved record results on behalf of
rural Americans, creating thousands of jobs in the process. We provided
a strong safety net for agricultural producers. We expanded trade
agreements around the world, while breaking down unfair trade barriers
to level the playing field for U.S. producers. USDA enrolled a record
number of acres in conservation programs, while modernizing the ways in
which we manage forest lands. We provided record amounts of credit in
rural America--from farm loans to assistance for rural businesses and
families. USDA strengthened food safety testing to protect Americans
from foodborne illness. We led the way to create a generational change
to improve child nutrition, while helping millions of families put food
on the table. USDA research continues to help feed a growing
population, while generating $20 in economic benefits for every $1
invested.
    Meanwhile, USDA has made a comprehensive effort to achieve
targeted, common-sense efficiencies. Under the Blueprint for Stronger
Service, USDA agencies cut costs and modernized operations to become
more efficient. In the past year, agencies have carried out workforce
reductions, closed offices and laboratories, implemented modern cloud
computing efforts and taken other actions to continue to lower costs.
We have disposed of excess and underutilized property. Agencies reduced
expenses for travel, printing, supplies, and advisory contracts. USDA
has reduced travel spending by more than 42 percent over 2010 levels.
In total, all of those efforts saved taxpayers more than $700 million.
    Despite our best efforts to prepare for additional funding
reductions through prudent practices, such as hiring freezes and
limiting operating costs, we cannot forestall the negative impact of
reduced funding in every area. Our ability to provide oversight and
servicing is likely to be impacted by cuts and we will work hard to
minimize the impact to the extent possible on farmers, ranchers, and
growers while protecting the integrity of the programs.
    While we have achieved significant savings, the reductions
contained within the 2013 full-year continuing resolution will result
in a reduction of some program services. For example, the reduced level
of program funding will mean that rental assistance will not be
available for more than 15,000 very low-income rural residents,
generally elderly, disabled, and single female heads of households, who
live in multi-family housing in rural areas. Our conservation efforts
will suffer as the Natural Resources Conservation Service (NRCS) will
not be able to assist over 3,500 farmers and ranchers in developing
conservation plans, which position them for participating NRCS
conservation programs. Further, conservation benefits will be lost with
fewer conservation plans being implemented as well as fewer
conservation practices being implemented with the assistance of
mandatory programs affected by across-the-board sequester cuts, such as
the Environmental Quality Incentives Program (EQIP). Our State partners
will see a reduction in assistance for pest and disease prevention,
surveillance, and response, potentially leading to more extensive
outbreaks and economic losses to farmers and ranchers. Reductions to
Agriculture and Food Research Initiative (AFRI) and mandatory funded
research programs will result in 200 fewer grants for agricultural
research conducted by both university scientists and private partners
in areas such as bioenergy, organic production, specialty crops, and
beginning farmer and rancher development.
    As outlined above, we have taken steps to deeply reduce USDA's
operating expenses over the past 2 years. The spending cuts enacted for
2013, however, severely limit our ability to deliver critical programs
for the American people. The President's 2014 budget request would put
us back on track to continue the revitalization of rural America, while
achieving targeted reductions.
    In total, the 2014 budget we are proposing before this subcommittee
is $139 billion, of which $121 billion is mandatory funding. The budget
provides mandatory funds to fully support estimated participation
levels for SNAP and Child Nutrition.
    It is my hope that Congress will continue to support our efforts to
strengthen rural America and provide more certainty for American
agriculture by enacting a comprehensive, multi-year food, farm and jobs
bill. The farm bill provides for delivery of critical programs by USDA,
including programs for farm commodity and price support, conservation,
research, nutrition, food safety, and agricultural trade. The next 5-
year farm bill should promote Rural Development, preserve a farm safety
net, enhance conservation, honor our World Trade Organization
commitments, maintain strong nutrition programs, and advance
agricultural research. In light of the Nation's long-term fiscal
challenge, the legislation should also contribute meaningfully to
deficit reduction.
    The 2014 President's budget includes a number of legislative
proposals that produce savings to reduce the deficit, while maintaining
a strong safety net for American agriculture. The proposed legislation
would reduce the deficit by $38 billion over 10 years compared to
current baseline spending. The savings would result from eliminating
direct farm payments, decreasing crop insurance subsidies, and better
targeting conservation funding to high-priority areas. The legislation
also proposes to extend some disaster assistance programs, including
the Livestock Forage Program (LFP), Livestock Indemnity Program (LIP),
for the 2014 through the 2018 crops and provides additional support to
dairy farmers through expansion of the dairy gross margin insurance
program. The administration remains strongly committed to programs that
create jobs, expand markets for existing products, and help develop the
next generation of farmers and ranchers. To accomplish those goals the
budget proposes an additional $1.3 billion in mandatory funding to
strengthen renewable energy capacity in rural America, continue to
create new markets and opportunity for organic agriculture, further
promote specialty crops, and train the next generation of beginning
farmers and ranchers.
    The administration also continues to support SNAP, a cornerstone of
our Nation's food assistance safety net. As the Nation continues to
recover from the worst economic crisis since the Great Depression, SNAP
has provided critical temporary assistance to help families get through
these tough times and back on their feet as soon as possible. While
participation has increased, the rate of this increase has been
declining since January 2010. Both the administration and CBO project
that SNAP participation will peak this year and then begin to fall--
consistent with past economic downturns. Even as the economy recovers,
SNAP will remain a critical support for children, the elderly, and
minimum wage workers, who struggle to afford to put food on the table.
Program benefits are modest--averaging only $134 a month--and are
scheduled to be cut this fall. A temporary increase enacted around the
start of the recession will expire on November 1, leading to an average
cut of approximately $20 per family. The budget once again proposes to
extend the availability of enhanced SNAP benefits through March 31,
2014.
    Although SNAP operates with a high degree of program integrity, any
waste, fraud, or abuse in a program of its size is important to
eliminate. As part of our aggressive actions to ensure integrity, last
year USDA took action to impose sanctions on 692 stores found violating
program rules and to permanently disqualify 1,387 stores for
trafficking in SNAP benefits. SNAP payment accuracy rate is at a record
high of 96.21 percent, and the 2014 budget includes funds to expand
existing SNAP integrity efforts to further reduce payment error,
trafficking and other recipient and retailer concerns. We also propose
funding to enhance integrity efforts in the other major nutrition
assistance programs.
    For discretionary programs of interest to this subcommittee, our
budget proposes $18 billion, approximately $109 million below the 2013
enacted level. That level fully funds expected WIC participation. It
provides the funding needed to meet our responsibility for providing
inspection services to the Nation's meat and poultry establishments.
The budget also includes over $1 billion to renew all outstanding
contracts for rental assistance. It meets the growing demand for farm
credit with sufficient funding to serve over 34,000 producers in 2014
seeking to finance operating expenses, to acquire a farm, or keep an
existing one.
    As I previously mentioned, agricultural research is a proven
investment. It is important to increase our investment in research and
education, which has proven to be a powerful strategy to boost farm
productivity, and has contributed to creation of jobs and enhancing
rural economies. As farmers and ranchers face challenges from more
frequent and more intense extreme weather conditions, we are focused on
providing best practices and workable strategies to adapt to the
changes and mitigate the impact. The budget makes a significant
investment in the AFRI and our laboratory infrastructure. The budget
also requests funding to design and construct facilities to replace the
severely outmoded Southeast Poultry Research Laboratory (SEPRL) in
Athens, Georgia. SEPRL has facilities that were constructed in 1964 and
1976, and whose limitations now prevent critical, cutting edge research
from being conducted. Construction of a new facility will enable ARS
scientists to more adequately address emerging or exotic poultry
diseases that threaten not only the Nation's poultry industry but also
the health of Americans.
    The budget places an emphasis on creating new market opportunities
presented by emerging markets for biofuels and clean energy and the
development of local and regional food systems. The 2014 budget also
replaces a number of existing programs with a new economic development
grant program designed to target small and emerging private businesses
and cooperatives in rural areas with populations of 50,000 or less. The
Rural Business and Cooperative Grants Program will improve the agency's
grant allocation process and will leverage resources to create greater
opportunities to improve regional economies. We will work to expand our
efforts to assist the Nation's farmers and ranchers in taking advantage
of increased consumer demand for locally and regionally produced foods
through on-farm research, support for value-added production, farm-to-
school efforts, and other venues. We will continue our market
development programs and expand foreign market access for U.S.
agricultural exports, including USDA efforts in the Trans-Pacific
Partnership and the newly announced Transatlantic Trade and Investment
Partnership with the European Union. As organic food production
increases and becomes a more critical part of the agriculture balance
sheet, we will expand our efforts to protect the integrity of the
organic label and expand organic opportunities with our trading
partners.
    The budget supports our continuing efforts to help all Americans,
and particularly school children, make the healthy choice the easy
choice. As part of our ongoing efforts to implement the Healthy,
Hunger-Free Kids Act, USDA remains strongly committed to helping States
and local schools as they successfully adapt to new, science-based
nutrition standards in the National School Lunch and School Breakfast
programs, which serve roughly 32 million American children each school
day. Our focus on healthy eating also extends to the American
population as a whole, where we continue to promote the Dietary
Guidelines and MyPlate. Our budget includes additional funding to
support the Department's work to expand the Dietary Guidelines to
include the 0-2 population.
    The President's budget proposal makes tough choices to meet tight
discretionary caps. Our funding request reflects efforts to reduce
administrative costs and streamline operations and proposes to
strengthen program integrity efforts. Funding for selected programs is
reduced or terminated and resources are reallocated to targeted
investments in priority programs and infrastructure to support
sustainable economic growth. Further, discretionary spending is
partially offset through about $1.4 billion of proposed limits on
selected mandatory programs and other adjustments.
    In addition, the budget proposes to replace $1.5 billion in funding
for Public Law 480 title II international food assistance with an
equivalent amount in the U.S. Agency for International Development
assistance accounts, including International Disaster Assistance (IDA).
The proposed reform replaces title II funding with robust levels of
flexible emergency food aid and related development funding that gives
the United States far greater ability to provide aid when, where, and
in the form that it can be most effective. Provided that all the
proposed food aid reforms are enacted, at least 55 percent of the
requested IDA emergency food aid funding will be used for the purchase
and transport of U.S. agricultural commodities.
    Major IT investments will increase program efficiency of our
Service Center Agencies. The 2014 budget provides funding for FSA,
NRCS, and RD to continue the development and operation of improved IT
systems that will allow them to devote more time to working with
customers and reducing paperwork.
    In conclusion, our budget requests the level of funding we need to
provide essential Government services, to build on the progress we have
made over the last 4 years to build a stronger America, and to support
robust farm income and good jobs in rural communities. It provides the
resources we need to effectively deliver the service that Americans
deserve from USDA. Any further reduction in funding for administering
programs would significantly impair our ability to deliver critical
services and would imperil our efforts to manage an increasingly
complex workload with fewer workers.
    Over the course of 2013, I look forward to working with
congressional leaders to ensure we have the resources we need to meet
the demands placed upon us as well as achieve passage of a food, farm
and jobs bill that will allow USDA to continue to provide a strong
safety net, combat poverty, and create even more good jobs in rural
America.
    At this time, I will be glad to answer questions you may have on
our budget proposals.

                         AGRICULTURAL RESEARCH

    Senator Pryor. Thank you, Mr. Secretary. And let me just
start with one of the things I know you're very passionate
about, and that's agricultural research. I know that it's a
priority of yours, and I'd like for you just to talk to the
subcommittee for a moment about why you think that's so
important and how you've prioritized it.
    Secretary Vilsack. I was in Wisconsin 2 days ago at the
Dairy Forage Center. We were talking about dairy cows and
forage.
    In 1950, when I was born, an average dairy cow produced
about 5,500 pounds of milk. Today, the average is 22,000 pounds
of milk. And I was told that there's at least one cow that
produced 72,000 pounds of milk. That is a result directly of
agricultural research and the increased productivity.
    The challenge for us, both in America and across the globe,
is to increase agricultural production over the next 40 years
by the same amount that we have increased it over the preceding
10,000 years in order to be able to meet growing populations.
    The only way we're going to do that is by embracing science
and investing in science. And unfortunately, for far too long,
the agricultural research aspect of our science portfolio
nationally has not received the attention that it deserves. So
this budget does propose an increase in the external
competitive funding.
    We're seeing amazing collaborations between universities,
land-grant universities, historically Black colleges, Hispanic-
serving institutions, and Native American tribal colleges,
extraordinary opportunity for us to expand our knowledge and
coordinate and leverage those resources with the private
sector's investment.
    I'm confident that, if given the tools, American
agriculture will continue to meet the demand. Internally within
our ARS system, we have done a very extensive capital
improvement review in order to prioritize the research and the
facilities. There are, obviously, difficult decisions that will
have to be made concerning some of those facilities. But to the
extent that we can improve facilities, build new facilities,
modernize facilities, we can also enhance internally what we do
with research.
    I think it's unlimited, Mr. Chairman, in terms of what we
can do. When you see forest products, woody biomass, wood
waste, being turned into armor that is stronger and lighter
than Kevlar; when you see corncobs being converted into plastic
bottles for major soft-drink companies; when you see grasses
producing materials that one day will be used for the body of
our automobiles, which is lighter and stronger than fiberglass,
you realize the unlimited potential of American agriculture to
re-create an economy.
    So I would hope that this subcommittee would give serious
consideration to that part of the budget.

                         INTERNATIONAL FOOD AID

    Senator Pryor. Thank you. Let me talk about another change
that the administration is proposing, and that's the Public Law
480 program. I know that Senator Blunt mentioned it in his
opening statement, and I'm sure he'll have a question or
comment about it in addition to that. But the budget proposes
to dismantle the Public Law 480 Food Aid program and move to
the funding directly to the U.S. Agency for International
Development (USAID).
    From a historical perspective, this program was created in
1954. The purpose of the legislation, President Eisenhower
said, was to, ``lay the basis for a permanent expansion of our
exports of agricultural products with lasting benefits to
ourselves and peoples of other lands.''
    I still believe this to be an important goal. I oppose the
move that the administration is proposing. And I will tell you
this, Mr. Secretary, I'm open to sitting down with you and
others, and talking about ways that we can reform it, maybe
make it more efficient if there are problems in it. I'm
certainly open to talking about that.
    But I think that it's very important for soft diplomacy
that we continue to keep this program here. And just as one
example, here's one of the sacks that is used by the USDA and
USAID, and you can see several things about it. One is it has a
nice American flag on it. They know this is an American product
in this bag.
    Also, it says, ``from the American people,'' which is I
think important that they know that these are American products
from the American people.
    But also, the thing that I like about the program is these
folks who need this aid the most, they're getting the highest
quality, best food in the world, grown in this country at USDA
standards. They know what they're getting.
    They're getting a gold standard of a product, and I think
it's very important that we keep that.
    In addition, the fact is that these are American taxpayer
dollars, and I think these dollars ought to be spent in America
on American products. But again, I'm certainly open to working
with you on any changes you might suggest.
    I know, officially, the position is that the program should
go to the State Department, but I just disagree with that. And
if you have any comment on that, I'll be glad to hear your
comments on it.
    Secretary Vilsack. Well, Mr. Chairman, I would say that
when the program was started, American agriculture and its
relationship to the rest of the world was a little bit
different than it is today. Obviously, we were just recovering
from a devastating world war, and much of agriculture globally
was impacted by that war. We were faced with serious and
significant surpluses that would jeopardize and reduce and
depress prices.
    American agriculture today is faced with the opportunity
not just to meet our own personal needs here in the United
States but a robust export opportunity, which we are,
obviously, involved in.
    I think the key here is there are competing interests. One
is the issue of budget. Obviously, what is being proposed by
the administration will save $500 million over 10 years.
    Second, it's about time. When you're faced with a disaster
to the extent that you have to wait 11 to 14 weeks to get the
aid that you need, it may be the difference between life and
death for some people. So this proposal will cut the amount of
time it takes to get disaster assistance to people by 11 to 14
weeks.
    And it will also allow us to serve more people.
    Still, you're still going to have those bags; you're still
going to have that American flag; you're still going to be able
to convey that message, because at least 55 percent of what we
will, in fact, utilize will be American product.
    Obviously, there are competing concerns about this, but
when you're looking at 4 million more people, 11 to 14 weeks
quicker, and $500 million in savings, I think it's something
that is worthy of discussion and debate.
    Senator Pryor. We'll continue to have that discussion.
Thank you for that.
    I'm going to go to Senator Blunt next and then Senator
Johnson.
    Senator Blunt.
    Senator Blunt. Thank you, Chairman.

                         AGRICULTURAL RESEARCH

    Just to try to cover as much as we can here, certainly,
your emphasis on research is one that I am fully supportive of.
I think it's one of the reasons the Department was created, one
of the reasons the land-grant college system was created. The
1862 Congress did a lot of things for agriculture that we need
to keep improving.
    On the research front, you gave statistic that, in the next
40 years, we need--would you give me that statistic again?
    Secretary Vilsack. Sure. When you take a look at the need
for increasing agricultural production, we need to do what
we've done in the preceding 10,000 years, in terms of
advancements, in the next 40 years. In other words, we have to
take the advancements in agriculture that occurred over the
preceding 10,000 years, all of those advancements, we need to
essentially do that again, but we have to do it in a 40-year
period not a 10,000-year period.
    And the reason we have to do that, obviously, is because we
have increased global population. We have the same amount or,
actually, reduced amount of land available. And you've got
varying climates, which is going to make it more difficult, in
some cases, to produce what we've been producing in the past,
short of coming up with new strategies for adapting and
mitigating the climate.
    Senator Blunt. And that would indicate that world food
demand in the next 40 years would do what, double?
    Secretary Vilsack. Well, at least double. I think some
studies I've seen, Senator, suggest it is as much as a 70-
percent increase. But it's, obviously, a significant percentage
increase.
    We can do this, but we can't do it without a robust
commitment to research.

                   FURLOUGH OF FOOD SAFETY INSPECTORS

    Senator Blunt. Well, that shows we have our work cut out
for us then, Mr. Secretary. That's for sure.
    On management, I do appreciate the fact that you've done
some things that have allowed you not to furlough employees.
I'm glad that Senator Pryor and I could work together on the
one column, one account, that was so specific that you,
frankly, couldn't manage around it, and try to help resolve
that situation where if the Federal USDA food safety inspector
didn't show up, 500,000 people in the country are dependent on
the food safety--the work at these facilities are dependent on
the food safety inspector being there just so they can work
that day. And that's lots of income to families who really are
part of a very hardworking part of our population.
    So thanks for your comments on that and for seeing that
this has gotten done in the right way.

                                 MIDAS

    On general management, MIDAS, you want to talk a little
about what you're hoping to accomplish there and how that helps
with the local offices, the FSA offices.
    Secretary Vilsack. Senator, I was in New Orleans last week
looking at the National Finance Center, which basically is
overviewing and reviewing the implementation of MIDAS. Roughly
7,000 of the 10,000 servers that we need for MIDAS to be fully
implemented are online.
    We are now putting global information system data into that
system. We're putting farm records into that system. We're
putting acreage information into that system.
    We expect and anticipate by the end of this calendar year,
roughly 80 percent of MIDAS will be essentially implemented and
in the system. Over the course of the next 2 years, all of it
will be implemented.
    And the view is that basically, at that point, many farmers
in this country will be able to communicate with FSA online.
They'll be able to fill out the application. They'll be able to
track the status of their account online, so that they won't
have to be any more inconvenienced in terms of coming to an
office and spending time at an office. They could do this at
their leisure and convenience.
    This has been a long haul. This Congress and previous
Congresses made commitments to MIDAS. We appreciate that. I
think we're finally going to see the results of MIDAS.
    Senator Blunt. And my understanding is, whenever you became
Secretary, the offices couldn't even communicate, in most
cases, with each other let alone communicate with their
customers.
    Secretary Vilsack. Senator, when I became Secretary, I
asked if I could send an e-mail to all of our employees. I was
told I couldn't do that. I couldn't send a single e-mail to all
our employees. I had to send 11 different e-mails, because we
had 11 different e-mail systems.
    We now have one system. We've also saved millions of
dollars by having that one system. It's one of the advantages
and one of the steps that our team is taking to save $828
million through our administrative services project, our
Blueprint for Stronger Service.
    And it's the way in which we've been able to manage and
avoid some of the more significant reductions in workforce that
sequester may cause in other Departments.

                             RURAL HOUSING

    Senator Blunt. On rural housing, there's a $40 million
reduction in this proposed budget on rural housing. That's,
certainly, not because you haven't been able to use the money
you've had.
    Secretary Vilsack. No, that's true. I think what we're
seeing is a conversion. We're the only agency that provides
direct loans, and I think you're seeing a conversion from
direct loans and guaranteed loans primarily to more guaranteed
loan activity.
    As I said earlier, we're still going to be able to do
174,000 loans, but this is a situation where we're faced with,
and you all are faced with, a defined and finite amount of
money. You've got to make choices, and we're moving to a
guaranteed program as opposed to putting a lot of resources in
the direct program.

                         SCHOOL LUNCH STANDARDS

    Senator Blunt. The only other question I've got for this
round is on school meal regulations. I think schools tell me
they had a hard time complying with the regulations on protein
and grain. And I think those had been waived for some time now.
Are you considering permanently, looking at some more permanent
solution than waiving the regulation?
    Secretary Vilsack. As you say, we've created flexibility.
And I would anticipate and expect that flexibility or something
akin to that will be a permanent feature of that program.
    Senator Blunt. And that decision will be made?
    Secretary Vilsack. Yes, I think it either has been made
this year or is about to be made.
    Senator Blunt. All right.
    Thank you, Chairman.
    Senator Pryor. Thank you, Senator Blunt.
    Next, we'll have Senator Johnson, then Senator Cochran.
    Senator Johnson.

                   COUNTRY OF ORIGIN LABELING PROGRAM

    Senator Johnson. Mr. Secretary, thank you for being here.
And let me first thank you for your efforts with revising our
Country of Origin Labeling (COOL) program to better meet our
WTO commitments. I hope that you will maintain a strong and
accurate labeling regime as you move forward with the
rulemaking process.

                    BIOENERGY RESEARCH AND EDUCATION

    There are also a couple of other issues I would like to
discuss with you.
    I commend the regional approach that USDA has adopted for
supporting bioenergy research and education. In fact, this
approach was championed early on by land-grant universities
through the grant initiative, which has been a collaborative
effort through several Federal agencies and the national
laboratories.
    I'm disappointed that the administration is once again
proposing to cut funding for this important initiative. Can you
tell me if you and the Department are supportive of the
initiative's use of regionally based competitive grants?
    Additionally, given the administration emphasis on the
importance of the development of renewable energy, why does the
administration propose zero funding for this nationally
authorized program?
    Secretary Vilsack. Senator, let me briefly comment on both
of those issues that you've raised. By May 23, we will actually
finalize the COOL regulation, which we think will respond to
the concerns raised by the WTO case. And we've already given
folks an indication of what that's going to look like. But we
will finalize that by the May 23 deadline.
    As it relates to bioenergy, we are definitely committed to
a regional approach. In fact, we have established five regional
hubs throughout the United States. And we're using our AFRI
resources to help fund those regional locations. And we've
substantially increased our commitment in this area.
    These regional hubs are taking a look at feedstock
development. They're taking a look at the supply chain
alternatives to food feedstocks, alternative nonfood
feedstocks, the supply chain and additional research in terms
of the efficiency of certain production processes.
    So that is underway. And as a result, it would have been
duplicative to have been involved in the Sun Grant system. We
sort of expanded that, if you will, to all parts of the
country. We want this initiative to have access and connection
to all parts of the country, to use feedstocks that are most
readily available in all parts of the country.
    So for example, just as an example, we've invested $80
million in the University of Washington and the Washington
State University to look at aviation fuel, the drop in aviation
fuel. We've invested the resources in a hub that involves Penn
State, for example, in the supply chain issue.
    So this is incorporating what the Sun Grant was doing, and
it basically expands on it.

                      RURAL POPULATION DEFINITION

    Senator Johnson. USDA has proposed a new definition of
rural that would set the population cap for a number of Rural
Development (RD) programs at 50,000 people. The water and
wastewater programs have historically been limited to
communities of less than 10,000 people. The options for these
communities are extremely limited, and that's precisely where
the RD program should be targeted.
    I would also note that the administration budget request
would cut this program from $560 million in fiscal year 2013 to
just $304 million in your fiscal year 2014 request.
    Do we have an estimate of how the demand in water programs
would grow if the population threshold is raised to 50,000
people? Additionally, how do you square proposing a 40 percent
cut to the program while at the same time dramatically
increasing the number of eligible applicants?
    Secretary Vilsack. Senator, the issue of the rural
definition is the fact that we're dealing with 11 different
definitions in statute today. And it's quite confusing.
    You've got a situation now where I believe 500 communities
no longer qualify because we now are using the 2010 census
data, because of the increase in populations in some
communities for water. And I think 900 communities will lose
housing assistance as a result of that definition because of
the census information.
    My view of this is that we need a consistent definition.
And I think it's also important--and I hope the subcommittee
thinks about this. It is important, I think, for this country
to have a different definition and understanding of what
constitutes rural. Because at this point in time, based on the
traditional definitions, we have fewer people living in rural
America as a percentage of our population in the history of our
country.
    And the concern I have is if that population and that
percentage continues to shrink, it will become increasingly
more difficult to have the resources for any of these programs
we're going to talk about today. So I think it is important to
have a uniform definition.
    The fact that you have a uniform definition doesn't mean
that you cannot continue to focus the need where the need is
greatest. You can create point systems and scoring systems that
basically assure those communities that are most in need will
get the time and the attention and assistance.
    In fact, we have a thing called StrikeForce, which we just
instituted in South Dakota, and we now have it in 15 States.
It's really focused on the 90 percent of our persistently poor
counties that happened to be in rural America. And this
StrikeForce Initiative is really designed to really hone down
and to try to provide greater assistance to those counties. So
I think there are mechanisms to deal with this.
    As it relates to the amount of money in the system, this is
only in the grant portion of the system. And the reason for
that is the interest rates on our loan program are so low that
our view is that we're in a position now with the $1.5 billion
of loan money to be able to begin the process of meeting the
need that's out there.
    The last comment that I would make is, in this new age that
we live in of constrained resources, it is challenging us to be
creative and innovative at USDA to find other investors who
might also be interested in these water projects. It doesn't
necessarily always have to be our money that basically builds
these facilities.
    What we're finding in talking to investment bankers and to
other folks who we've communicated to, there's a lack of
understanding and appreciation about the deals that are out
there in rural America. We just haven't marketed these deals
very well.
    Just very quickly, one major corporation has, as its social
responsibility and business initiative, to reclaim water. They
use water in a product that they make. They want to reclaim
every ounce of water that they use. They're interested in
potentially investing in these kinds of water projects. The
investment return may not be as much as they would get
someplace else, but it fulfills a business responsibility.
    We need to be more aggressive in educating people about
where these projects are. It doesn't always necessarily have to
be Government money.
    Senator Johnson. Thank you.
    Senator Pryor. Thank you, Senator Johnson.
    Next, we have Senator Cochran and then the list says we go
to Senator Tester.
    Do we have to do Senator Tester next?
    Senator Cochran, thank you.

                           CATFISH INSPECTION

    Senator Cochran. Mr. Secretary, thank you very much for
your cooperation with our subcommittee.
    One of the things that we did in a previous farm bill was
to provide authority for the Department to inspect imported
fish that was coming into the country, particularly from
southeast Asia. The concern was that some marketing firms and
stores were advertising as farm-raised catfish, and a lot of
our aquaculture producers in my State and elsewhere around the
country feel that this law has not been aggressively
implemented.
    What is your plan, if you have a plan, to try to put action
behind the words that are contained in our farm bill?
    Secretary Vilsack. Senator, I certainly understand the
frustration of your farmers who have raised this issue with
you. And I think, frankly, we continue to grapple with
precisely what the definition of catfish is.
    I assumed I knew what that definition was when I took this
job. I now find out there are 39 different varieties. And we're
still trying to work our way through that definition, and it's
not as simple as it would at first blush appear.
    We're obviously working on this. In the meantime,
obviously, fish are being inspected by FDA, but I'm going to
commit to you that we're going to continue to work on this. And
we understand the frustration. But it is complex, from a
scientific standpoint. And it, obviously, has significant
implications domestically and from a trade perspective.

                        SCHOOL KITCHEN EQUIPMENT

    Senator Cochran. One initiative that the administration has
pursued to help reduce the cost of school lunch programs is to
modernize the kitchen and cafeteria equipment. And there's been
a Federal grant that our Governor has used to replace deep fat
fryers with some combination oven steamers and other ways of
getting to the children more nutritious and better prepared
school lunch meals.
    Is your administration aware of this initiative? And could
it be replicated so that it becomes a nationwide program to try
to improve the quality and nutritional value of the foods that
our children are having at school?
    Secretary Vilsack. Senator, absolutely. This budget that
we're proposing suggests a $35 million commitment to upgrading
school equipment for that very purpose.
    We had a $35 million appropriation this year, but it was
reduced during the sequester discussions. And it's now down to
$10 million. But we are absolutely committed to this.
    Frankly, what we're seeing is that food producers are
reformulating their food. Again, I was at a food company the
other day. It makes extraordinarily tasty food that is in a
pouch that you just put in boiling water. And it's fresh, and
it's spectacular.
    So we want to, obviously, encourage more of that. And we
want to get away from just centralizing production and then
having it bused or shipped from a central kitchen to a variety
of schools. We'd like to be able to give those schools the
capacity to prepare food on site.
    This would also I think help us extend our summer feeding
program. We feed about 2.5 to 3 million kids in our summer
feeding programs across the country. But we feed 21 million
free and reduced lunch kids during the school year, so there's
issue there during the summer months. And we're trying to
figure out strategies to provide those youngsters nutritious
meals during the summer as well.
    Senator Cochran. Thank you for your leadership on that.
    Senator Pryor. Thank you.
    Senator Tester.

                          AMERICAN AGRICULTURE

    Senator Tester. Thank you, Mr. Chairman.
    And I want to thank the Secretary for being here today.
With some of the questions you have already answered, I
appreciate the work that you've done on COOL, and I would tell
you that I am personally excited about the online capabilities,
potential online capabilities. I've been able to connect with
the FSA office, and I would hope, even though I love every one
of the staff that happens to be in Chouteau County, I would
hope that it wouldn't create a workforce increase but actually
more efficient once it gets implemented. So thank you for that.
    You know it was about 40 years ago, when you and I were
much younger, much better looking, there was a Secretary of
Agriculture that made the statement, get big or get out. I have
listened to your testimony this morning, and I don't think you
have that same vision for agriculture.
    You've talked about opportunities for young people. You've
talked about how we've become fewer as a percentage of the
general population. And if that continues to shrink, that's a
bad thing.
    My question is, is this budget put forward--and by the way,
I've got to tell you I've vacillated on this. The farm bill has
done some good things and it's done some things that I've
questioned over the years. And I have vacillated back and forth
whether it's been a net positive or a net negative, depending
on whether we're in drought or not.
    But the question really becomes, this budget that you put
forward, has it done anything different than previous budgets
as far as enhancing opportunity for young people to get into
agriculture in one fashion or another, whether it's production
agriculture or adding value or whatever?
    Secretary Vilsack. I think it does, Senator. I think it
does in a variety of different ways.
    First of all, it increases the commitment to the Beginning
Farmer and Rancher Development Programs. Second, I think it
understands the necessity of us expanding market opportunities.
Production agriculture is an extraordinary story, and the
export is an extraordinary opportunity. But we need to branch
beyond that if smaller producers are going to have a shot.
That's why we commit ourselves to an expansion of local and
regional food systems, why we increase farm-to-school programs.
It's why we have our specialty crop block grant to create
opportunities for smaller producers to get in business. It's
why we continue to expand access to farmers markets through the
SNAP program and through the WIC program. That's an additional
market opportunity for smaller producers.
    It also makes a significant commitment to bioenergy and the
bio-based economy. The reality is there are 3,100 companies
today that are manufacturing something that's bio-based. We
need to extend that. We need to expand it. If we do, we create
market opportunities for plant material, crop material,
livestock waste. That creates additional markets.
    So this budget does indeed support all of that.
    Senator Tester. Well, I just want to say I appreciate that
perspective. And I hope every day when you come to work, you
keep that perspective in mind as we go forth, because with
rural America drying up, I don't think it's a net positive for
this country.
    And I always use the example, when I graduated my school in
1974, I'm getting old, had 165 kids. That same high school
today has less than 60. And that's not something that's
particular to north central Montana. I think you could say the
same thing for many of the schools in Iowa, certainly can for
all the schools in Montana that are small.
    Secretary Vilsack. I think that the key here is for us to
understand that it's not about tax-supported institutions that
we need to keep in those communities. It's about taxpaying
institutions.
    Senator Tester. That's correct.
    Secretary Vilsack. Because if we have those, then we're
going to have the tax-supported institutions.
    And that's why this four-cornerstone philosophy that I have
of rebuilding the rural economy is important: production
agriculture and exports, local and regional food systems,
conservation and outdoor recreation, and the bio-based economy.
Those are the lynchpins, I think, to rebuilding a rural economy
that will support communities.

                              TIMBER SALES

    Senator Tester. I want to go a little bit off this
subcommittee but I know the chairman will let me do this--a
different subcommittee, but your agency, and that's the Forest
Service.
    In this budget, it effectively cuts about 15 percent out of
timber sales targets, which is true. And you've been in
Montana, and I appreciate you coming there. And I think at this
point in time, we're seeing a forest that is in crisis. And
there are trees that need to be cut, need to be cut right,
sustainably and all that. And we can do that. That's not a
problem.
    I think we need to increase timber harvest to meet the
hazardous fuels out there, not reduce them. I know you're in a
tough fiscal climate, but are there ways to boost timber supply
in a way that keeps our infrastructure going, and we manage our
forest in a proper way as we move into this 21st century when
you see the beetle kill and climate change and all that stuff
going on?
    Secretary Vilsack. Senator, I want to make sure, the 15
percent number that you're referring to is actually in this
existing budget as a result of the sequester, and as a result
of the additional 2.5 percent cut that you all put on top of
the sequester for this agency.
    So we had to----
    Senator Tester. We'll take the rap.
    Secretary Vilsack. Okay.
    Senator Tester. We should take the rap. The question is,
how do we fix that? Do you have any----
    Secretary Vilsack. The reason I say that is because we were
on track to actually increase timber sales. We have announced a
desire to go from 2.4 billion board feet being treated to 3
billion board feet being treated. We were on track to get
there, to treat more. But now we take a step back. But we're
going to continue to take a step forward.
    In response to your question, the Forest Service is
investing in wood energy opportunities. The Forest Service has
its wood products lab in Wisconsin that's creating new
opportunities.
    I think there's an extraordinary chance here for us to deal
with this. And let me tell you precisely what we're doing, and
this is very, very important. We're trying to link up
universities that talk about clean energy with the opportunity
to have cogeneration facilities that are wood burning. You
combine that with long-term stewardship contracting. You
essentially have a ready supply of wood. The university gets a
cheaper cost of heat and electricity as a result.
    And we're trying to create those kinds of partnerships at
USDA through the Forest Service.
    We also are working with utility companies to recognize
that they have a vested interest in helping us clear out those
forests, because they have a multimillion dollar investment.
Transmission lines are at risk. They have a multibillion-dollar
potential liability if fire is a result of one of those
transmission lines.
    And we're working with corporate America that has a variety
of interests in maintaining more resilient forests.
    So we are involved in all of that. The fact that we have
less money in a particular line item doesn't mean that we're
not going to get more work done.
    Senator Tester. I appreciate that. We'll work to give you
the tools so you can do your job.
    Thank you, Mr. Secretary.
    Thank you, Mr. Chairman.
    Senator Pryor. Thank you, Senator Tester.
    Next, we have Senators Merkley, Udall, and Moran.
    Senator Merkley.

                     GENETICALLY MODIFIED ORGANISMS

    Senator Merkley. Thank you very much, Mr. Chair.
    And thank you, Mr. Secretary. And I wanted to mention I
appreciated so much your help when the Klamath Basin enduring a
terrible drought several years ago, 2010. And both you and
Secretary Salazar were quick to be of assistance.
    The bad news that I have to report today is that they have
yet a worse drought, the worst ever to this point in time in
this season. And so I may be carrying on the conversation with
you and your team again.
    I wanted to specifically ask about the Monsanto Protection
Act, the rider that was included, the authority to overwrite a
judicial ruling regarding the planting of genetically modified
organisms (GMOs). In my town halls, people have come to every
single town hall saying we do specialty crops here in Oregon,
specialty seeds, we're worried about cross-contamination--for
example, from GMO canola to broccoli or rutabaga seed.
    And the concept behind this rider, is that something the
Department of Agriculture endorses?
    Secretary Vilsack. We didn't ask for the rider. And we have
questions and concerns about the legality of it, as it relates
to temporary injunctions and things of that nature.
    But let me answer your questions more fully. The USDA
position on this is we believe strongly in coexistence. And we
have created a program we call AC21 where we put organic
producers and GM producers in a room, and we basically said,
what will it take for you all to get along better than you do
today?
    They came out with a series of recommendations. Those
recommendations range from making sure that we continue to have
a solid germplasm bank to ensure that we always have the
capacity to restore something that could potentially have been
impacted, a potential compensation arrangement or process for
those that do suffer from cross-contamination, more research on
precisely gene flow. This is all going on at the present time
within USDA in an effort to try to create a world in which, if
you want to be an organic producer, you can do so; if you want
GM opportunities, you should do so; and an understanding that
good stewardship can make good neighbors.
    So we're looking at ways in which we can promote
coexistence.
    Senator Merkley. I think that's exactly the right approach.
And there are complicated issues that are raised, that get
struggled with--how far does pollen travel, what is the risk of
cross-contamination, and so on and so forth. But I think the
concept behind this rider, which basically said, it can be
planted regardless of concerns in the normal process,
interrupts that strategy of cooperation and working out the
coexistence.
    And I look forward to continuing this conversation. This
rider is going to expire later this year. There's going to be a
conversation about whether it goes forward further. And it's
just huge concern by our Oregon seed producers of the impact on
their markets and organic growers.

                         ELECTRIC LOAN PROGRAM

    I wanted to turn to the Rural Utilities Service (RUS)
Electric Loan Program. This program, as I understand it, the
Department is planning to create a version through regulation
that does low-cost loans for energy saving renovations. This is
very consistent with what the U.S. Senate endorsed by passing
the Rural Energy Savings Program in the farm bill that went
through the Senate. And so, I applaud that, encourage that.
    I did want to express a concern about the overall, the
larger, Electric Loan Program, which helps fund transmission
lines, capital infrastructure, and so forth. There's concern on
some of my electrical co-ops that with the reduction in the
size of the program, I believe it's going from $7 billion to $4
billion for direct loans, that three-fourths of the lower
number, of the $4 billion, are set aside for renewables. Of
course, I'm a big supporter of renewables.
    But I want to make sure, on behalf of electric co-ops, that
there's still the ability to invest in the transmission lines
as well. Is this an issue that has been brought to your
attention? And any concerns about the support for our rural
electric co-ops being able to build their infrastructure?
    Secretary Vilsack. It has been brought to my attention and,
honestly, Senator, we honestly believe that there's a good
balance here. And we'll try to strike that balance.
    The reality is, if we're concerned about the impact of
varying climates on production, and we're convinced that that
is related to greenhouse gas emissions, and I think there's
pretty good science to suggest that it is, part of the strategy
and challenge will be for us to reduce those emissions. And one
way to do that is by making sure that we invest in renewable
energy resources.
    It also creates enormous new opportunities, particularly in
agriculture and in forestry for bioenergy opportunities. So for
that reason, we're focused on trying to encourage folks to
think differently and to think creatively about the
opportunities in renewable energy.
    Senator Merkley. And I completely salute that. But as
electrical co-ops invest in transmission lines, if the loan
program runs out of funds, if you will, to help support that,
is there a way to come back and try to expand the size of that
program to help support the transmission capabilities?
    Secretary Vilsack. I mean, obviously, there are ways for
the--you all can make decisions about that. But I would say
that it goes back to the point that I made earlier which is, in
this constrained resource environment, it's challenging us to
think differently and to think creatively about partnerships
and others who might be interested and able to invest in these
projects that we've never thought of before.
    And I think that there's a lot of opportunity out there. In
talking to folks, investment bankers in particular, they had no
idea about these program. They had no idea about the
opportunities in utilities, for example. And they're
interested, and so we're going to try to, literally, to the
extent we've got a waiting list or to the extent we have a need
that we're not able to meet, we're going to try to shop and
facilitate that need being met by a private sector or nonprofit
sector partner.

                    FEDERAL RESEARCH GRANT PROGRAMS

    Senator Merkley. Thank you. And in my final minute, I
wanted to mention how important the Federal grants have been
for the Northwest Center for Small Fruits Research. They are
one of those regional research centers that really focus on the
particular challenges in the Northwest.
    And they are finding that the current format of the Federal
research grant programs, such as the format of the Agriculture
and Food Research Initiative and Specialty Crop Research
Initiative, seemed to have been adjusted in ways that only
allow access by very large-scale research institutes that don't
necessarily have that regional focus.
    And so, that's a real concern on their part. And I wanted
to raise it, put it on your radar as a concern for our smaller,
regionally focused research centers.
    Secretary Vilsack. Senator, I appreciate you bringing that
to our attention. That's surprising, because what we're
actually trying to do with this program is to create more
opportunities for collaboration in which smaller facilities are
able to align themselves with other universities to do
cooperative and collaborative research.
    We'll be happy to take a look at that particular issue as
it relates to your area and take that concern back to the
office.
    Senator Merkley. Thank you very much. I look forward to
following up on it with you. Thank you.
    Senator Pryor. Thank you.
    Senator Udall, then Senator Moran.
    Senator Udall. Thank you, Mr. Chairman.

                      FARM SERVICE AGENCY PAYMENTS

    And, Secretary Vilsack, let me just thank you for being so
on top of the forest fire situation. You visited my State of
New Mexico when we were right in the middle of the Little Bear
fire right down near Ruidoso. That was a fire that destroyed
254 structures in the summer 2012, 245,000 acres.
    And I think you saw the remarkable thing was how dedicated
your people are all the way from the incident commanders down
to the people that are fighting fires. And we're facing
another, because of the drought, a very severe fire season.
    As your map shows here, New Mexico is right at the center
of the target in terms of the drought. And so we know that
you're going to stay on top of that and make sure that the
personnel and that the airtankers and all of that are in place.
    I wanted to ask about the FSA payments. And I wanted to
thank you for getting the Farm Service Agency payments back
online this week. The last several years have been very
difficult for producers in New Mexico. So the payments have
been vital to keeping producers afloat.
    The freeze in payments this spring has been hard on many
people in New Mexico, especially the freeze on the Noninsured
Crop Disaster Assistance Program (NAP) payments. This is
another example of the terrible toll that sequestration is
taking on our country.
    Because of the time it took to get these payments back
online, I know many of my constituents are not confident that
the payment is actually coming. Will you confirm for me and my
constituents that the FSA payments are indeed back online,
particularly the NAP payments?
    In short, Mr. Secretary, is the check in the mail?
    Secretary Vilsack. Effective today, it's online, Senator.
And the reason, frankly, that it was because we were uncertain
about the impacts and consequences of sequester, and didn't
want to create more of a situation where payments went out the
door only to have folks having to refund or return them.
    And so, beginning today, we're back online and payments
will be made in short order.

                       LIVESTOCK DISASTER PROGRAM

    Senator Udall. Thank you very much.
    Over the last 3 years of drought in New Mexico, there's
been a 50 to 60 percent decline in the cattle population in my
State. The impact of this ongoing drought, it obviously has
been very terrible in New Mexico.
    And as you know, several Senators have been working for
months to try to get livestock disaster programs that expired
in 2011 renewed and retroactive. And I'm pleased to see that
the President's fiscal year 2014 budget includes a proposal for
renewal of the livestock forage program and the livestock
indemnity program for 2014 through 2018.
    We expect the farm bill to come to the floor for a vote in
the coming weeks. If we are able to renew these programs with
retroactive authority, would the USDA be able to carry out back
payments? What would this mean for producers in New Mexico and
other States who've had several years of drought and loss? And
what do you expect the need is nationwide for these programs?
    Secretary Vilsack. Well, I think the need is reflected in
the budget request, Senator. This is something that I think
needs to be done.
    It's unfortunate the disaster assistance was not fully
funded in the previous farm bill, and that it was allowed to
extinguish. We're very supportive of continuing this.
    What it means to producers is, obviously, resources, and
what it means is reassuring that banker that there's a safety
net in place that will make it a little bit easier for that
producer to get the credit that he or she needs to be able to
continue or expand their operation.

                        WATER AND WASTE PROGRAM

    Senator Udall. Thank you. Mr. Secretary, coming from a
State where water infrastructure is a priority need in almost
every community, it's unsettling to see the proposed cuts in
the President's fiscal year 2014 budget. And I'm especially
concerned about the cuts of almost 50 percent to grants and
loans for water and wastewater infrastructure for tribal
communities and colonias. Even the basic need for running water
is not being filled in many of these communities in New Mexico.
    I'm also concerned about the cuts to the Circuit Rider
Program for rural water systems and the wastewater and waste
disposal loans and grants in the RUS.
    Could you explain the logic behind these seemingly
disproportionately high cuts to water infrastructure? What kind
of impact do you expect these cuts would have on rural
communities, including tribes and colonias? And has there been
any decline in the need for this kind of water infrastructure
funding?
    Secretary Vilsack. Senator, you all will be faced with the
same set of decisions that we made and had to make in terms of
the budget. You're given a number, and you've got to fit all of
the competing needs and interests within that number.
    In a perfect world, we'd have more money to spend. We're
not living in a perfect world. We're living in a very imperfect
world. So obviously, choices have to be made.
    Our view is that the loan interest rate on the loan portion
of the water program does provide us the capacity and, for many
communities, the opportunity to improve their water systems.
    The need is significant. There's no question about that.
That's why we have to look at ways in which we can extend and
leverage our resources effectively. I've said earlier about our
efforts to reach out to other investors who may potentially be
able to provide opportunities to these communities.
    You mentioned the colonias, in particular. I will tell you
that our StrikeForce Initiative is focused directly on that
area and has also been extended to New Mexico. So many of the
most impoverished areas are getting more attention and more
assistance than ever before.
    We're just dealing with a very difficult budget. Do you
take money from housing to put in water? Do you take money from
farm programs to put in water? Do you take money from nutrition
to put in water? Do you take money from Rural Development and
business growth? It's hard.
    And so my view of this is, you're not going to be able to
meet all the needs to the extent that they need to be met, so
we've got to think creatively. And one way we're going to think
creatively is going to nonprofit foundations and saying, you
invest a lot of grant money in communities, what about your
investment portfolio? Where are you putting your business
investments to generate the income that you grant? Can you
consider putting it in rural America? Investment banks, are you
aware of these utility opportunities in rural areas?
Corporations, are you aware of the opportunity for you to meet
a social responsibility requirement by investing in rural
areas?
    I think we have to think broadly about where resources can
come from. You're going to face the same difficult decisions
we've faced, and we'll see how you all do.
    Senator Udall. Thank you very much. And I know you come
from a rural State and you feel these issues a lot, and I know
you're working hard on them. Thank you very much.
    Thank you, Mr. Chairman.
    Senator Pryor. Thank you, Senator Udall.
    Senator Moran.

                            RISK MANAGEMENT

    Senator Moran. Mr. Chairman, thank you.
    Mr. Secretary, thank you for being here. The last time we
had this hearing, nearly 1 year ago, you were leaving for
Manhattan, Kansas, to speak at the Landon Lecture at Kansas
State University. I was not there, but thank you for speaking.
And the reports were that you were well-received, and I hoped
that you experienced Kansas hospitality in your visit to our
State.
    I want to express my appreciation to you in your work on
the Pryor-Blunt amendment in regard to meat inspection,
something critically important to our country, to its
consumers, but, certainly, important to Kansas and livestock
producers and the meatpacking industry that is so prevalent in
our State.
    And I know a number of questions and comments have been
made in regard to agricultural research. I would like to
emphasize to you its value and its importance, its long-term
benefits to agriculture and to rural communities. And
especially, I believe I said this last year, to make certain
that, sometimes the research that gets a lot of attention is a
bit more exotic, but to remind you or to request you to always
keep in mind the importance of agricultural research related to
productivity and yields in crops that we currently grow, the
value of making certain that we know how to curtail the damage
that occurs with insect and disease, drought.
    We've had a lot of conversation and just the recent few
questions about the circumstances we find ourselves in because
of weather. And there is a Pryor-Moran caucus in regard to
water. Senator Udall and I have been involved, since our days
in the House, in regard to the Ogallala Aquifer.
    Water is, in so many ways, front and center to the future
of rural America, and I would encourage you to, both on the
agricultural research side, but on the water resources aspect
of the Department of Agriculture, continue to provide the
necessary infrastructure and support.
    In regard to that drought, it's dramatic and the
consequences are tremendous. It's long-running in Kansas. And,
in particular, I mean, I'd be glad to hear any thoughts you
have about efforts at RMA to improve the crop insurance product
for the cultivation side of agriculture.
    But we are, certainly, failing our livestock producers.
And, certainly, I know that the issue of ad hoc disaster is
something that we can pursue. But I've always believed, going
back to my days in the House and chairing the Subcommittee on
Risk Management, that a better product within the crop
insurance delivery system for all crops, but also on the
livestock sector, is something that needs to be actively
pursued. And I'd be glad to hear your thoughts and your
assurances that that's the case at USDA today.
    Secretary Vilsack. Senator, we are, obviously, in the
business of continuing to expand crop insurance offerings in a
variety of areas of agriculture. And we're trying to do it in a
way that is thoughtful and consistent with good fiscal
decisionmaking.
    In the meantime, we are obviously faced with a specific
challenge today from our livestock industry and from our dairy
producers. And so that's why we are proposing and suggesting a
continuation of the Disaster Assistance Programs that were
established in 2008 farm bill. And our hope is that that gets
done either in the context of this budget and or a 5-year farm
program.
    We are proud of the fact that we have expanded the number
of crop insurance offerings. And we're going to continue to
look for creative ways to address all of the challenges that
our producers face.
    Senator Moran. Crop insurance is particularly important to
farmers on the high plains. Agriculture is clearly the
significant component of our economy, but the weather is often
not our friend.
    And I've visited with many producers across the country
where crop insurance is less of a viable option for them. And
it seems to me that the goal of making certain the crop
insurance is an important tool available for farmers
geographically and commodity-wise is important. It is one of
the things that makes it more difficult to garner the support
across the wide array of agricultural interests here in
Congress. It's that crop insurance product is not as useful in
some places in the country and for some crops.
    And while you would expect me to advocate on behalf of a
crop insurance program that works for Kansans, I also recognize
its value in bringing all of agriculture together to support a
program that benefits the entire agricultural economy across
our Nation. And I look forward to having conversations with the
administrator of RMA as we have had over the years.
    Let me switch topics, and let me also say that I hope to be
helpful to you and be helpful in the cause of the livestock
disaster programs inside the farm bill, outside the farm bill,
if necessary. I'm hopeful that we are able to accomplish what
we didn't accomplish last year with the passage of a long-term
5-year farm bill, and I hope we do it sooner rather than later.
    And I can't imagine there's any disagreement from the
Secretary.
    Secretary Vilsack. Amen, Senator.

                           BROADBAND PROGRAM

    Senator Moran. Thank you.
    Let me change topics. In October 2011, the Federal
Communications Commission (FCC) entered its order in regard to
reforming the Universal Service Fund. I'm not here necessarily
to debate the merits of their order. But there are tremendous
consequences to that order in your world, at Rural Utilities
Services.
    And you filed an ex parte with the FCC. And one of the
things that caught my attention in reviewing that is the demand
for RUS loan funds dropped to 37 percent of the total amount of
loan funds appropriated by Congress in fiscal year 2012.
    What I think is happening, and I've been very concerned
about this FCC order and its consequences upon the expansion of
broadband available to areas that don't have broadband or
options in regard to broadband, but also very important is the
retroactivity of this order and its consequences upon
companies, particularly small telephone companies, that
deployed broadband but their revenue stream to finance the
deployment and, in many instances, its ability to repay the
Rural Utilities Services money that was loaned to them to
accomplish this purpose is now greatly diminished.
    And I'm interested in that 37 percent number, but I would
assume that--and I know this in part from conversations I had
with those phone companies, is that, one, they're making the
decision about we don't know how to pay for what we've already
deployed, and how to repay loans that are already existing; and
two, is this order going to be changed in a way that we can
continue to deploy broadband in places that we don't have
broadband in the future.
    So if you would capsulize for me or explain to me where you
are in your--you've had conversations now with the FCC, with
Chairman Genachowski. Have we got anything in the works, and
again, I think I asked about this topic last year, has anything
developed? Is anything developing that can give me some comfort
that this effort that was started by the administration a
number of years ago to deploy broadband is--that the harm that
has come from the FCC order is being overcome?
    And second, where are you in the ability to see that your
loans are going to be repaid to the Rural Utilities Services?
    Secretary Vilsack. I've, actually, kept my eye on the
portfolio issue. Let me address that, first and foremost.
    And the good news is that we have not seen, at this point,
a significant level of concern in terms of the ability to meet
prior obligations, which is good.
    And in those cases where there has been an issue, we have
been working with the FCC to create some kind of waiver that
will allow the draconian impact on a particular company to be
less draconian.
    So we have been engaged in those conversations, and the FCC
has been willing, up to this point, to be granting waivers in
those circumstances.
    We have had a conversation with the chairman, and
obviously, he's no longer there. But we did express a concern
for the need to amend the Connect program that they have, to
create a bit more flexibility for rate of return folks to be
able to participate in that.
    They put $300 million out. It wasn't fully utilized, and we
think there's an opportunity there to potentially assist us in
expanding.
    And we have engaged in a more meaningful conversation, as a
result of my discussion with the chairman, about how we might
be able to better focus our resources in areas that the FCC and
the regional bells are probably not going to have much interest
in.
    We're going to continue to invest in this. We're going to
continue to figure out ways to expand it, because we realize,
as you do, how critical this infrastructure is to the survival
of businesses and communities in rural areas.
    And our hope is the FCC takes a bit more of a flexible
position than they originally took.
    Senator Moran. I hope to be able to pursue this further at
some point in time with you, Mr. Secretary. Thank you for
answer.
    Your response to Senator Tester about needing to make
certain we have people who are paying taxes, this is one of
those issues that create the opportunities for us to create
business and opportunities in which we have taxpayers
supporting the services that are necessary in rural
communities. In the absence of this, the absence of the small
rural telephone companies' ability to provide these services,
your goal and my goal of seeing a more prosperous rural America
is significantly diminished.
    Thank you, Mr. Secretary.
    Thank you, Mr. Chairman.
    Secretary Vilsack. Senator, I would also say that we have
also had conversations with the folks at AT&T and Verizon in
terms of encouraging them to be more aggressive in their
efforts in this area as well. And they've given me some
assurance that they are focused on this and are going to try to
take advantage of these programs to expand broadband.
    So we have, in a sense, lobbied, if you will, that
opportunity as well.
    Senator Moran. Great to hear. Thank you.

                  RURAL BUSINESS PROGRAM CONSOLIDATION

    Senator Pryor. Thank you, Senator Moran.
    We have one Senator on the way who wants to ask questions.
What we'll do is a very brief second round. Let's let all of us
who want to ask questions, just ask one or two more.
    Actually, I have several questions for the record that are
follow-ups from some of the questions that Senators asked. But
as we're waiting on our colleague to arrive, let me go ahead
and ask you, Mr. Secretary, about something I like in concept,
which is the consolidation of grant programs.
    I think you're taking five grant programs and consolidating
them into one. I love that concept, and I think we would all
like to know more detail, why you're doing this and how much
you think you can save and how that efficiency is going to
help.
    Secretary Vilsack. We're taking five smaller Rural
Development programs and combining it into one because we think
by doing so we can create a greater accountability and
establish a solid standard relating to jobs created and
economic opportunity created by doing this.
    When you have five smaller programs, obviously, you get
five different administrative responsibilities. And oftentimes,
it becomes difficult to keep track of every loan.
    But this one program will allow us to set standards then
hold grantees accountable to those standards. And we think, in
the long run, it will encourage more regional thinking, and
encourage and expand economic opportunity, and give us more
flexibility.
    Senator Pryor. Great.
    Senator Hoeven, if you're ready, I'll go ahead and call on
you and let you do your first round of questions. And we'll
finish up with our second round.

                         CROP INSURANCE PROGRAM

    Senator Hoeven. Thank you, Mr. Chairman. I appreciate it
very much.
    Mr. Secretary, good to see you again. The first question I
have is crop insurance in the budget. You show a $12 million
reduction in--excuse me, $12 billion reduction in crop
insurance. And what my farmers are telling me, not just from
North Dakota but from around the country, is that crop
insurance is their absolute number one priority as we go into
writing the new farm bill, which we hope to be in markup in our
Agriculture Committee next week for the Senate.
    So crop insurance, number one priority for farmers. How
come the $12 billion reduction in your budget submission?
    Secretary Vilsack. Well, we're, obviously, trying to deal
within a constrained resource environment, and there are a
couple of things that we are suggesting. We took a look at crop
insurance and tried to determine what kind of rate of return
insurance companies would need in order for this program to
remain viable and fiscally sound. What we found was a 12-
percent return on investment was sufficient and adequate.
    Currently, producers and companies are receiving somewhere
in the neighborhood 14 to 15 percent return on investment over
the long haul. So we thought there could be a slight adjustment
there.
    There are circumstances when the Government is subsidizing
more than 50 percent of the premium, in some cases, more than
60 percent of the premium. And we felt that there could be some
slight adjustment in terms of that relationship between the
taxpayer, the farmer, and the company.
    And we felt that there were some adjustments that could be
made for products that are focused on price protection.
    So that's where the resource comes from. We don't think it
jeopardizes the availability of the product or the need for the
product. We think it's just a rebalancing of the relationship
between the taxpayer, the farmer, and the company.
    Senator Hoeven. I'd point out that in the baseline, $64
billion in direct payments is going away. So we'll be taking
the direct payments out of the farm bill. The farm bill will be
saving somewhere between $23 billion and $35 billion based on
Senate versions and House versions that made it through the
respective Agriculture committees last year.
    That's more than sequestration would call for. And so
agriculture is stepping up and providing budgetary savings.
It's going to be very important that crop insurance is there
for them in a solid way going forward when we're making these
other reductions.
    My next question is, I had Brandon Willis out in our State,
and I appreciate very much him coming out.
    The issue we worked on is right now under prevented plant.
You have to plant and harvest a crop 1 out of 4 years in order
to be eligible for prevented plant under crop insurance. But
there are other rules that make prevented plant very, very
confusing.
    He's agreed to help us work through that, which we
appreciate very much. We'd ask your thoughts and hopefully your
commitment to help in that regard as well.
    Secretary Vilsack. Senator, we have a lot of confidence in
Brandon to administer the RMA program in a way that reduces
inconvenience or inefficiencies in the program. One of the
reasons that I put Brandon in that position was because he
understands the crop insurance program very well and is
committed to making it work.
    And you have my commitment to assist him in any way I can
to create a more efficient and more effective program. It goes
back to Senator Moran's question and concern about the need for
us to have an RMA Administrator that understands and
appreciates the need to constantly look at ways to improve the
product or to expand the product.

                         SCHOOL LUNCH STANDARDS

    Senator Hoeven. Well, Senator Moran is a very insightful
Senator. And so, I think that's remarkably good advice. I know
you do as well.
    The final question I have for you is, the school lunch
program, the chairman of this subcommittee and myself have put
forward legislation, which we think is helpful. It provides
some more flexibility for the school lunch program.
    And it doesn't change the calorie limit because we all want
to address childhood obesity, but it does provide some
flexibility in terms of the amount of proteins and the cereal
grains that students can receive, if they're older or taller,
or just have different activity levels and physical needs.
    And so I think it provides real flexibility for what we're
all trying to do, and I would ask for you help and support with
that.
    I think we're putting it forward, and, certainly, the
chairman can speak for himself, but it's very bipartisan. We're
putting it forward with the idea of working with the Department
to have the best possible product.
    We actually have the endorsement of the school
nutritionists nationally. And so I just ask for your
willingness to help us with that legislation.
    Secretary Vilsack. Senator, I think that what you and the
chairman, and I suspect Senator Blunt in an earlier set of
questions, I think you'll find that what you're proposing is
pretty consistent with what we're currently doing and that we
had discussion earlier about the need to make those kinds of
flexibilities more permanent, which we agree with.
    Senator Hoeven. Yes. I thank you for the flexibility. You
came out after we'd sent a letter and you responded. You were
very responsive to it. Now we're just trying to make sure we've
got a permanent solution in place, and we want to work with you
on this.
    Secretary Vilsack. Fair enough.
    Senator Hoeven. Good. Thank you.
    Senator Pryor. Senator Blunt would like to ask a few more
questions.
    Senator Blunt. Thank you, Chairman.
    We got a call this morning, Secretary, from one of our
dairy farmers who has land in two adjoining counties. And they
said they weren't able to receive their full NAP payment
because FSA told them that you have to figure the loss in two
different counties, and that isn't linked up yet.
    Is this a problem we can take care of? Or is it already
taken care of? The back online problem should solve this?
    Secretary Vilsack. Clearly, the payments are back online.
Whether or not it addresses your particular situation, I don't
know, but we will find out today if it does.
    Senator Blunt. All right, thank you.
    Secretary Vilsack. If it doesn't, we'll try to get that
result.

                     GENETICALLY MODIFIED ORGANISMS

    Senator Blunt. Well, that's in two counties and apparently
that's the problem. At least that's why they were told that
they weren't getting their full payment yet.
    I didn't intend to ask about this, but I want to be sure I
understand it. Mr. Merkley brought up the GMO issue.
    And as I understand it, and of course, that was in the
House bill and we accepted it in an earlier decision to put
those two bills together some time last year. But as I
understand what that bill does is it--or what that bill did,
and as Mr. Merkley pointed out, it only goes through September
30, it would give the Department the authority to do what
essentially you did in 2010.
    What happened in 2010 was a court said that a crop that you
had allowed to be planted, a deregulated crop, sugar beets at
that time, which, certainly, Mr. Tester knows more about sugar
beets than everybody else here put together. By the time we got
to 2010, 95 percent of all the sugar beets in the country were
this new strain of sugar beets.
    And a judge said in August 2010, much too late to do
anything different than you've done that year, that USDA had
made a mistake for environmental reasons, not for food safety
reasons but environmental reasons, you hadn't check in that
boxes, and this product couldn't be harvested or sold.
    As I understand this provision, it gives you the authority
to figure out how to let that one crop, that annual crop, be
harvested and sold unless you agree with the court. And if you
agree with the court and aren't going to appeal, you don't have
to do this at all.
    And by the way, by February 2011, a higher court had said
that's nonsense and of course this crop can be harvested. But I
think, by then, you had done some things that I'm told this
provision just gave you the authority to do if it ever came up
again.
    Would you want to respond to that?
    Secretary Vilsack. Sure. Your recitation of the rather
complex situation with sugar beets is absolutely correct.
    I guess my attitude about this is that I don't think it was
necessary. And this is a delicate conversation we're trying to
have within agriculture between those who are strongly
committed to new technologies and genetically modified efforts,
and those who feel very, very strongly and passionately about
organic or alternative or different ways of agricultural
production.
    And I'm trying to create a conversation between these two
ways of thinking, which is a very difficult conversation,
because people think passionately about this.
    And to a certain extent, I think what happened when that
amendment was passed or put in is it created a concern that
people were trying to slip something through at the last minute
without much debate. And it makes that conversation just a bit
more difficult than it needs to be.
    And as you point out, it doesn't necessarily do anything I
can't already do. So my view of this, why stir up the pot if
you don't have to?
    We're going to make these decisions based on the science
and based on the law, which is the way they ought to be made.
And this creates, I think, some confusion, and I think makes it
harder to have that conversation.
    Senator Blunt. I particularly agree in the short term where
you're only doing something that lasts for 4 or 5 months
anyway. I tend to think that was right, though not only did it
allow you to do something that you already had the authority to
do, it allowed you to do something you'd already done in this
2010 case.
    So this thought that somehow this is some extraordinary--it
made the Department do something the Department couldn't do. In
fact, it specifically said, as I looked back at it after it got
all these attention, that if you agreed with the court and you
weren't going to appeal, you didn't have to do anything. You
could tell all these farm families, you can't sell the crop
that we told you last spring you could plant.
    But, of course, that had not been your position when this
had come up before.
    Secretary Vilsack. And what you've just indicated is
precisely the reason why I was concerned about this, is that it
gets reinterpreted, misinterpreted, expanded, concerns are
expressed about what the real intent of something is, while
we're trying to have this delicate conversation.
    But, Senator, in the time that we've had this conversation,
the good news is your NAP issue for you Missouri farmers has
been resolved.
    Senator Blunt. It was a long enough question, Mr. Tester,
that it actually can solve a problem while I was asking the
next question.
    Now, this is a good response, Mr. Secretary. I'm glad to
hear that.
    I had two or three others. I'll just submit those for the
record. I don't want to take more of everybody else's time than
we need, but I will submit some more, a couple of more,
questions for the record.
    Senator Pryor. Thank you.
    Senator Cochran, do you have any questions?

                        BIO-BASED MARKET PROGRAM

    Senator Cochran. I have one, just as a matter of curiosity.
    And that is, is there any bias in the Department of
preferring bio-based market program items for home construction
over traditional forest products?
    Secretary Vilsack. No, I don't think that there's a bias,
Senator. I think that we actually have a green building
initiative at the Forest Service where we're trying to educate
folks about the important component of wood in construction.
    I think it's a matter of education. I don't think it's a
bias. I think there was an understanding of precisely what the
laws and regulations require in that particular program. But I
wouldn't suggest there is a bias.
    But if you have an indication there is, I'd be more than
happy to visit with you about that.
    Senator Cochran. Well, it's just a matter of personal
curiosity. My staff had written out a question suggesting that
I ask you about the bio-based markets program. And I'm really
not familiar with all of the details of how it works, and to
what extent it is an effort to pressure through use of awards
or rewards one type of building construction over another.
    Secretary Vilsack. I think the way it's structured, it's
designed to promote new and innovative opportunities to support
new and innovative opportunities, on the theory that matured
industries don't necessarily need a leg up or assistance. So I
think that's the strategy and what happens is it, obviously,
works to the detriment of some particular materials that are
more traditional.
    Senator Cochran. How can bamboo be more renewable than
pine? They're both the same in terms of renewability, aren't
they?
    Secretary Vilsack. It has to do with the newness of the
technology and the utilization. I'm not disagreeing with you.
We're trying to work through this. And one way we're trying to
work through it is all of our Forest Service projects from now
on have a preference for green for wood. And we've had several
projects that have been built recently. And we're trying to
encourage more of that understanding on some of the more
traditional materials.
    Senator Cochran. Thank you very much.
    Thank you, Mr. Chairman.
    Senator Pryor. Thank you, Senator Cochran.
    Senator Tester.

                     GENETICALLY MODIFIED ORGANISMS

    Senator Tester. Thank you, Mr. Chairman, and I want to
thank the Secretary once again. And I do want to thank you for
your realization about the delicateness of the whole GMO issue.
I appreciate that a lot.
    We can debate this offline, but I mean, I think the
interpretation is if you make a decision, this is where this is
different, and the court makes another decision that says you
did it improperly, you're required to stay with that original
decision. That's what the GMO rider did, from my
interpretation. I could be wrong. I don't want to go down this
line right now, because I've got other questions I want to ask.

                             PLANT BREEDING

    Classical plant breeding, I'm actually very concerned we're
not doing enough with our Federal dollars for research on
publicly available, locally adapted seeds. And I think that
they're critically important. A diverse seed supply is
important. I think you alluded to that previously.
    I guess Congress has highlighted the issue through report
language, urging conventional and animal breeding and public
cultivar development to be a priority for your Department. The
question is, I guess it's fair to say there are concerns out
there that it's not a priority. And I just want to get your
perspective on those things.
    They're critically important, as we see our climate
changing all the time. And given the challenges of food
security, diversity, farmer viability, where is the Department
on this or you personally?
    Secretary Vilsack. Senator, I think you're going to see
additional investments in this area as a result of the concerns
that have been expressed by folks.
    Let me just simply say that as part of the AC21 effort, and
as part of our concern about climate and adaptation and
mitigation strategies, there is an emphasis on this. We put
together a team in USDA to take a look at climate adaptation
and mitigation. Part of that team is looking at the whole issue
of seed and germplasm, and what do we have, what don't we have,
what are the risks, and so forth.
    So I wouldn't say that there is a lack of concern about
this at all the Department. There's an understanding of the
need for it.
    Senator Tester. I think it's good. And I think in a time
where farmers are tending to lose control of the seed that they
plant, in other words, somebody else owns it, I think these
public cultivars are very, very important. Just wanted to pass
that along.

                          CONSERVATION FUNDING

    Conservation funding. This budget proposes critical
conservation programs significantly below level established in
the farm bill. Look, from a Montana perspective, from a country
perspective, this is a huge industry, this outdoor industry,
which the conservation helps promote.
    The question is, we're in this game, whether it's politics
or agriculture, to be able to pass the land on, and pass the
country on to the kids in better shape that we got it.
    So in this particular area, I'm not sure that the budget
helps us do that, and I was wondering why conservation programs
were targeted in this way.
    Secretary Vilsack. Well, Senator, I respectfully suggest
that we are committed to conservation. We're adding 26.3
million acres to our conservation programs, and it will mean
that there will be another 80,000 producers assisted. It will
mean that we'll continue to increase the record and historic
amount of acres enrolled in conservation programs.
    When the 2008 farm bill was passed, you were in a much
different fiscal circumstance than you find yourself today. So
this is about challenges and strategies.
    So back to my point about being creative, there are two
additional strategies that you weren't using in 2008 that we
are currently using, which we think will expand and continue a
commitment to conservation.
    First is this issue of regulatory certainty. We did not
have the relationship we have with the Department of the
Interior in 2008 on the Endangered Species Act where we're now
being able to grant producers 30 years of regulatory certainty
on the Endangered Species Act if they engage in certain
conservation practices.
    We did not have the relationship we are currently having
with States like Minnesota, States like Maryland and Virginia
who are in water certifications programs, where, using our
conservation programs, they get deemed in compliance with their
certification State requirements.
    So this regulatory certainty creates an additional
incentive and opportunity to expand conservation.
    Second, that notion of ecosystem markets, we are focused
very heavily on trying to measure and quantify the results of
conservation. We believe strongly that if you can measure and
quantify the results, then you can get private sector
investment in conservation in order to sustain and comply with
the regulatory responsibility that a utility or another
industry may have that they can more easily and more
inexpensively meet by conservation on a farm than building a
water treatment facility on their grounds.

                     GENETICALLY MODIFIED ORGANISMS

    Senator Tester. You've got it. Okay.
    One last thing, if I might, Mr. Chairman. You talked about
the AC21 committee. I want to talk about the AC21 committee on
biotech really quick.
    You talked about the ability to coexist with organic
sector, with purebred seed folks. And I think that there's
going to be other issues that come down the line.
    Let me give you an example. You can have a biotech crop
like corn that's being used in a corn chip somewhere. And you
can have another biotech corn plant that has an ingredient
called amylase, which is good for making biofuels, but really
destroys the chip market if it's commingled.
    I guess, as that committee came out with its
recommendations--and the commingling issue is not going to
away. I think it's going to become more and more of a problem
as we move forward. Do you have any suggestions or did they
give you any suggestions on how you can move forward in a way
that's sustainable financially and really deal with the
coexistence issue?
    Secretary Vilsack. I'm not sure that we specifically
addressed the commingling issue as it relates to your
particular example. But the way to answer your question, I
think, is to say that there were three main focuses of this
effort.
    One was identifying stewardship responsibilities that
producers of GM products will have, and understanding what's
being raised around them, and timing and types of planning
decisions that could minimize or reduce the risk of
commingling.
    And then, second, creating some kind of financial
mechanism, maybe it's insurance, maybe it's something different
than that, that would cover the risk of commingling when
someone is financially devastated as a result.
    And third is continuing to do significant research so that
we understand better what's actually happening out there,
because there's a lot of talk about what's happening, but
there's not a whole lot of data about what's happening.
    So collecting information and analyzing it and researching
it will allow us to do a better job with the stewardship and
the risk management piece of this.
    Senator Tester. I appreciate that. And I would hope that
research would happen even before it's released into the
ecosystem to find out what the potential of it happening out
there is.
    I mean, Mother Nature is a very simply but yet very complex
beast, let's just put it that way. And I think that the tools
are out there, and the potential tools for genetically modified
plants makes a person very hopeful. But we need to make sure
we're not getting more than what we bargain for. After it's
into the ecosystem, you can't pull it out.
    So thank you, Mr. Secretary. I just want to say thank you
very much for the job you've done in the Department. I very
much appreciate it, as somebody that's involved in production
agriculture, the work that you've done and your commitment to
rural America. Thank you very much.

                         AGRICULTURAL RESEARCH

    Senator Pryor. Thank you, Senator Tester.
    Mr. Secretary, I want to thank you for being here. I do
have some questions for the record. We need to move on to the
second panel at this point, but I do have some questions about
the Dale Bumpers Small Farms Center. I do not support the
closing of that center.
    And also some of the unique funding challenges for the
Arkansas Children's Nutritional Center, but I want to follow up
on that with you offline and talk through that and walk you
through that and you can walk us through that, and hopefully
come to some sort of agreement.
    And then I just want to end where we started. I asked you
about agricultural research in the beginning. I think it's
critically important. And again, we'll follow up on this and
talk about this in a separate setting. But you focused on
competitive research, and I think that the capacity funding for
our land grant universities is also important and let's just
continue to have that conversation as we go.
    And I want to thank you and your team for being here today.
We look forward to continue working with you.
    And, as you know, we always have an open line of
communication, and we'd love to hear from you, love to continue
to work with you.
    Secretary Vilsack. Thank you, Mr. Chairman.
    Senator Pryor. Thank you. Thank you very much.

                      Office of Inspector General

STATEMENT OF HON. PHYLLIS K. FONG, INSPECTOR GENERAL
ACCOMPANIED BY:
        GIL HARDEN, ASSISTANT INSPECTOR GENERAL FOR AUDIT
        KAREN ELLIS, ASSISTANT INSPECTOR GENERAL FOR INVESTIGATIONS
    Senator Pryor. I'm now going to introduce our second panel.
And, as our staff clears the table and resets it, I'll just go
ahead and just say very briefly, our second panel today is the
Honorable Phyllis Fong. She's the inspector general of the U.S.
Department of Agriculture.
    And my understanding is, Ms. Fong, this is your first time
to be before this subcommittee. We welcome you here. We thank
you for your work. And I know that we have questions for you
about some of the efforts you've done at the Department of
Agriculture.
    I know you have Karen Ellis and Gil Harden here, and we
want to welcome all of you to this.
    So if you would go ahead and start with your opening
statement, we'll limit that to 5 minutes. Thank you.
    Ms. Fong. Well, thank you, Mr. Chairman, and Ranking Member
Blunt. It's really a pleasure to be here this morning. And as
you point out, it is our first time. So we're looking forward
to a good exchange of views.
    We appreciate the support that this subcommittee has shown
for the Office of Inspector General and our work. And, as
always, we welcome the chance to address your concerns.
    You have my full written statement, so I won't go into
great detail. Let me just very quickly summarize that our
mission at the Office of Inspector General is to support the
Department and to help the Department deliver its activities as
effectively as it can.
    And so we do spend quite a bit of time on very high-
priority issues involving the safety of the food supply,
involving the Department's biggest programs, the Supplemental
Nutrition Assistance Program (SNAP), as well as the various
management activities of the Department including financial
management, improper payments, information technology (IT)
security, and the full range of Department activities.

                           PREPARED STATEMENT

    And, as you know, we had a very successful year. Last year,
we reported outstanding productivity. And so, we would just
summarize by asking your support for our budget request for
fiscal year 2014.
    And with that, we're ready to address your questions.
    [The statement follows:]
               Prepared Statement of Hon. Phyllis K. Fong
    Good morning, Chairman Pryor, Ranking Member Blunt, and members of
the subcommittee. Thank you for the opportunity to testify concerning
the oversight the Office of Inspector General (OIG) provides to
Department of Agriculture (USDA) programs and operations. As you know,
OIG's mission is to promote economy, efficiency, effectiveness, and
integrity in the delivery of USDA's programs.
    OIG conducts audits designed to ascertain if a program is
functioning as intended, if program payments are reaching intended
recipients, and if funds are achieving their intended purpose. Our
audits make recommendations we believe will help USDA better accomplish
its mission. We do not have programmatic or operating authority over
agencies or programs; instead, agencies are responsible for
implementing our recommended corrective actions. We also conduct
investigations of individuals and entities suspected of abusing USDA
programs--these investigations can result in fines and imprisonment for
those convicted of wrongdoing, disqualification from USDA programs, and
agency disciplinary actions for USDA employees found to have engaged in
misconduct.
    In fiscal year 2012, OIG's activities resulted in potential
monetary results totaling over $1.5 billion. We issued 76 audit reports
intended to strengthen USDA programs and operations, which produced
about $1.4 billion in potential results. OIG investigations led to 538
convictions with potential results totaling over $106 million.
    Today I will discuss our most significant recent audits and
investigations under our major strategic goals, which provide a
framework for prioritizing OIG's continually changing portfolio of
oversight work. We will summarize our remaining work overseeing the
Department's administration of American Recovery and Reinvestment Act
of 2009 (Recovery Act) funds.\1\ Finally, we will conclude with a
description of the cost-saving actions that OIG is taking in fiscal
year 2013 to live within its budget constraints, as well as a summary
of the President's fiscal year 2014 budget request for OIG.
---------------------------------------------------------------------------
    \1\ Public Law 111-5, 123 Stat. 115 (2009).
---------------------------------------------------------------------------
 oig goal 1: strengthen usda's safety and security measures for public
                                 health
    To support USDA's mission to ensure the wholesomeness of the U.S.
food supply, OIG conducts audits and investigations intended to ensure
that U.S. consumers purchase safe, high quality products.
The Animal and Plant Health Inspection Service (APHIS) and Smuggling
        Interdiction
    APHIS' Smuggling, Interdiction and Trade Compliance (SITC) unit
prevents the unlawful entry and distribution of prohibited agricultural
products that may harbor plant and animal pests, diseases, or invasive
species. These prohibited products and pests cause billions of dollars
in lost revenue and millions in cleanup costs. We found that SITC's
control environment did not include a system of management
accountability that would foster efficiency, adequacy, or accuracy in
achieving its core mission and reporting its results. For example, 90
percent of SITC's market surveys (intended to seize prohibited products
and investigate their origins) were not successful at either seizing a
prohibited product or in generating a trace back to identify the
importer of a prohibited product. For the surveys that were successful
in these two areas, SITC did not take further action to stop future
shipments for 96 percent of the higher risk imported prohibited
products it seized. We recommended that APHIS assess the effectiveness
of SITC's mission, and the agency agreed.
The Food Safety and Inspection Service (FSIS) and Meat Inspection
    OIG has also published several recent audits intended to help
improve the quality of inspections FSIS performs at meat processing
plants around the country. One audit set out to determine if FSIS has
sufficient inspection personnel to adequately monitor establishments
that process meat and poultry products.\2\ Although FSIS requires
inspectors to visit slaughter establishments at least once per day, and
at least once per operating shift, we noted that inspectors did not
always comply due to events such as inclement weather, traffic delays,
inspector delays at prior establishments, and unscheduled leave by
inspectors. When such unexpected events occurred, FSIS had not
established mitigating procedures for inspectors to use during the next
scheduled visit to ensure that meat and poultry products were processed
on the missed date in a safe and sanitary manner. We recommended that
FSIS develop mitigating procedures for inspectors to perform when they
miss scheduled inspections at processing establishments and require
supervisors to analyze data from followup visits. FSIS generally agreed
with our recommendations.
---------------------------------------------------------------------------
    \2\ Because FSIS did not track whether establishments missed
scheduled procedures due to unavailable inspectors, we were unable to
reach a conclusion on the sufficiency of FSIS' inspection staff level.
---------------------------------------------------------------------------
    OIG also reviewed how effectively FSIS tests boxed beef items that
downstream processors used for ground beef production and found that
the agency needs to re-evaluate its E. coli testing methodology as it
relates to the downstream processing of boxed beef products. While FSIS
tests product designated as ground beef or likely to become ground
beef, it does not sample all boxed beef product. Some downstream
processors grind such boxes of cuts of beef without sampling it for E.
coli prior to grinding. Similarly, ``retail exempt establishments''--
such as grocery stores, restaurants, hotels, butcher shops--often grind
their own ground beef; but unlike federally inspected plants, FSIS does
not sample and test bench trim at these establishments for E. coli. We
recommended that FSIS take additional steps to ensure that beef to be
ground throughout the production process--from federally inspected
slaughter establishments to local grocery stores--be subject to FSIS
sampling and testing for E. coli, and the agency agreed.
    Several recent OIG investigations have also highlighted the need
for continued vigilance in the area of food safety. In May 2012, a
Kansas food company was convicted and sentenced to pay $480,282 in
restitution to the U.S. Bureau of Prisons for selling misbranded meat
products. From August 2006 through July 2007, the manufacturer caused
more than 1 million pounds of beef trim to become adulterated and
misbranded; it then sold, transported, and delivered this beef to
Federal correction institutions located in several States.
    Other investigations have helped protect the USDA organic label
from individuals who would abuse it. In April 2012, an Oregon man who
sold 4.2 million pounds of conventionally grown corn falsely labeled as
USDA-certified organic corn was sentenced to 27 months in prison and 36
months of supervised release for wire fraud. This corn had been fed to
cattle, and the resulting beef and dairy products were sold to
consumers as USDA-certified organic. Similarly, in November 2012, the
owner of a large volume organic products company was sentenced in
California to 78 months in Federal prison for selling fertilizer
falsely represented as organic. He was also ordered to pay $9 million
in restitution.
   oig goal 2: strengthening program integrity and improving benefit
                                delivery
    One of OIG's most important goals is helping USDA safeguard its
programs and ensuring that benefits are reaching those they are
intended to reach. Given the size of the Food and Nutrition Service's
(FNS) Supplemental Nutrition Assistance Program (SNAP)--$82 billion in
fiscal year 2012--OIG has made a concerted effort to oversee compliance
within that program.
    OIG continues to direct a large percentage of its investigative
resources to combating the trafficking of SNAP benefits.\3\ In fiscal
year 2012, OIG devoted about 52 percent of its investigative resources
to SNAP-related criminal investigations, which resulted in 342
convictions and monetary results totaling $57.7 million. In a recent
example, a north Texas grocery store owner pled guilty to SNAP
trafficking, wire fraud, and running an illegal money transmitting
business. The store owner was sentenced in January 2013 to 57 months of
imprisonment and ordered to pay restitution of $1.4 million. During the
investigation, SNAP recipients admitted to exchanging SNAP benefits for
cash and to using SNAP benefits to wire money to friends and family
members in North Africa.
---------------------------------------------------------------------------
    \3\ Trafficking is the illegal exchange of SNAP benefits for cash
or other ineligible items. See 7 U.S.C. section 2024(b) and 7 C.F.R.
section 271.2.
---------------------------------------------------------------------------
    We also continue to work closely with State and local law
enforcement agencies to prosecute SNAP recipients who abuse benefits.
For instance, in March 2012, when a Texas store owner was convicted of
trafficking $1.3 million in SNAP benefits in his convenience store, OIG
worked with local authorities to pursue the recipients as well. These
individuals used their benefits to buy various ineligible items
including gasoline, tobacco products, and alcohol, and also to play
video poker at the store. To date, the local district attorney has
accepted referrals of over 100 SNAP recipients for prosecution by the
State of Texas.
    OIG audits have shown that FNS can improve its controls over SNAP.
One audit analyzed SNAP-related databases at Federal and State levels
to identify anomalies that may result in ineligible individuals
receiving SNAP benefits. We found that, while FNS and States do have
tools for ensuring applicant eligibility and detecting fraud, States
either do not make full use of the tools, or cannot rely on the data
provided by the tools to take actions related to benefits. While our
data mining reviews found a relatively low percentage of potentially
ineligible recipients receiving SNAP benefits (just 0.20 percent), that
percentage represents large sums in a program of SNAP's size--about
$3.7 million per month. OIG recommended that FNS make full use of the
fraud detection tools it already has, as well as strengthen its fraud
reduction efforts. FNS agreed to our recommendations.
Other Food Assistance Programs
    Of course, SNAP is not the only food assistance program that can
benefit from improved oversight. The National School Lunch Program
contracts with food service management companies to serve 31 million
children lunch each day, with total disbursements of approximately $11
billion. Our review of 18 school food authorities showed that 11 did
not exercise sufficient management oversight to ensure they received
the full benefits of purchase discounts and rebates and the value of
USDA-donated foods. As a result, we questioned almost $1.7 million in
unallowable costs and USDA-donated foods that could not be accounted
for. We recommended that FNS improve its controls over these contracts
and agency officials generally agreed.
    An OIG investigation revealed that an organized group of
individuals opened 13 storefront operations in Georgia to defraud SNAP
and the Special Supplemental Nutrition Program for Women, Infants, and
Children (WIC). From February 2009 to June 2011, this group illegally
exchanged over $5 million in benefits for cash. To date, 16 individuals
have been charged with conspiracy or theft of Government funds. In
fiscal year 2012, 13 individuals were sentenced to incarceration
periods ranging from 9 to 63 months and were ordered to pay a total of
$6.3 million in restitution. Three individuals are scheduled for trial
in June 2013.
    An OIG audit of FNS' controls over vendor management and
participant eligibility in WIC found that the agency's management
evaluations did not identify and correct significant issues in the
vendor management processes at two State agencies operating WIC. State
agencies in Illinois and Florida lacked sufficient controls to track
vendor violations for 42 vendors, and ensure timely and appropriate
sanctions. As a result, these vendors were not disqualified as required
by FNS regulations, and could redeem an estimated $6.6 million in WIC
benefits during their required periods of disqualification. We
recommended that FNS improve its controls over WIC, and the agency
generally agreed.
Farm Programs
    OIG also works to help ensure the integrity of USDA farm programs.
A recent audit reviewed how the Farm Service Agency (FSA) determines
the soil rental rates used for payments in its Conservation Reserve
Program (CRP)--a program that provides annual payments to producers who
agree to maintain conservation practices such as establishing grass
cover on farms to prevent soil erosion and reduce chemical runoff. We
found that FSA did not use the National Resources Conservation
Service's (NRCS) most up-to-date measure of soil productivity, which
uses scientific data relating directly to the ability of soils,
landscapes, and climates to foster crop productivity on non-irrigated
soil. Additionally, FSA did not use the National Agricultural
Statistics Service's (NASS) statistically valid survey of county
average rental rates for cropland and pastureland, and instead allowed
States and counties to submit alternate rates, which were not always
supported. OIG questioned these rates and determined that FSA's rates
exceeded NASS' by about $127 million over the 10-year life of the CRP
contracts. We recommended that FSA improve how it determines these
rates, and the agency generally agreed.
The Risk Management Agency (RMA) and Crop Insurance
    OIG has recently completed work on how RMA operates the crop
insurance programs that U.S. farmers and ranchers rely on. One of our
audits reviewed how RMA reinsures private insurance companies (known as
approved insurance providers (AIP)) when they insure new producers.
Such ``new producers''--defined as those who have no more than 2 years
of history farming a specific crop--are considered higher risk and RMA
therefore reinsures the AIPs at a higher rate. We determined that 154
of 176 new producer-designated crop insurance policies in our sample
were sold to insured producers who were not eligible for new producer
status--57 of these policies resulted in indemnities totaling $2.4
million and $910,000 in associated costs. We recommended that RMA
improve how AIPs determine if a producer should be considered new or
not, and the agency generally agreed with our recommendations.
    Our review of how RMA is overseeing Federal crop insurance coverage
for organically produced crops found that transitional yields offered
to organic producers overstated actual production capabilities of
farmers producing crops using organic farming practices. We determined
that this error resulted in excessive insurance coverage and higher
indemnity payments for 35 of 48 crop policies with losses. Because the
policies guaranteed excessive yields, at least $952,000 of the $2.56
million that RMA paid in indemnities were excessive. We recommended
that RMA reduce transitional yields for crops produced using organic
farming practices, and the agency agreed.
    Several recent OIG investigations have also involved farm programs.
In one case, RMA and OIG worked together to determine that a farmer in
Illinois underreported his crop production in 2009 and 2010, thereby
defrauding the Government of more than $500,000. The farmer pled guilty
to money laundering and bankruptcy fraud, and was sentenced to 51
months of imprisonment and restitution totaling $1.8 million.
    I would also like to draw the Committee's attention to a
particularly noteworthy investigation involving widespread crop
insurance fraud for tobacco in North Carolina, which has resulted in
several cases. In one case an insurance agent was sentenced to 108
months of imprisonment and $8.3 million in restitution. In a second
case a crop adjuster was sentenced to 48 months imprisonment and $21
million in restitution jointly and severally with the other subjects of
the investigation. OIG's ongoing investigation of this conspiracy has
resulted in a total of 40 convictions, 28 years' prison time, and $55
million in restitution, to date.\4\
---------------------------------------------------------------------------
    \4\ These results include both cases.
---------------------------------------------------------------------------
       oig goal 3: oig work in support of management initiatives
    OIG is also working to aid the Department in improving the
processes and systems it needs to function effectively. Bringing its
information technology (IT) systems into line with Federal standards
has been a significant challenge for USDA. Over the last 4 years, OIG
has made 49 recommendations in our fiscal year 2009-2012 Federal
Information Security Management Act (FISMA) audits to improve the
overall security of USDA's systems.\5\ The Office of the Chief
Information Officer (OCIO) has completed action to resolve 14, and USDA
is taking steps to resolve the remaining recommendations.
---------------------------------------------------------------------------
    \5\ 44 U.S.C. sections 3541 et seq.
---------------------------------------------------------------------------
    In fiscal years 2010 and 2011, OCIO received about $66 million to
fund additional IT security projects to address some of these system
weaknesses. OIG reviewed the use of these funds and found that the
office did not prioritize its efforts to mitigate IT security
weaknesses and accomplish a manageable number of the highest priority
projects before proceeding to the next set of priorities. Instead, we
found that several of OCIO's projects did not meet the purposes
outlined in the congressional request for funding or address the
Department's most critical IT security concerns. For example, OCIO
exceeded proposed budgets for projects, did not allot sufficient
funding to key security areas, and did not completely implement the
projects it started. We recommended that OCIO document the
prioritization of projects Departmentwide, and the agency agreed to
take the appropriate action.
Reducing Improper Payments at USDA
    The Improper Payments Elimination and Recovery Act of 2010 (IPERA)
requires OIG to determine whether USDA complies with IPERA annually.\6\
For fiscal year 2012, OIG determined that USDA did not comply with
IPERA for a second consecutive year. USDA made progress in improving
its processes to substantially comply with IPERA, but the Department
was not compliant with three of the seven IPERA requirements, including
reporting sufficient estimates for high-risk programs, reporting error
rates below specific thresholds, and meeting annual reduction targets.
By meeting reduction targets, USDA could have avoided making
approximately $74 million in improper payments. As required, OIG must
report to Congress that USDA did not comply with IPERA. For those
programs that did not comply for 2 consecutive fiscal years, USDA must
consult with the Office of Management and Budget to discuss further
actions. We briefed USDA officials on our results, and they generally
concurred with our findings and recommendations.
---------------------------------------------------------------------------
    \6\ Public Law 111-204, 124 Stat. 2224 (2010).
---------------------------------------------------------------------------
    As part of the effort to eliminate payment error, waste, fraud, and
abuse in Federal programs, OIG reviewed USDA's compliance with the
executive order on improper payments and found that USDA has made
significant improvements in identifying high-dollar overpayments within
its 16 high-risk programs.\7\ However, we noted that the component
agencies' submissions to the Department did not always completely and
accurately account for high-dollar overpayments and corrective actions,
and that the Department did not submit these reports until 23 to 99
days after the required due date. We recommended that OCFO improve its
oversight of this process, and the agency agreed.
---------------------------------------------------------------------------
    \7\ Executive Order No. 13,520, 74 Fed. Reg. 62,201 (Nov. 25,
2009).
---------------------------------------------------------------------------
    At NRCS, OIG reviewed the steps the agency has taken to ensure that
its conservation programs are reaching the intended participants and
achieving their intended results. We found that NRCS has not
implemented a comprehensive, integrated compliance strategy designed to
verify that its $3.6 billion in conservation programs are being used as
intended. Over the past decade, a number of OIG audits have
demonstrated that NRCS has longstanding problems with verifying the
eligibility of participants, participant compliance with conservation
agreements, and the valuation of easements. We recommended that NRCS
perform a risk assessment of its vulnerabilities and focus its
compliance activities on areas of program weaknesses, such as
eligibility. Agency officials generally agreed.
Investigations of Wrongdoing by USDA Employees
    When a USDA employee is accused of criminal activity, OIG is
responsible for performing investigations of any wrongdoing. An OIG
investigation found that a former FSA county committee member and her
husband conspired to defraud USDA by stealing the identities of
unsuspecting parties and submitting false and fraudulent claims.
Ultimately, they caused FSA to make approximately $1 million in
fraudulent payments. In August 2012, the former FSA county committee
member and her husband were sentenced to 52 and 57 months in prison,
respectively. In addition, they were jointly ordered to pay $802,490 in
restitution.
     oig goal 4: improving usda's stewardship of natural resources
    Since USDA is entrusted with hundreds of billions of dollars in
fixed public assets, such as 193 million acres of national forests and
grasslands, OIG performs reviews to ensure that the Department is
acting as an effective steward of these natural resources. One review
found that the Forest Service (FS) allocated Recovery Act grants for
wildland fire management (WFM) activities--such as hazardous fuels
reduction, forest health, and ecosystem improvements--without the
necessary controls to ensure that the grant funds were both properly
accounted for and used for their intended purpose. These findings apply
not just to Recovery Act grants, but to the entire FS WFM grant
program. We also found that FS did not enhance its existing controls,
despite the Recovery Act's requirements for greater transparency and
accountability. As a result, grant recipients charged a total of $92
million in unallowable and questionable costs to both Recovery Act and
non-Recovery Act grants. Additionally, FS staff did not take necessary
steps to ensure that the agency met the Recovery Act's overall
objective of maximizing job creation and retention in the most cost-
effective manner possible. FS generally concurred with all of our audit
recommendations.
                oig's oversight of recovery act programs
    We are working to finish our remaining oversight work directed
towards ensuring that the $28 billion in funds USDA received from the
Recovery Act served their intended purposes. Because many of our
recommendations concerning Recovery Act funds also apply to regular
USDA programs, our work will have lasting importance long after
Recovery Act funding has been expended.
RD's Single Family Housing (SFH) Guaranteed Loan Program
    In order to provide low- and moderate-income people who live in
rural areas with an opportunity to own homes, the Federal Government
guarantees loans and reimburses up to 90 percent of the original loan
amount if a borrower defaults on a loan. Given increases in such loss
claims--from $103 million in fiscal year 2008 to $295 million in fiscal
year 2011--OIG reviewed the program and determined that RD needs to
better identify loans with questionable eligibility prior to paying
loss claims, reduce loss claims when lenders improperly serviced loans,
and pay lenders only for eligible expenses. We estimate that the agency
paid about $87 million in loss claims that were at risk of improper
payments due to questionable loan eligibility, and paid about $254
million in loss claims for loans that were at risk of improper payments
due to questionable lender servicing. We recommended that RD improve
its loss claims process to address these circumstances, and the agency
generally agreed with our recommendations.
    Most of our remaining Recovery Act projects involve assessing
agency determinations of program effectiveness through analysis of
Recovery Act performance measures.
                 oig's fiscal year 2014 budget request
    OIG continues to offer Congress an excellent return on its
oversight investment, per $1 spent. From fiscal year 2007 to fiscal
year 2012, the potential dollar impact of OIG audits and investigations
has been $6.9 billion, while our appropriations have been $508 million.
For every $1 invested, we realized potential cost-savings and
recoveries of about $13.66. This calculation does not include the value
of our food safety work and program improvement recommendations, which
are extremely important to USDA's mission and the welfare of the
general public, but are not easily quantified.
    We have also streamlined our operations in an effort to work as
efficiently as possible. For example, in fiscal year 2012, OIG
conducted a functional analysis to ensure that we, as an agency, are
tying our resources to what is most critical to meeting our mission and
are positioned to operate as efficiently and effectively as possible.
Based on this analysis, we are taking the following steps to build a
leaner and more effective agency:
  --offering Voluntary Early Retirement Authority and Voluntary
        Separation Incentive Payments (39 employees separated pursuant
        to these authorities);
  --increasing the use of video and teleconferencing to reduce travel
        costs;
  --reviewing leases and office structure, resulting in savings from
        steps such as office consolidation;
  --allowing employees to fill GS-14 and GS-15 positions without
        moving, which has reduced relocation costs; and
  --shifting Investigations and Audit employees away from headquarters
        and to the field, which puts more resources into activities
        that directly accomplish our mission.
    Although these steps have enabled OIG to continue performing its
oversight role despite a restricted budget, we note that OIG is
presently functioning at its lowest level of authorized staffing since
1963. The availability of staff and travel resources has become a key
consideration in determining which audit and investigative matters OIG
can undertake.
    We ask that you support the President's fiscal year 2014 budget
request of $89.9 million for OIG, which would enable us to provide
effective oversight of USDA programs and help ensure that tax dollars
are being well spent. The President's budget includes modest increases
in areas where we should be able to produce a high-value return for a
relatively small investment:
  --$785,000 to support statistical sampling that would accurately
        project the extent of improper payments in audits of USDA
        benefit programs. This multiplies our work's range and
        effectiveness, especially for very large programs like SNAP.
  --$620,000 to fund enhanced audit and investigations oversight of
        USDA's international programs.
  --$1,217,000 for investigative initiatives to address SNAP fraud on
        the part of both retailers and recipients involved in benefit
        trafficking.
  --$468,000 for the Council of the Inspectors General on Integrity and
        Efficiency by funding Government-wide activities to identify
        vulnerabilities in Federal programs.
  --$667,000 for increased pay costs to support and maintain current
        staffing levels to meet the demands and statutory requirements
        of OIG. Approximately 86 percent of OIG's budget supports
        personnel compensation.
    This concludes my testimony. Thank you for the opportunity to
testify, and I would be pleased to address any questions you may have.

    Senator Pryor. Great, thank you.

               SUPPLEMENTAL NUTRITION ASSISTANCE PROGRAM

    Let me start with the SNAP program. Obviously, SNAP is
nearly an $80 billion program, which is the largest single USDA
program. Can you just give us a brief summary of the work
you've been doing to combat fraud and abuse in SNAP, and the
recommendations that you've worked on, on SNAP.
    Ms. Fong. Well, thank you. That is definitely a focus for
our office. It is the biggest program. And what we have tried
to do over the last 5 or 6 years is really pinpoint the areas
in the program where there is potential for vulnerability and
fraud. And so, we're looking, for example, at the Department
level, how the Food and Nutrition Service (FNS) manages the
program. We're looking at the interaction between retailers and
beneficiaries. And we're looking at how the States make the
determinations on eligibility for recipients.
    We have issued numerous audit reports and investigation
reports with a lot of recommendations to the Department. And
FNS, I'm happy to say, is working with us very collaboratively
on trying to address these issues.
    Senator Pryor. That's good news.

                     NATIONAL SCHOOL LUNCH PROGRAM

    Let me also ask a similar question about the National
School Lunch Program. I know you've been doing audits there,
and can you give us just a brief update on the National School
Lunch Program and your findings there?
    Ms. Fong. You're correct that that is an area of focus for
us as well. We are, right now, looking at the improper payment
issues in that program. The rate of improper payments tends to
be very high as estimated by the program.
    We have done some work recently involving the food service
management companies, and whether or not the rebates that those
companies receive are passed along appropriately. And we will
continue to work in that program.
    Senator Pryor. Okay.
    Senator Blunt.
    Senator Blunt. Thank you, Chairman.

                              WIC PROGRAM

    Following up on the chairman's questions about SNAP, the
WIC program, there appears to me to be, in the information
we've had, a difference in the people who are taking advantage
of the system and people who are violating the law.
    And as I understand it, in Georgia recently you found some
real violations of law. In California, an issue that we've
talked about at this same hearing with the Department, not
necessarily with you, last year, it turns out that California's
rules and regulations were so flexible that they let people do
things that were clearly stressing the system in bad ways, but
not necessarily illegal behavior.
    Would you talk a little about how both of those things are
things that we need to try to do something about?
    Ms. Fong. Well, this is an area that we are finding that we
need to spend more time on, the WIC program.
    As you point out, there has been quite a bit of fraud. And
some of our cases in Georgia really point out the kinds of
trafficking that we have seen, which is very similar to the
trafficking that we find in the food stamp program.
    The other situation that you mention, we appreciate your
bringing that to our attention. We have not, to date, done work
on that particular issue, but we do have some ongoing audit
work that we are starting now, focusing on the vendors in the
WIC program and how the food prices can be worked with.
    I believe we'll be focusing on that in that audit, and we
should have more to report on this next year.
    Senator Blunt. Okay. As I understand, as I recall this from
last year, the California situation was a number of stores had
been set up really focused as WIC or SNAP locations, but more
WIC because you're buying product, as I understand it, and then
they're getting reimbursed for what they charge for it.
    But the California rules appear to be rules that actually
allow some of that behavior to happen, maybe not ethical, but
legal where I think we need to--I'll look forward to your
response to that as you have a chance to look at what if
anything can be done so that you don't have locations just set
up to game the system and do it within the rules of the system.
    Ms. Fong. I think one of the issues that we would want to
look at is how this is being implemented nationwide, whether
there is any variance between States. And there may be some
issues that could be addressed at the national level on that.

                           IMPROPER PAYMENTS

    Senator Blunt. And for the second year in a row, OIG has
found that USDA doesn't comply with the Improper Payments and
Recovery Act, because of the complexity of these programs?
What's your sense of why that is?
    Ms. Fong. Well, you're referring to the requirements that,
every year, the Department has to identify its improper payment
activity, it has to identify where the issues are that may
result in improper payments, and then report on actions that it
will take to address those issues.
    And under those statutes, we in the Office of Inspector
General have to audit the Department's efforts. And as you
point out, for the second year in a row--this is a fairly new
requirement that we go in and audit these efforts. We have
found the Department has made progress.
    Since last year, it's made progress. But there are still
areas that need to be addressed. And we are seeing issues, both
at the Department level, as well as at the individual agency
level, as well as issues with improper payments in particular
programs.
    Our written statement identifies a number of specific
programs where we have found improper payment issues. So this
will continue to be a high priority for us.
    Senator Blunt. Well, thank you.
    Mr. Chairman, I have some other questions I think I'll
submit for the record. So that's all I have right now.
    Senator Pryor. Thank you, Senator Blunt.
    Let me go ahead and ask a couple of more before we break
for the day here.

                         REDUCTION IN WORKFORCE

    I know that we're in a budget-declining and budget-
restricted time. And one of the results of that is going to be
a fewer number of staff. And I think, in some ways, we should
applaud that and encourage that and find those efficiencies.
But I do have a concern about some agencies as they reduce
staff, might the program integrity suffer, might it open the
door for fraud and waste and mismanagement, because there's
just not as many people there taking care of the Nation's
business?
    So have you had that experience at USDA? Are you seeing any
drop off with the number of employees going down?
    Ms. Fong. I think you put your finger on a very difficult
issue. There's no question that many of the agencies are losing
significant portions of their workforce, and they tend to lose
the very experienced people who really know the programs inside
out.
    And I think we have, as an office, seen that there are
succession-planning challenges, there are challenges in
continuing to deliver the programs with less staff.
    And I don't know what the solution to that is. As we do our
work within the Department and identify areas that need work,
we try to come up with solutions that are not staff-intensive,
that make better use of IT, for example, that may be more
efficient in terms of business process.
    But I think we will continue to see the Department
challenged in this regard.
    Senator Pryor. And do you think you'll see the incidence of
waste and maybe fraud go up as the staffing levels go down?
    Ms. Fong. I think it's hard to predict. Some of the
recommendations that we do make to the agencies are that they
come up with a baseline estimate on the level of fraud in their
programs.
    And just for an example, within the SNAP program, the
agency has identified a certain percentage of what it believes
to be improper payments. But in our view, they don't have a
good estimate on the level of fraud or trafficking. And so we
have made recommendations to them that they actually engage in
that analysis so that they have a benchmark and then can
measure whether things get better or get worse over time.

                              CIVIL RIGHTS

    Senator Pryor. And for my last question, I want to have
some questions for the record as well, but for my last
question, I'd like to ask about a sensitive subject at USDA,
because USDA has had some problems in this area of civil rights
over the years.
    And there was recently a New York Times article that was
critical of the processes that the Department utilized to
settle four large civil rights cases. I don't know if you had a
chance to read that or if you're familiar with it.
    But basically, the article points out that the
administration at USDA made certain decisions that maybe
maximized claimants chances of receiving a settlement and that
there possibly was fraud and fraudulent tactics on the parts of
the claimants.
    I don't know if you're familiar with that. That's a fairly
serious charge, and I was wondering if you have any
investigation along those lines, again, if you're familiar with
that story and the circumstances around it.
    Ms. Fong. Thanks for that question.
    I believe the article is focused on the so-called Pigford
II litigation situation. And as you know, that's been a
longstanding challenge for the Department. We in the Office of
Inspector General have been dealing with Pigford situation,
both on the audit as well as investigative sides.
    On the investigation side, very simply, whenever there are
allegations of fraud in that process, our agreement with the
Department of Justice is to refer those allegations to the
Federal Bureau of Investigation to look at. And we have done
that for the past 10 years or so.
    One the audit side, because of a concern that payments may
be made improperly to people who don't deserve the claims, as
you probably know, Congress mandated that we do an audit, a
performance audit of the Pigford claim process, prior to any
payout of the claims.
    And so we are, right now, engaged in that audit. We have
just about finished our fieldwork. And we should have a report
out in the near future, which, I think, will help the process
and help to ensure integrity in that payment process.

                     ADDITIONAL COMMITTEE QUESTIONS

    Senator Pryor. Great.
    Listen, I want to say thank you. We're going to have other
questions for the record. And I know other subcommittee members
will have those as well.
    So thank you for being here, and thank you for your
preparation and for you appearance, and also, of course, to
Secretary Vilsack.
    What we're going to do on the subcommittee is we're going
to allow Senators 1 week to submit additional questions to the
subcommittee staff, and that's a week from today, so that's
Thursday, May 16. And then we'll send those over to USDA.
    We would appreciate you all having your answers back within
4 weeks of that time.
    [The following questions were not asked at the hearing, but
were submitted to the Department for response subsequent to the
hearing:]
             Questions Submitted to Hon. Thomas J. Vilsack
              Questions Submitted by Senator Mark L. Pryor
                         strikeforce initiative
    Question. In 2010, the Department implemented the StrikeForce
Initiative to increase participation in USDA programs in high poverty
counties. Selected counties in Arkansas, Georgia, and Mississippi were
included. Recently, USDA announced expansion of this initiative into 10
additional States. NRCS, FSA, and RD are all involved in the
StrikeForce Initiative.
    Can you please explain how the StrikeForce Initiative works?
    Answer. The USDA StrikeForce for Rural Growth and Opportunity was
piloted in 2010 as a partnership with community-based organizations
(congregations, volunteer organizations, nonprofits and others) to
improve access to USDA programs in poverty-stricken rural areas with
more than 20 percent poverty. NRCS, FSA, RD, and other USDA agencies
work together to increase awareness and enrollment in programs.
    The overall goal for StrikeForce is to increase partnership with
rural communities and leverage community resources to reduce poverty in
targeted, persistent poverty counties. USDA aims to accomplish this by
increased technical assistance through meetings and trainings;
providing assistance to increase the number of applications for USDA
program associated with the Socially Disadvantaged Groups; assessing
the number of successful applications to USDA programs by Socially
Disadvantaged Groups; and a 10-percent increase in funding from all
USDA programs to StrikeForce target areas.
    StrikeForce is coordinated at USDA headquarters and managed by
NRCS, as the current chair of the National Food and Agriculture
Committee. State conservationists in each StrikeForce State lead the
effort with RD, FSA, and regional representatives from AMS, FNS, and
RMA. Each agency in the 16 StrikeForce States has a designated agency
StrikeForce lead, usually the State Conservationist for NRCS, State
Director for RD, or State Executive Director for FSA. Arkansas,
Georgia, and Mississippi are the original States that were in the 2010
pilot; Colorado, New Mexico, and Nevada were added to the Initiative in
2011; and Alabama, Alaska, Arizona, North Carolina, North Dakota, South
Carolina, South Dakota, Texas, Utah, and Virginia were added in 2013.
    Question. What successes have you seen to date, and how do you plan
to measure success over the long term?
    Answer. NRCS has forged partnerships with key local nonprofit
organizations to host hundreds of outreach meetings with historically
underserved populations, and has allocated $35 million above normal
program allocations in the Environmental Quality Incentives Program
(EQIP) over the last 3 years. As of the second quarter of this fiscal
year, a total of 1,295 contracts have been selected for funding,
obligating over $22 million on more than 500,000 acres of eligible
lands. NRCS will continue to evaluate funding applications through the
end of the year to increase funding through the StrikeForce Initiative,
which currently represents about 10 percent of EQIP second quarter
national financial assistance obligations. In addition, NRCS is
developing targets that will enable a better measure of success in
reaching historically underserved and Socially Disadvantaged Groups in
StrikeForce areas.
    RD obligated a total of $65 million in StrikeForce areas for the
Rural Housing Community Facilities Program in 2012, which was a 112-
percent increase over 2011. USDA is increasing homeownership
opportunities in New Mexico for families living in the Colonias
communities of Luna, Hidalgo and Dona Ana Counties along the U.S.-
Mexican border. RD worked with the Southwest Regional Housing and
Community Development Corporation and Tierra del Sol Housing to
increase the number of USDA home loans from 22 in 2011 to 58 in 2012,
and as of May 2013 has 36 loans completed.
    FSA has had a significant increase in direct farm loans during the
last year in StrikeForce States even as the number of applications
nationwide has decreased slightly. Second quarter FSA farm loan reports
for 2013 show a total of 1,869 direct loans made in StrikeForce States,
for over $150 million. In Arkansas the number of direct and guaranteed
loans has increased each year, with 159 loans in 2010; 170 loans in
2011; and 204 loans in 2012. As of April 2013, a total of 169 loans
have been made.
    The new FSA Microloan Program should further assist the credit
needs of minority, women, and beginning farmers, who typically have
smaller farm operations, less farm equity, or lack a sufficient credit
or production history. Between mid-January and mid-June, FSA is on
track to obligate over 2,600 Microloans valued at more than $50
million; and 85 percent of those loans are going to historically
underserved groups. Additionally, 67 percent of Microloan borrowers are
first-time farm loan participants, an indicator that the program is
accomplishing a primary objective of removing barriers to USDA program
participation in StrikeForce States.
    Question. A critical component of this program appears to be the
leverage attained from increased cooperation across USDA agencies,
coupled with improved reliance on local organizations and institutions.
    In this era of reduced resources, how does the Department have the
funds to expand the initiative?
    Answer. There is no new funding and USDA agencies are using
existing resources from congressionally approved and appropriated
programs. We are working to improve program effectiveness by
collaborating across agencies to reduce redundancies and by targeting
our efforts to areas with the greatest need. Agencies will continue
working together to leverage resources with private sector non-
governmental organizations, the philanthropic community, and others to
educate and advise potential program participants who previously were
unaware of their eligibility. In addition, participating agencies will
take turns leading the initiative at national headquarters to share the
responsibility of collaboration and coordination.
    Question. With local organizations and institutions also facing
administrative cut-backs, is this model sustainable?
    Answer. We believe it is. The StrikeForce Initiative has been
successful in large part because of our partnerships with local
organizations. We understand those organizations may face funding
pressure in the future. However, we will continue to work closely with
local community-based organizations, colleges and universities, State
and local governments, and other partners because we can accomplish
much more by combining our financial resources and staff and being
smarter about how we invest in rural America. Working together helps
stretch limited funding, technical assistance and manpower.
               national institute on food and agriculture
    Question. Secretary Vilsack, I was pleased to see the large funding
increase requested for NIFA and AFRI. We're the world leader in
agriculture production, and the demands on the industry are continuing
to grow, but we're being far outspent by China, India, and Brazil when
it comes to agricultural research. If we want to remain the world
leader, we need to up our game.
    However, while competitive funding is an important tool, capacity
funding at our land-grant universities is equally important. Unlike
competitive research, it provides a steady stream of revenue to allow
for a wide range of real time, real world research that can solve local
and regional problems immediately, and that can be disseminated through
our extension service to make sure the research is implemented. Our
land-grant universities have provided the bedrock support that has made
our agricultural research system the envy of the world and helped
position the United States as the world's largest food exporter.
    These funds are highly leveraged, with State and local governments
often providing 10 times as much in matching funds as the original
Federal investment. It's a good use of taxpayer dollars.
    Why is the focus solely on competitive research, when there are so
many benefits, both long and short-term, to capacity funding as well?
    Answer. The aim of the President's budget request for the National
Institute of Food and Agriculture is to provide a balanced investment
of resources to support research, education and extension programs in
food, agricultural, natural resources, and human sciences. The budget
proposes to support the capacity programs at the 2012 level. Restoring
this funding level for 2014 will provide the land-grant institutions an
8-percent increase above the final amounts available during 2013 and
provide critical base support for research and extension capacity
throughout the land-grant system. These funds, with support from State
and local sources and in combination with competitive grants, will
assure the continued preeminence of our Nation's food and agricultural
research and extension enterprise.
    The 2014 budget supports the need to continue investing in growing
capacity, including moving beyond the capacity support for 1890
Institutions, to include continued support for other programs that
support minority-serving institutions. About 55 percent of the NIFA
budget supports capacity programs.
                 consolidating business program grants
    Question. Mr. Secretary, your budget proposes to create a new
economic development grant program by consolidating five existing
programs and increasing the total funding by $15 million to $55
million. The programs to be consolidated include: Rural Business
Enterprise Grants; Rural Business Opportunity Grants; Rural Community
Development Initiative Grants; Grants to Assist Minority Producers; and
Rural Cooperative Development Grants.
    These successful programs were designed to address different needs
and to assist different constituents. For instance, the Rural Business
Enterprise Grant program promotes the expansion of small and emerging
rural businesses, while the Rural Cooperative Development Grant program
supports centers for cooperative development.
    Why are you proposing to combine these different programs?
    Answer. The proposal to combine these programs is based on
improving the efficiency of program delivery and making these programs
more accessible to people in rural America. While these programs do
address different needs and assist different constituencies, they all
share a common objective of improving economic conditions in rural
America. The consolidation of authorities under one umbrella will
enable Rural Development to make awards based on economic development
performance targets established to encourage rural private sector
growth. Combining five programs into a single rural business and
cooperative grant program will simplify the communication of program
offerings and support a more streamlined application process. Lastly,
the consolidation would provide greater flexibility to be more
responsive to locally identified priorities. Regardless of the funding
level, certain costs of administering a program are fixed and USDA must
allocate resources accordingly. Consolidation into a single program
will reduce the amount of resources needed for preparing programs and
allow for greater attention to program delivery, administration and
outreach.
    Question. How will you ensure that the disparate needs that are now
addressed will continue to be addressed in the future? For instance,
will current constituents of the Rural Cooperative Development Grant
program be disadvantaged in the competition for funds under the new
program?
    Answer. The new Rural Business and Cooperative grant program will
continue to address the wide array of demands that the current array of
business programs meets by being inclusive of the variety of applicants
and the types of eligible projects. For example, the new program would
continue to make grants available to public bodies, nonprofits, Native
American tribes, cooperative development centers, and associations of
cooperatives, among others. In addition, it would continue to fund
technical assistance activities to promote the creation of jobs and the
growth of rural business activity.
    By structuring the new program using metric-based parameters, all
applicants will be able to compete for funding on an equal footing. The
new program would have a strong emphasis on performance targets and
evaluation, and make them evidence based, which would improve the
efficiency and effectiveness of agency grant making. Rural Development
(RD) would establish minimum community and economic development
performance targets and award grants based on the extent to which the
applicant can demonstrate the ability of the proposed project to exceed
those performance targets on a competitive basis.
    Further, the broader consolidated program will benefit all
constituents by leveraging more effectively the grants to provide
greater assistance to rural communities and may be further beneficial
to constituents by offering them access to project activities or
purposes not currently covered in a program.
    Question. Since this is a new program, isn't that an authorizing
issue that should better be addressed in the farm bill?
    Answer. In order to implement regulations for a combined grant
program, RD would need to have statutory authority. USDA certainly
hopes that such a combined program will be given serious consideration
in future farm bill deliberations. In fact, the current Senate version
of the farm bill includes a version of a combined grant program.
    USDA has chosen to go forward with this proposal at this time in an
attempt to address unprecedented budget concerns. We are seeking ways
to ensure the Agency is making the most efficient use of human and
financial resources to deliver outcomes that are sustainable and
measurable in terms of performance. Until such a program is authorized
in a future farm bill and until such time as a regulation is in effect
for the new program, USDA seeks to implement this program as a
demonstration or pilot program through a Notice of Funds Availability.
    Question. In your justification you state that, ``This account is
also available to support the Promise Zones initiative.'' In searching
the Department's Web site I can find no reference to the Promise Zones
initiative. What is that initiative and why should scarce resources be
diverted from existing successful programs for that purpose?
    Answer. In the President's 2014 budget, the Promise Zones
initiative is a White House/multi-agency initiative that will
revitalize high-poverty communities across the country by attracting
private investment, improving affordable housing, expanding educational
opportunities, and providing tax incentives for hiring workers.
Investing in the Promise Zones will reduce violence and assist local
leaders in navigating Federal programs and cutting through red tape.
    USDA has played an active role in a cross-agency working group that
is designing the Promise Zones initiative. Promise Zones is an
important piece of the President's Opportunity Ladder agenda. There
will be Promise Zones in urban, rural, and tribal communities around
the country. USDA has led the effort to design the Promise Zone
initiative for rural and tribal communities. Regions will be designated
in 2013, including at least one rural and/or tribal community.
    At the present time, no funding resources are provided for this
initiative. The intent is to collaborate and leverage existing
resources from across the Government to support sustainable regional
community development activities.
                             sequestration
    Question. Please describe, by mission area, how USDA has handled
sequester reductions. Please include information on reductions to
service contracts, Federal employees, and contract employees.
    Answer. [Follows:]
    Farm and Foreign Agricultural Services.--Curtail internal and
external hiring, reduce overtime; offer Voluntary Early Retirement
Authority (VERA) or Voluntary Separation Incentive Payments (VSIP);
cancel or strictly limit monetary awards; rescope information
technology (IT) contracts or delay them until a future fiscal year;
rescope contracts for program and management support services or delay
them until a future fiscal year; reduce employee training and travel;
and renegotiate new grants or delay them until a future fiscal year.
Additionally, FFAS used interchange authority under 7 U.S.C. section
2257 to transfer about $174 million from CCC Direct Payments to prevent
disruptions in the following FSA and CCC programs: Dairy Indemnity,
Milk Income Loss Contract, Non-Insured Assistance Payments, Non-Bill
Emerson Humanitarian Trust Commodity Inventory Storage, Disaster
Relief, Tobacco Trust Fund, and Marketing Assistance Loans.
    Rural Development.--Curtail internal and external hiring; reduce
overtime; offer Voluntary Early Retirement Authority (VERA) or
Voluntary Separation Incentive Payments (VSIP); cancel or strictly
limit monetary awards; rescope information technology (IT) contracts or
delay them until a future fiscal year; rescope contracts for program
and management support services or delay them until a future fiscal
year; rescope contracts for hardware procurement or delay them until a
future fiscal year; reduce employee training and travel; rescope major
activities or events related to agency core functions, including the
production, development and testing of new products, or delay until a
future fiscal year; and cancel grants, planned maintenance, or major
activities or events related to agency core functions. Additionally, RD
used interchange authority under 7 U.S.C. section 2257 to transfer $8.3
million to the Salaries and Expenses account from the Bioenergy Program
for Advanced Biofuels to fund on-board employees who provide critical
services.
    Food, Nutrition and Consumer Services.--Curtail internal and
external hiring; reduce overtime; and reduce employee travel.
    Natural Resources and Environment (NRE).--Curtail internal and
external hiring; reduce overtime; cancel or strictly limit monetary
awards; rescope information technology (IT) contracts or delay them
until a future fiscal year; rescope contracts for facilities and
building services or delay them until a future fiscal year; rescope
contracts for program and management support services or delay them
until a future fiscal year; rescope contracts for hardware procurement
or delay them until a future fiscal year; reduce employee training and
travel; rescope planned maintenance or repairs or delay until a future
fiscal year; rescope major activities or events related to agency core
functions, including the production, development and testing of new
products, or delay until a future fiscal year; and cancel grants,
planned maintenance, or major activities or events related to agency
core functions. Additionally, NRE used interchange authority under 7
U.S.C. section 2257 to transfer $5.4 million in Natural Resources
Conservation Service funding from the Farm and Ranch Lands Protection
Program to the Conservation Security Program to avoid billing
recipients for some of the payments already made.
    Food Safety.--Curtail internal hiring; offer Voluntary Early
Retirement Authority (VERA) or Voluntary Separation Incentive Payments
(VSIP); cancel or strictly limit monetary awards; and reduce employee
training and travel.
    Research, Education, and Economics.--Curtail internal and external
hiring; reduce overtime; offer Voluntary Early Retirement Authority
(VERA) or Voluntary Separation Incentive Payments (VSIP); cancel or
strictly limit monetary awards; rescope information technology (IT)
contracts or delay them until a future fiscal year; rescope contracts
for facilities and building services or delay them until a future
fiscal year; rescope contracts for program and management support
services or delay them until a future fiscal year; rescope contracts
for hardware procurement or delay them until a future fiscal year;
reduce employee training and travel; renegotiate new grants or delay
them until a future fiscal year; rescope planned maintenance or repairs
or delay until a future fiscal year; rescope major activities or events
related to agency core functions, including the production, development
and testing of new products, or delay until a future fiscal year; and
cancel grants, planned maintenance, or major activities or events
related to agency core functions.
    Marketing and Regulatory Programs.--Curtail internal and external
hiring; reduce overtime; offer Voluntary Early Retirement Authority
(VERA) or Voluntary Separation Incentive Payments (VSIP); cancel or
strictly limit monetary awards; rescope information technology (IT)
contracts or delay them until a future fiscal year; rescope contracts
for facilities and building services or delay them until a future
fiscal year; reduce employee training and travel; renegotiate new
grants or delay them until a future fiscal year; and rescope planned
maintenance or repairs or delay until a future fiscal year.
    Departmental Activities.--Curtail internal and external hiring;
reduce overtime; offer Voluntary Early Retirement Authority (VERA) or
Voluntary Separation Incentive Payments (VSIP); cancel or strictly
limit monetary awards; rescope information technology (IT) contracts or
delay them until a future fiscal year; rescope contracts for facilities
and building services or delay them until a future fiscal year; rescope
contracts for program and management support services or delay them
until a future fiscal year; rescope contracts for hardware procurement
or delay them until a future fiscal year; reduce employee training and
travel; rescope planned maintenance or repairs or delay until a future
fiscal year; rescope major activities or events related to agency core
functions, including the production, development and testing of new
products, or delay until a future fiscal year; and cancel grants,
planned maintenance, or major activities or events related to agency
core functions.
                      centralized servicing center
    Question. I have been informed that a new procedure is being
proposed in the Rural Development mission area for insurance claims
above $30,000. My understanding is that certain claims that have
traditionally been handled through the Centralized Servicing Center
will now be handled in the field. Is this correct, and if so, what is
the justification for this process change, how will the change affect
staff in the Centralized Servicing Center and the field, and how will
the change affect rural homeowners?
    Answer. During a Management Control Review (MCR) of the Centralized
Servicing Center (CSC), it was noted that major development, or
rehabilitation-related construction, using insurance claim proceeds was
not being completed according to Rural Development's Instruction 1924-
A, ``Planning and Performing Construction and Other Development''. The
MCR team noticed that management and documentation of ``large loss''
development was weak. This weakness may have been the result of a
disconnect between tasks performed by the CSC and those assigned to
field staff. In addition, current guidance on insurance proceeds
administration lacks a clear definition of ``major development''. After
extensive discussions with the MCR team and staff from CSC, it was
determined that rehabilitation work using insurance claims proceeds
exceeding $30,000 are considered major development and need to be
closely supervised by the field office staff.
    Rural Development (RD) proposes to revise existing guidance for
administering insurance claims proceeds. For significant rehabilitation
(having a total cost of more than $30,000) all development will be
completed under the supervision of the local field office. The idea is
to require the use of all construction documents and requirements/
methods only when there is a considerable risk to the value of the
Government security or the structural integrity of the house. On
smaller claims, regulations permit the repairs to be completed in a
fashion commensurate with risk to the Government, and will most likely
be handled by CSC staff.
    We believe that rural homeowners will benefit from this change.
Insurance claims exceeding $30,000 are typically the result of a
catastrophic event and field office staff have the construction
management expertise needed to assist borrowers throughout the property
rehabilitation process. The proposed new procedure allows field staff
to work with borrowers early in the development process and ensures
that work is completed in accordance with RD Instruction 1924-A, thus
minimizing the risk of inadequate development work. By doing this, we
protect the Government's security interest and ensure that after the
work is completed, the borrower's home is decent, safe, and sanitary.
    The new procedure is not expected to have an impact on either CSC
or field office staff. Before recommending this change, RD asked a few
States to provide information on the number of large insurance checks
that have been processed in their States in recent years and to assess
the field offices' capacity to manage insurance claims over $30,000.
All the respondents indicated that these large insurance claims are
very uncommon (estimated to be 6 percent of the total claims processed
fiscal year 2012 at CSC) and field offices are deemed to have the
capacity to take on management of insurance claims over $30,000 on an
occasional basis. CSC staff will not be affected for the same reason;
the number of large insurance claims is not significant enough to
affect their workload. In fact, the revised guidance allows field staff
to either establish a supervised bank account at the local level or
forward insurance proceeds to CSC's escrow to manage construction
funds. Even with the new proposed procedure, CSC staff may be asked to
be involved in the administration of insurance claims for major
development.
           rural development and farm loan program contracts
    Question. Rural Development and the Farm Service Agency have
contracted out significant work in support of the Rural Development and
Farm Loan programs, including contracts to support loan processing
activities and information technology development. Please provide
information on these contacts, including the amount of the contract,
how long they have been underway, and how long they are expected to
continue. In addition, please explain why USDA has determined that
contracting out this work is the best option for the agencies involved,
including whether the Department has performed a cost-benefit analysis.
    Answer. [Follows:]
             rural development--fiscal year 2013 contracts
Centralized Servicing Center (CSC)
    1. CBC Innovis--AG-31ME-C-12-1010:
  --Contract amount: $35,000 for locator services.
  --Period covered: 6-14-13 through 6-13-14.
  --Why contracting is best option: The vendor provides a wide range of
        resources throughout the country which integrate and interact
        to obtain information on individuals. The Government has no
        similar organizational system or network of resources to
        perform this function at a similar cost for the relatively low
        volume of searches.
    2. CMW & Associates--AG-31ME-D-10-0095:
  --Contract amount: $2,797,658.83 for prepping, scanning, indexing,
        and filing.
  --Period covered: 9-1-12 through 8-31-13.
  --Why contracting is best option: CSC utilizes a support service
        contract to perform centralized services for other agencies
        utilizing and leveraging CSC's existing infrastructure to
        increase efficiencies and mitigate overall costs to USDA. Due
        to length and nature of service agreements, budgeting and
        fluctuating volumes, staff years are not a viable option at
        this time.
    3. CMW & Associates--AG-31ME-D-12-0026:
  --Contract amount: $1,254,327.50 for mortgage loan processing
        services, guaranteed loan appraiser/auditor assistance in
        reducing backlog of loan loss claims and servicing in the
        Guaranteed Loan Section (GLS); Single Family Housing-Direct
        Section; and Multi-Family Legal Liaison Support, which includes
        providing operational/program analytical skills on each legal
        action case.
  --Period covered: 9-1-12 through 8-31-13.
  --Why contracting is best option: to supplement existing staff during
        the current hiring freeze to process loss mitigation, property
        disposition plans and loss claims for the Single Family Housing
        Guaranteed Loan Program (SFH-GLP). These contractor employees
        are necessary to assist CSC in addressing a larger than
        expected volume of loss mitigation requests, property
        disposition plans, and loss claims resulting from the recent
        housing crisis and from the ``robo-signing'' practices from
        many of the larger guaranteed lenders. CSC continues to see a
        future need to supplement its existing guaranteed workforce
        with contractor personnel to assist with processing the larger
        than anticipated volume of guaranteed servicing actions and
        reduce the existing backlogs to bring inventory levels within
        established regulatory requirements.
    4. Corelogic--AG-31ME-C-11-1011:
  --Contract amount: $1,530,000 for tax services.
  --Period covered: 9-30-12 through 9-29-13.
  --Why contracting is best option: to support loans with escrow
        accounts for taxes and insurance. It is an industry standard
        for a tax service provider to be utilized for tax research and
        payments due to the asset protection provided by an efficient,
        automated procurement and payment process. The vendor also
        assumes liability in case of a loss due to properties sold in a
        tax sale.
    5. Corelogic--AG-31ME-C-11-1010:
  --Contract amount: $10,626,620 for property preservation services for
        centralized States.
  --Period covered: 9-30-12 through 9-29-13.
  --Why contracting is best option: Property maintenance and
        preservation services provide guarantees that the Government's
        interest is protected. For properties that are in foreclosure
        and have been abandoned and for properties that have been
        foreclosed upon and are part of the USDA RD Real Estate Owned
        (REO) inventory, we are required to protect and care for the
        physical condition of those properties (e.g., mowing grass,
        cleaning out trash, boarding up and securing and winterizing of
        pipes). Properties in about half the States are serviced by
        this contract and efficiencies are realized through a single
        point of contact and single vendor relationship for these
        services.
    6. Fiserv--AG-31ME-C-10-0016:
  --Contract amount: $3,319,499.40 for mortgage and loan program
        services. Task orders associated with this contract total $4.6
        million and extend through 1-31-14.
  --Period covered: 8-27-10 through 2-27-13.
  --Why contracting is best option: It enables the Government to obtain
        services that are not available in house and a cost-benefit
        analysis was performed on the contract.
    7. Pitney Bowes--AG-31ME-D-11-0016:
  --Contract amount: $34,446 for postage mailing equipment to cover
        maintenance, repairs and software on an as needed basis; and
        provides bulk mailing services.
  --Period covered: 5-1-13 through 4-30-14.
  --Why contracting is best option: Pitney Bowes is a leading industry
        provider of mail equipment and services which could not be
        provided by RD personnel.
    8. SunTrust--AG-31ME-C-13-1001:
  --Contract amount: $492,826 for investment and disbursement services.
  --Period covered: 10-11-12 through 10-10-17.
  --Why contracting is best option: The contractor provides the
        expertise that CSC needs to ensure the custody, disbursement
        and preservation of principal while maximizing investment
        returns. CSC utilizes five bank accounts at the contractor for
        the receipt and disbursement of ``escrow funds'' (non-
        Government funds) on behalf of single family housing borrowers;
        and a single custody account at the contractor for the
        accumulation of ``net income'' from the investing of borrower
        funds, which is net of all associated contract fees. No cost-
        benefit analysis was performed since RD is unable to supply the
        investment and banking services that were required under the
        contract while ensuring no co-mingling of borrower escrow funds
        with Government funds.
Procurement and Administrative Services
    1. Central Paper Stock--AG-31ME-C-11-0051:
  --Contract amount: $59,800 for destruction and disposal of sensitive
        documents.
  --Period covered: 09-27-11 through 09-30-16.
  --Why contracting is best option: Services are needed to remove
        recyclable materials and destroy sensitive materials that
        require shredding prior to disposal for security reasons. The
        contract covers warehousing services in addition to removal,
        destruction, shredding, and disposal services.
    2. Challenge Unlimited--AG-31ME-C-10-0009:
  --Contract amount: $306,036 for warehousing services of RD forms,
        supplies, equipment, and other items.
  --Period covered: 09-01-10 through 10-1-15.
  --Why contracting is best option: No Government employees perform
        warehousing services or distribute/ship products and items to
        employees nationwide.
    3. First Choice--AG-31ME-C-12-0014:
  --Contract amount: $84,854 for courier services.
  --Period covered: 07-02-12 through 07-02-17.
  --Why contracting is best option: No Government employees perform
        courier or courier-related services, including picking up and
        delivering checks from lockboxes.
    4. MERS Goodwill--AG-31ME-C-09-0006:
  --Contract amount: $420,291 for full-service mail operation and for
        construction and warehousing labor services.
  --Period covered: 02-26-09 through 09-30-13.
  --Why contracting is best option: No Government employees perform
        full-service mail operations; or furniture and cubicle
        construction, maintenance, and warehousing services.
    5. Pitney Bowes--AG-31ME-D-11-0006:
  --Contract amount: $59,800 for postage system and meter heads, which
        process daily USPS, Priority, Register, and Return Receipt
        Mail.
  --Period covered: 02-28-11 through 02-28-15.
  --Why contracting is best option: A contract for the system and
        equipment is more cost-effective than purchasing an updated
        system and equipment.
Deputy Chief Financial Officer (DCFO)
    1. Solutions Data System--AG-31ME-P-08-0021:
  --Contract amount: $14,486.85 for data conversion services for the
        1st and 2nd quarters.
  --Period covered: 4-17-13 through 5-16-13.
  --Why contracting is best option: The contract was put in place so
        that Accounting Data (banking transactions) could be converted,
        transmitted electronically and in real-time. A cost-benefit
        analysis was performed that showed contracting out is more
        cost-effective than providing the services in house.
Deputy Chief Information Officer (DCIO)
    1. QFLOW--AG-31ME-D-09-0026:
  --Contract amount: $1,249,187.00 for imaging and document management.
  --Period covered: 9-18-12 through 9-17-13.
  --Why contracting is best option: A contract is needed to maintain
        licensing and obtain technical support for services to provide
        maintenance support and enhancement development to the Rural
        Development FileNet Imaging System and the USDA Enterprise
        Content Management System utilizing Oracle's Stellent document
        management. Additional certifications are required for services
        that are only available through contracting.
    2. Rose International AG--31ME-C-12-0018:
  --Contract amount: $1,587,026.00 for Oracle Hyperion and OBIEE
        services.
  --Period covered: 9-29-12 through 9-28-13.
  --Why contracting is best option: Support services are needed to
        administer the systems and the development of Hyperion and
        OBIEE reports. Although no formal cost-benefit analysis was
        completed, it is more cost-effective to obtain these services
        through contracting from a vendor who can provide well-trained
        and experienced personnel. Contracting out also provides
        additional flexibility for large or multiple projects in a
        given time period where it is necessary to quickly expand or
        reduce the size of teams.
    3. Rose International AG--31ME-C-09-0019:
  --Contract amount: $3,179,924.28 for technical support services,
        which includes maintenance for the Automated Multi-family
        Accounting System (AMAS) at a cost of $618,688.44.
  --Period covered: 8-31-12 through 7-31-13.
    4. Unisys (CLP)--AG-31ME-C-10-0013:
  --Contract purpose: maintaining and implementing upgrades/
        enhancements to the automated components that support the
        direct loan and grant and guaranteed loan programs. See task
        order (TO) amounts below.
  --Period covered: 5-10-13 through 5-9-14.
  --Why contracting is best option: Although no formal cost-benefit
        analysis was completed, contracting out enables RD to obtain
        services from a vendor who can provide well-trained and
        experienced personnel. It also provides additional flexibility
        for large or multiple projects in a given time period where it
        is necessary to quickly expand or reduce the size of teams.
  --Associated Active TO AG-31ME-D-12-0036.
    Contract amount: $291,843.47 for maintaining and implementing
upgrades/enhancements to the automated components that support the
direct loan and grant and guaranteed loan programs.
  --Period covered: 9-28-12 through 9-27-13.
  --Why contracting is best option: Although no formal cost-benefit
        analysis was completed, contracting out provides additional
        flexibility for large or multiple projects in a given time
        period where it is necessary to quickly expand or reduce the
        size of teams.
  --Associated Active TOs, amount, customer and period covered:
    --AG-31ME-D-10-0083--$219,715.79--Automated Multi-family Accounting
            System (AMAS)--9-13-10 to 3-31-13.
    --AG-31ME-D-10-0098--$2,129,810.82--Date Warehouse (DW)--9-29-10 to
            4-2-13.
    --AG-31ME-C-11-0046--$3,057,973.90--OM/HD--9-26-12 to 9-25-13.
    --AG-31ME-D-12-0005--$249,999.70--Community Program Application
            Processing (CPAP)--2-15-12 to 2-14-13.
    --AG-31ME-D-12-0013--$5,429,258.82--Comprehensive Loan Program OM
            (CLP OM)--8-1-13 to 6-30-14.
    --AG-31ME-D-12-0025--$1,797,930.15--E-Government (EGOV)--9-1-12 to
            7-31-13.
    --AG-31ME-D-12-0029--$249,935.40--Guaranteed Loan System (GLS) Loan
            Close--9-28-12 to 9-30-13.
    --AG-31ME-D-12-0031--$63,943.10--RD Intranet--9-28-12 to 4-30-13.
    --AG-31ME-D-12-0037--$399,844.69--Comprehensive Loan Program (CLP)
            Initiative--9-28-12 to 9-27-13.
    --AG-31ME-D-12-0028--$59,977.81--CASH--9-28-12 to 3-31-13.
    --AG-31ME-D-12-0040--$604,489.00--Rural Electric and Telephone
            (RET)--9-29-12 to 9-28-13.
    --AG-31ME-D-12-0036--$291,843.47--Deputy Chief Financial Officer
            (DCFO)--9-28-12 to 9-27-13.
    --AG-31ME-D-12-0032--$692,148.80--Broadband Collection Application
            System (BSAC)--5-1-13 to 9-30-13.
    5. Unisys (GLS)--AG-31ME-C-09-0021:
  --Contract amount: See below TOs totaling over $2 million for a
        support contract to develop the necessary user documentation to
        support the implementation of Phase 3 of the Guaranteed Single
        Family Housing Annual Fee Project.
  --Period covered: 9-1-12 through 8-31-13.
  --Why contracting is best option: Although no formal cost-benefit
        analysis was completed, contracting out provides additional
        flexibility for large or multiple projects in a given time
        period where it is necessary to quickly expand or reduce the
        size of teams.
  --Active TOs, amount and period covered:
    --AG-31ME-C-11-0014: $1,189,765.64. Period covered 9-30-12 through
            7-31-13.
    --AG-31ME-D-10-0085: $845,540.50. Period covered 9-13-10 through 6-
            30-13.
            farm service agency--fiscal year 2013 contracts
    1. Program Loan Accounting System (PLAS)--AG-3151-C-11-0019
Bluemont Technologies, Inc.
  --Contract amount: $4,711,162.35 to maintain the expiring legacy
        system until it is re-engineered to a Web-based system.
  --Period covered: A 5-year contract was awarded for 07-01-11 through
        09-30-15.
  --Why contracting is best option: contracted maintenance of the
        expiring system is needed because:
    --Government PLAS legacy knowledge has been lost to attrition;
    --It is not cost-effective or beneficial to the future of FSA's
            programs to recruit and train Government employees on old
            technology and platforms; and
    --Government resources can be dedicated to supporting newly
            developed Web-based systems and inherently Government
            functions.
  --FSA has complied with the FAR 39.102 requirement to analyze risks,
        benefits and cost in its USDA and OMB information technology
        submissions. FSA performs continuous collection and evaluation
        of risk-based assessment data through monthly review of
        invoices (hours used and funding burn rate) and comparison of
        scheduled milestones in the project schedule to determine cost,
        schedule, variances and risk. Post implementation reviews are
        conducted to determine actual project cost, benefits and
        returns. The quantifiable measures are captured and analyzed on
        a monthly basis and an associated risk is deduced from the
        analysis.
Appraisals
    2. AgWare--AG-3151-C-10-0009:
  --Contract amount: $543,780.00 for a complete commercially available
        off-the-shelf appraisal PC-based software system that
        encompasses the features and data required to complete both an
        Agricultural Real Estate Appraisal and a Housing Appraisal. It
        is a complete package that can be used even when network
        connectivity is not available (i.e., remote areas). It creates
        reports and performs third-party mapping, sketching, deed
        plotting, scanning, image file importing and integrating with
        Arc GIS software.
  --Period covered: A 5-year contract for 05-25-10 through 05-24-14.
  --Why contracting is best option: it provides functions not performed
        by Government employees.
    3. Marshall & Swift/Boeckh (MSB)--AG-3151-C-12-0031:
  --Contract amount: $622,400.00 for commercial off-the-shelf (COTS)
        software that is a Web-based hosted application which provides
        quarterly updates and unlimited use of free technical support
        services available via an annual subscription. The cost
        estimators are used as support and documentation of cost of
        improvements in the appraisal process.
  --Period covered: A firm fixed-price 5-year contract was awarded for
        the period 09-25-12 through 09-24-17.
  --Why contracting is best option: This contract provides functions
        not performed by Government employees. MSB provides National
        Residential, Commercial, and Agricultural Estimating Software
        and Support.
    4. Farm Business Plan (FBP)--AG-3151-C-11-0029--WebEquity
Solutions, LLC:
  --Contract amount: $10,885,250.00 for a commercial off-the-shelf
        (COTS) farm business planning and financial/credit analysis
        Web-based software package.
  --Period covered: A firm fixed-price 5-year contract was awarded for
        the period 09-30-11 through 09-29-16.
  --Why contracting is best option: This contract provides functions
        not performed by Government employees.
    5. Farm Loan Program Information Delivery System (FLPIDS)--AG-3151-
C-12-0032:
  --Contract amount: $25,564,663.16 for Information Technology
        Services.
  --Period covered: A 5-year contract was awarded on 09-26-12 through
        09-25-17.
  --Why contracting is best option: The Government does not have the
        current capability or expertise to perform the type of service
        provided by FLPIDS. Inherently governmental functions are not
        applicable to this solicitation pursuant to FAR subpart 7.5.
  --FSA has complied with the FAR 39.102 requirement to analyze risks,
        benefits and cost concerning FLPIDS in its USDA and OMB
        information technology submissions. Lifecycle cost--There have
        been prior investments in pre-existing 2004 FLPIDS, GS-06F-05
        5OZ, AG-3151-D-09-0156, AG-3151-D-10-0137 and AG-3151-C-11-0028
        which will be added to by current FLPIDS procurement.
    2. Rural Development Reimbursable Agreements:
  --Farm Service agency has reimbursable agreements for Rural
        Development to use the:
    --Guaranteed Loan System; and
    --Program Funds Control System.
                                 ______

                Questions Submitted by Senator Tom Udall
                           rural development
    Question. Secretary Vilsack, in New Mexico, the Rural Development
office is down to 39 employees, 6 months ago the New Mexico office had
44 employees, and in 2011 the office had 53 employees. This decline in
employees is resulting in programs being shut down as the 2-year hiring
freeze continues. I understand that these are difficult times, and that
the sequestration is making budgets even tighter. My concern, however,
is about the disparity between the number of employees in western
States compared to those east, and whether or not the resources we do
have are reaching the rural and poor communities that they are intended
for.
    According to your staff, in May 2012 about 12 States had over 100
Rural Development employees, while States like Nevada, Alaska,
Colorado, Utah, Wyoming, and New Mexico had well under 50. These are
some of our country's most rural States.
    According to the most recent data published by USDA, New Mexico has
the second highest poverty rate in the United States for both adults
and children. New Mexico's rate of poverty is roughly 30 percent higher
than the national average. New Mexico is also one of the most rural
States. If there is a region that needs the resources that Rural
Development provides, it is New Mexico.
    Could you help the subcommittee understand how this disparity in
Rural Development efforts has come to be, and what the agency is doing
or can do to ensure a more equitable distribution of resources?
    Answer. When faced with sequestration of funds, Rural Development
(RD) considered several options when looking for ways to meet the
funding levels. One of those options was offering RD employees early
retirement and not filling many positions. As a result of these
retirements and the freeze on hiring, Rural Development lost
approximately 18 percent of its workforce. Unfortunately, these losses
were not equally divided by program or geography. We recognize that
many States are struggling to provide services and are looking at ways
to correct these inequities.
    In the last year, RD has also reexamined its FTE allocation formula
and adjusted it to provide greater weight to States with deeper
poverty. We continue to examine this formula.
    Question. What kind of impact does a declining staff have on the
distribution of grants and loans in a State like New Mexico?
    Answer. Loss of staff slows down the processing time for loans and
delays the distribution of grant funds.
    Question. I am concerned about whether or not Rural Development
resources are reaching the rural and poor communities that they are
intended for. In New Mexico there are many very small and very rural
communities that have a hard time accessing grants and loans through
Rural Development because they do not have the personnel and even
infrastructure, like Internet service, to successfully apply for and
manage grants and loans.
    Could you share with the subcommittee how the President's budget
would ensure that Rural Development funds in fiscal year 2014 make it
to the small and very rural communities who need it most?
    Answer. Rural Development is working closely with the USDA Office
of Advocacy and Outreach to make sure that the citizens and communities
who need assistance the most are aware of what our programs can do and
how to apply. Also, in 2010, the Department implemented the
``StrikeForce Initiative'' to increase participation in USDA programs
in high poverty counties. Many of the RD programs provide additional
points to the smaller communities competing for funding.
    Question. What kind of technical assistance is available for
communities who may not have a full time employee to write a grant
application or manage a loan?
    Answer. Most Rural Development programs are administered through
our State and Area Offices, and the majority of direct support and
assistance in preparing a grant application will come from these
offices. However, while RD staff can provide support and guidance in
developing an application, they do not participate in the actual
writing of the grant or loan proposal.
    Through existing programs, Rural Development supports a number of
University and nonprofit organizations who provide direct technical
assistance to prospective program applicants through programs such as
the Rural Business Enterprise Grant, Rural Business Opportunity Grant,
and Rural Cooperative Development Grant programs. Through a variety of
methods (i.e., business incubators, cooperative development centers),
recipients of funding from these programs have delivered technical
assistance and other services to individuals and communities seeking to
apply for RD programs.
    Further, several existing programs contain components that can
provide application development assistance. For example, the
Agricultural Marketing Resource Center (AgMRC) which is funded out of
the Value Added Producer Grant (VAPG) program is a free, virtual
resource for producers looking to get into a value added agricultural
business. The AgMRC Web site provides an array of resources, including
business planning tools, budget templates, and marketing plans that can
be used to address requirements in a grant application.
                          strikeforce program
    Question. Secretary Vilsack, it is my understanding that your
StrikeForce Program is targeting USDA assistance to communities in New
Mexico.
    Could you share with the subcommittee how this program is helping
communities in New Mexico, and what kind of results you are seeing from
the program in New Mexico?
    Answer. The New Mexico Farm Services Agency (FSA), Natural
Resources Conservation Service (NRCS), and Rural Development (RD)
agencies continue to improve and widen USDA outreach efforts.
    Since being identified as a StrikeForce State, the RD staff has
worked to expand and establish new partnerships with various
organizations to help provide greater use of Rural Development's (RD)
resources. Partnership examples include the YWCA in Sunland Park and
the Southwestern Regional Housing and Community Development Corporation
(SRHCDC), another nonprofit organization based in Deming, New Mexico.
The YWCA is helping individuals and families with homebuyer education
classes and counseling designed to help the borrower be more successful
as a homebuyer and homeowner. The Southwestern Regional Housing and
Community Development Corporation (SRHCDC) another nonprofit
organization based in Deming has stepped up its relationship with USDA
Rural Development since Luna County was designated a StrikeForce
county. The organization has become a major partner with Rural
Development in single family housing, multifamily housing, and business
programs. USDA's partnership with SRHCDC has increased the delivery of
USDA loans to these border communities.
    FSA partnered with NRCS to assist groups of producers, who irrigate
from traditional Acequias, to submit applications for the Environmental
Quality Incentives Program (EQIP). Multiple workshops have been held
around the State to educate these producers about the EQIP program and
the application process. This collaboration gives producers the benefit
of learning more about EQIP while also learning FSA's eligibility
process regarding farm records, Adjusted Gross Income provisions, and
other FSA programs. The first of its kind NRCS Acequia EQIP contract
was approved in July 2013. The Acequia Initiative, along with many
others, are StrikeForce projects that provide direct additional
resources to better serve our farmers, ranchers, and producers in
persistently poor rural communities. The focus is on these identified
high-poverty areas to help improve the quality of life of farmers,
ranchers, producers, and their communities.
    NRCS hosts its fourth Conservation Planning Initiative (CPI)
workshop--this time in Los Lunas in October 2013. The target groups
include women, Hispanic, and Native American small agricultural
producers. Participants are thoroughly immersed in the process of
developing and the significance of having a viable Conservation Plan.
These CPI workshops have been well received in Las Cruces, Carrizozo,
and Chama communities. NRCS New Mexico is also restructuring itself to
make more of its specialists available to agricultural producers across
New Mexico--particularly in StrikeForce recognized areas. This leads to
more customized service for those who need it most.
    As of mid-June, New Mexico FSA Farm Loan Programs expects to
approve more than $24 million through nearly 190 loans in fiscal year
2013. Approximately 75 percent of those will be Direct Loans totaling
over $11.6 million. Nine are currently waiting on funding of about
$865,000; nearly one in five Direct Loans will be Micro Loans totaling
nearly $711,000; and 40 loans are currently waiting on $55,200 in
funding. The total loans projected for approval through June 2013 also
include 36 Guaranteed Loans totaling $12.6 million.
                      alfalfa and forage research
    Question. Secretary Vilsack, In the last Congress, I joined with
several of my Senate colleagues in urging Appropriations Committee to
include funding for the Alfalfa and Forage Research Program in the
fiscal year 2013 agriculture appropriations bill. It is my
understanding that language expressing the Committee's support for such
research was included in the fiscal year 2013 continuing resolution,
but that to-date, no funds have been allocated for the Alfalfa and
Forage Research Program.
    Does the USDA plan to allocate funds for the Alfalfa and Forage
Research Program in fiscal year 2013 as recommended by the Committee?
    Answer. USDA is allocating funds for alfalfa research in ARS and
NIFA. ARS scientists are conducting alfalfa genetic improvement and
marker selection research for biotic and abiotic stresses to build a
genetic pipeline to help accelerate the development of superior
performing plants. The ARS Plant Germplasm Introduction and Testing
Research Station expands the genetic diversity in the U.S. alfalfa
germplasm collection, improves availability of information about
alfalfa genetic resources, and distributes pathogen-tested samples.
    For fiscal year 2013 and fiscal year 2014, ARS has developed a
coordinated national research plan to increase the impact of agency
alfalfa research and to build effective linkages with university and
industry partners. The coordinated plan addresses three broad areas of
research that provide value to the alfalfa, forage, and dairy
industries including, but not limited to the following: (1) germplasm
improvement (yield, biotic and abiotic stress, marker assisted
selection); (2) management for animal nutrient intake and for revenue
lines; and (3) ecosystem services (rotational effect, soil health [N,
P, K microbes], and carbon sequestration).
    Funding for ARS research activity related to alfalfa is as follows:
$3,367,000 in fiscal year 2009; $4,124,000 in fiscal year 2010;
$3,768,000 in fiscal year 2011; $4,322,000 in fiscal year 2012;
$4,322,000 estimated in fiscal year 2013; and $4,516,000 estimated in
fiscal year 2014.
    In NIFA, a specific program directed at alfalfa was not implemented
in fiscal year 2013, but report language will be considered when
drafting fiscal year 2014 RFAs. For example, work on alfalfa and
forages will be explicitly included, where appropriate, in fiscal year
2014 RFAs for the Agriculture and Food Research Initiative (AFRI).
Alternative capacity funding (from Hatch Act, McIntire-Stennis, and/or
Smith-Lever 3(b) and (c)) may be used to support aspects of this topic
area deemed to be of priority at State and/or local levels. The active
AFRI, Hatch, and Biotechnology Risk Assessment program projects
include, but are not limited to, alfalfa topics such as: understanding
of and mitigation strategies for co-existence/gene flow in alfalfa;
improving alfalfa quality and production as a biofuel feedstock;
enhancement of alfalfa forage quality for animal feed by alfalfa
breeding and genetic improvements; developing tolerance to changing
climatic conditions and biotic diseases in alfalfa production by
breeding and genetic enhancement technologies; and understanding
interactions of symbiotic bacteria with their alfalfa host in fixing
nitrogen from the soil. Other programs have also included alfalfa in
multi-crop studies.
    Funding in support of NIFA research on alfalfa is as follows:
$2,425,000 in fiscal year 2009; $2,025,000 in fiscal year 2010;
$1,264,000 in fiscal year 2011; and $1,264,000 estimated in fiscal year
2012.
                           wildlife services
    Question. Secretary Vilsack, it is my understanding that the
President's budget includes an increase in Wildlife Services funding to
bring the fiscal year 2014 total up to $104 million. The work that
Wildlife Services does in New Mexico is very important for producers,
especially at this time when feral hogs continue to spread into the
State and threaten landscapes and animals.
    How will the funding proposed by the President in fiscal year 2014
help to deal with the impacts of feral hogs across the country?
    Answer. The President's budget includes $20 million to implement a
national strategic plan to conduct integrated feral swine removal, to
reduce property damage, and reduce threats to agriculture and urban
areas. USDA will work with Federal, State, and local entities to carry
out this control program in the 38 States where feral swine are
located. The program will focus control efforts on reducing populations
and excluding feral swine from agricultural resources in States where
feral swine are well established. In States where feral swine are
emerging or populations are low, the program will focus on eliminating
animals. The requested funds will also enable USDA to develop new and
improved control tools; conduct economic analysis and risk modeling and
develop outreach materials and activities.
    USDA will also conduct disease monitoring and diagnostic testing
for diseases that may pose risk to domestic livestock or human health.
As feral swine quickly establish themselves throughout the Nation, they
carry numerous endemic diseases that could be transmissible to humans,
domestic livestock, or other wildlife species. The requested funds
allow for the early detection of diseases in feral swine. Currently,
risk analysis and mitigation is based on opportunistic sampling of
feral swine collected near farms. USDA will conduct target sampling to
improve the understanding or risks and to develop mitigation measures
for reducing disease threats that feral swine pose.
    Question. Will the $104 million requested by the President allow
USDA to meet the demand for assistance from Wildlife Services?
    Answer. USDA cooperates with Federal, State, and local agencies and
public stakeholders on all Wildlife Services programs. To carry out
these programs, APHIS uses a variable cost-share formula based on the
core mission, strategic and program priorities, whether the activity
substantially enhances the program's efficiency, whether it is
appropriate for the cooperator to contribute more under a particular
agreement, and the cooperator's ability to pay toward the program. As a
result, cost-share varies by State, cooperator, and project. In fiscal
year 2014, USDA is seeking higher contributions from cooperators who
pay less than the amount the Federal Government pays. Although USDA
attempts to respond to all requests for assistance to the greatest
extent possible, some program needs cannot be met without an increased
cooperator contribution.
                     national school lunch program
    Question. Secretary Vilsack, you were asked by members of this
subcommittee about the temporary change in rule the USDA made to allow
no limits on weekly grain and protein for school lunches, while keeping
calorie limits in place. It is my understanding that this temporary
change has been very well received by schools and school nutritionists.
You also mentioned the possibility of making this rule change
permanent.
    Is this change in school lunch protein requirements something you
are considering making permanent?
    Answer. The current flexibility on portion sizes for grains and
proteins lasts through the end of school year 2013-2014. USDA has no
intention of discontinuing that flexibility. The Department is
committed to making the current flexibility permanent by the end of the
calendar year 2013.
    Question. Does the USDA have the authority to make such a change
permanent?
    Answer. Yes, USDA set the limits and has the authority to make such
a change permanent through regulation. One of our top regulatory
priorities is to complete the regulation that will make the grains and
meats/meat alternates flexibility permanent in calendar year 2013.
    Question. Since 1946, when the act was first signed by President
Truman, until last year, the Federal Government deferred to the local
school food authority and school board to set the price of a ``paid''
meal. This was changed in the last child nutrition reauthorization in
an effort to drive more non-Federal money into the program. However, I
have heard concerns that not all communities can afford the newly set
prices for school lunches, and that paid participation has declined in
some schools due to the price increase.
    Could you share with the subcommittee what kind of response you
have been receiving from schools and parents about prices set for
``paid'' school meals?
    Answer. USDA received only 96 comments on the interim rule
published on June 17, 2011, implementing the increase to paid lunches.
About half of these comments came from school districts. Of the school
districts that did comment, many of them stated that school lunch
prices should be set at the local level citing local economic
circumstances as a main contributor to setting paid lunch prices.
    A few comments suggested that we allow a la carte sales as a non-
Federal source of revenue to support paid meals.
    In response to comments on the interim rule, on April 17, 2013, FNS
issued new flexibilities school districts may use when implementing the
Paid Lunch Equity requirement for school year 2013-2014. For school
year 2013-2014, FNS expanded the definition of a non-Federal source
school districts can use in lieu of raising paid lunch prices to
include State or local funds for any paid meal including breakfast or
snacks. Additionally, State agencies, upon request by a district, may
exempt the district from the requirement to increase prices or add
funding to the school food service account if the school district can
demonstrate that it already has sufficient revenue to operate a meal
program that meets or exceeds all the nutritional and administrative
requirements of the program.
    Outside of the formal rule comment process, USDA has received
positive feedback from school districts wanting to raise their paid
lunch prices as a way to increase revenue but have not been allowed by
their school boards. While some districts are concerned about losing
participation, they understand increasing revenues from paid lunches is
a way to improve the financial standing of their foodservice account
and improve the overall quality of meals.
    Question. Have you seen any decline in paid participation due to
increases in meal prices?
    Answer. Based on the additional flexibilities offered and feedback
received from districts thus far, if there is any impact on
participation, USDA would expect it to be minimal. Because multiple
changes have been occurring simultaneously in school meals, it is not
feasible to determine, at this time, the precise relationship between
this particular policy and participation in the program. USDA will
continue to collect data on program participation and work with States
to monitor participation.
                                 ______

            Questions Submitted by Senator Susan M. Collins
                   agricultural management assistance
    Question. Mr. Secretary, potato production is an important
component of Maine's economy. Maine is eighth in the Nation in potato
production and fifth in acres harvested. Drought is a significant
concern to our potato farmers, and many struggled with drought
conditions in 2012. Farmers without the ability to irrigate experienced
dramatically reduced yields and smaller potatoes. The Agricultural
Management Assistance (AMA) program administered by NRCS provides
management and technical assistance to farmers by incorporating
conservation into their water management, water quality, and erosion
control operations. In Maine, AMA and EQIP funds have been extremely
helpful to Maine potato farmers. EQIP funds, however, can only be used
on land that is already being irrigated. AMA funds can be used on new
projects and to increase the number of farmers who are irrigating.
Maine is one of the 16 States for which AMA is available (where
participation in the Federal Crop Insurance Program is historically
low). Additional AMA funds for potato farmers in Maine could be
extremely consequential in assisting farmers who do not currently have
the ability to irrigate. Mr. Secretary, can additional AMA funds be
made available to Maine potato farmers?
    Answer. The Food, Conservation and Energy Act of 2008 (section
2801(b)(ii)) authorized $15 million in Agricultural Management
Assistance (AMA) funding for fiscal years 2008-2012, and requires that
not less than 50 percent of that funding be provided to NRCS. Section
716(a) of the Consolidated and Further Continuing Appropriations Act,
2012 (Public Law 112-55) reauthorized the funding through fiscal year
2014. However, a $5 million savings proposed in fiscal year 2014 would
reduce the total authorized level to $10 million and NRCS's portion to
$2.5 million, since the entire savings is applied to the NRCS portion
of the authorized funding.
    We recognize that this program has been of significant value to
Maine's producers and the demand for AMA funding in Maine reflects that
value. In fiscal year 2011 Maine received $2.13 million of AMA
financial assistance (36 percent of the total available); $279,000 (14
percent of total) in fiscal year 2012; and $391,000 (20 percent of
total) in fiscal year 2013. Due to high demand in Maine compared to
other AMA States, Maine has been able to obligate additional funds that
were originally allocated to other AMA States but were returned before
the end of the fiscal year. We will continue to support funding AMA for
Maine and other States with new and existing AMA projects.
           federal milk marketing orders--dairy price reform
    Question. Secretary Vilsack, I remain very concerned about milk
pricing and have joined with Senator Kirsten Gillibrand of New York to
introduce the Dairy Price Reform Act of 2013. Dairy farmers in Maine
are under severe financial stress due to a number of factors beyond
their control, including high energy prices, escalating feed prices,
and the wildly fluctuating price paid for their milk. This legislation
would require USDA to initiate hearings about restructuring the milk
pricing system and directs the Secretary of Agriculture to release
recommendations to Congress. The legislation also enables you to
dispense with the pre-hearing requirements in the bill and to initiate
a formal hearing at any time. Mr. Secretary, could you please provide
us with your views on Federal milk marketing orders and also give us
your opinion on the possibility of accomplishing dairy price reform in
a realistic timeframe?
    Answer. Federal milk marketing orders are not designed to be a
price or income support program. They are voluntary marketing tools
requested by producers or their cooperatives for specific geographic
areas in the country. Our 10 marketing areas cover about 65 percent of
the milk produced in the United States. Marketing orders help
facilitate the efficient marketing of milk and dairy products by
maintaining a balance in negotiating power between dairy farmers and
milk processors. Federal milk marketing orders enforce market-based
minimum payments to farmers, monitor the accuracy of milk weights and
tests, and provide extensive equal access market information to all
segments of the industry to support marketing decisions.
    A formal hearing process is used to establish and make amendments
to Federal milk marketing orders. In the 2008 farm bill, Congress
provided timeframes for making amendments to orders. We have adopted
supplemental rules and held three hearings under these rules that have
each met or exceeded the timeframe deadlines. I believe the current
timeframes provide a realistic benchmark for making changes. However,
we need to keep in mind that major changes, such as a sweeping
modification to how we establish minimum prices under Federal milk
marketing orders needs sufficient time for careful and thoughtful
contemplation of impacts. The timeframes of the Dairy Reform Act of
2013 (S. 670) and as outlined in section 1462 of S. 954, Agriculture
Reform, Food, and Jobs Act of 2013 should provide USDA with adequate
timeframes for accomplishing dairy price reform.
                    poultry slaughter modernization
    Question. Mr. Secretary, a front page article in the Washington
Post on April 25, 2013, detailed questions and concerns surrounding the
increased use of possibly toxic, bacteria-killing chemicals in poultry
processing plants. As the Department of Agriculture is poised to
implement new rules that would modernize the poultry inspection
slaughter system, including increasing line speeds, I am concerned
about the impact of these new rules not only on worker safety, but on
public health. With the number of chemical treatments to disinfect
poultry carcasses likely to increase at processing plants, what steps
will your Department be taking to assure that worker health concerns
are adequately addressed? In addition, how can your Department be sure
that increased line speeds and reductions in the numbers of on-line
inspectors will result in a higher level of food safety?
    Answer. The modernization plan will protect public health, improve
the efficiency of poultry inspections in the United States, and reduce
spending. The new inspection system will reduce the risk of foodborne
illness by focusing FSIS inspection activities on those tasks that
advance our core mission of food safety. By revising current procedures
and removing outdated regulatory requirements that do not help combat
foodborne illness, the result will be a more efficient and effective
use of taxpayer dollars.
    Regarding the effects this rule will have on chemical usage in
plants, generally plants determine how they meet FSIS standards. They
have many tools at their disposal to choose from--antimicrobial
interventions used at appropriate levels are one. FSIS has examined
HACCP-based Inspection Model Program (HIMP) and non-HIMP plants' usage
of antimicrobials. The majority of plants were found to have chosen to
use chemical/antimicrobial steps to help meet FSIS' targeted
salmonella/campylobacter reductions, with no particular pattern whether
the plant is HIMP or non-HIMP.
    In the course of the development of this rule, the issue of worker
safety in poultry plants has been raised. The data that we have to date
does not show any link between this new type of inspection system and
increased risk for poultry industry employees or for our own inspection
personnel. While we as a food safety agency do not have the ability or
expertise to regulate worker safety, we have been working closely with
the Occupational Safety and Health Administration and the National
Institute for Occupational Safety and Health on important efforts to
strengthen the Federal Government's data collection and enforcement
activities in this area.
    FSIS put forward this modernization proposal because the Agency's
risk assessment demonstrates that the system it embodies will prevent
foodborne illnesses--approximately 5,000 per year. It will prevent
illnesses by making common sense, scientifically verified changes in
the way inspection personnel do their work in plants.
                                 ______

               Questions Submitted by Senator Jerry Moran
         implementation of new school meal pattern regulations
    Question. Schools across Kansas have been working hard to implement
the new regulations for lunches served at school. While schools and
students are still adjusting to the new lunch regulations, another
change is scheduled to take effect at the beginning of the 2013 school
year when the new breakfast regulations go into effect. What outreach
has USDA done to make sure the type of problems we saw with the
implementation of the lunch regulations do not also occur next fall
when schools are required to change the breakfasts they serve?
Furthermore, has USDA consulted with school nutrition professionals to
determine if they are ready to make the breakfast changes this fall?
    Answer. While the majority of updates to the school lunch program
occurred in school year 2012-2013, the changes to breakfast are being
phased in over multiple years. In this coming year the only changes
schools will need to make are increased whole grains and new weekly
calorie ranges. Increased fruit offerings will become effective in
school year 2014-2015. The first sodium limits will be implemented in
school year 2014-2015 and the final targets will be reached in school
year 2022-2023. This phased-in approach will allow both industry and
food service operators ample time to create appealing food items and
menus that students will accept. Additionally, the breakfast meal
pattern readily provides operators with much menu planning flexibility.
For instance, while neither meats/meat alternates nor vegetables are
required at breakfast, operators may choose to offer these foods and
credit them in the reimbursable meal.
    In addition to existing technical resources available on the USDA
Web site, as the start of the school year approaches, we will offer
Webinars and social media activities and provide further information on
what's new for school breakfast in 2013-2014. The agency is also
working on an update to its breakfast toolkit resources, which empower
program operators with information about starting or expanding school
breakfast service, evaluating costs and serving methods, and marketing
the program to key stakeholders. The toolkit also assists operators
with implementation of the upcoming changes by providing sample menus
and suggestions for offering healthy and appealing meals in compliance
with the new meal pattern. Additionally, USDA has partnered with the
President's Council on Fitness, Sports, and Nutrition to produce
promotional materials, including posters and public service
announcements, on breakfast. These materials promote the importance of
eating a healthy breakfast for all students and are intended to
maintain or increase participation in the SBP.
    USDA has consulted with school nutrition professionals through
various formal and informal channels including national conferences,
State agency trainings, and phone and email inquiries. USDA will
continue to provide technical assistance and outreach to schools and
program partners and anticipates that the phased-in implementation
timeline and numerous flexibilities built into the breakfast meal
pattern will result in successful implementation of breakfast in most
schools this coming year.
                                 ______

              Questions Submitted to Hon. Phyllis K. Fong
                Questions Submitted by Senator Tom Udall
    Question. Inspector General Fong, I would first like to applaud you
for the efforts you and your team have taken to ensure that the USDA is
running in the most ethical and efficient way possible. From your
testimony, I understand that the work you are doing results in huge
amounts of money for the USDA to use in areas that are effective. I
understand your financial impact in 2012 was around $1.5 billion.
    I understand that much of your work focuses on combating fraud
within the SNAP program. This is a very important and often discussed
effort.
    Could you give the subcommittee your view of how the SNAP program
is doing in terms of insuring that taxpayer dollars are being well
spent?
    Answer. By far the largest program within the U.S. Department of
Agriculture (USDA), the Supplemental Nutrition Assistance Program
(SNAP) provides monthly food assistance and nutrition for the health
and well-being of more than 47 million low-income individuals. Due to
the economic downturn, program participation has grown by 80 percent
since fiscal year 2007 and over $74.5 billion in benefits was disbursed
in fiscal year 2012. Given the program's significance, fraud committed
by both SNAP recipients and the retailers that redeem SNAP benefits is
a critical concern. With increased participation comes increased risk,
and past audit work has found that the Food and Nutrition Service (FNS)
needs to redouble its efforts to enforce its policies against such
fraud as trafficking,\1\ and to establish strong internal controls to
prevent it.
---------------------------------------------------------------------------
    \1\ Trafficking is the exchange of benefits for cash or other
compensation.
---------------------------------------------------------------------------
    Recognizing this challenge, FNS has taken measures in recent years
to strengthen its oversight of SNAP in three key areas: (1) reducing
improper payments and errors; (2) combating the abuse and misuse of
benefits; and (3) better pursuing recipient fraud. While FNS has made
progress, further efforts are needed to fully utilize available
resources and to ensure taxpayer dollars are well spent.
    Since September 2012, OIG has issued four national audit reports
\2\ that help define how well SNAP is doing to ensure taxpayer dollars
are spent well. We found that FNS needs to better detect and prevent
recipient fraud. FNS has agreed to specify a set of tools that States
can use for fraud detection, and create associated guidelines for their
consistent usage. For example, manual transaction reports are used to
identify all activity where retailers manually enter SNAP recipients'
EBT card numbers into point-of-sale (POS) terminals. Manual transaction
reports are used to detect potentially fraudulent activities between a
retailer and recipient where large numbers of manual entries are
processed by the retailer. FNS also agreed to assess the feasibility
of: (1) creating a uniform method for States to report recipient fraud
and (2) conducting a nationwide random sample of SNAP retailers.
---------------------------------------------------------------------------
    \2\ Analysis of FNS' SNAP Fraud Prevention and Detection Efforts
(27002-0011-13, September 2012--this report also consolidates the
results of audits performed in 10 States); Overlap and Duplication in
Food and Nutrition Service's Nutrition Programs (27001-0001-10, June
2013); Recovery Act Impacts on Supplemental Nutrition Assistance
Program Phase II (27703-0001-22, June 2013); and FNS: Controls for
Authorizing Supplemental Nutrition Assistance Program Retailers (27601-
0001-31, July 2013).
---------------------------------------------------------------------------
    We also found that the potential for overlap and duplication exists
among FNS' 15 nutrition programs, and determined that FNS may be
duplicating its efforts by providing participants total benefits in
excess of 100 percent of daily nutritional needs when households and/or
individuals participate in more than one FNS program simultaneously.
FNS has agreed to determine and document the requirements for
conducting a study to identify and determine the extent to which
overlap and duplication may exist in FNS' nutritional assistance
programs. FNS also agreed to determine whether they have the resources
necessary to conduct the assessment of the potential overlap of its
nutrition programs, or whether additional funding will be necessary to
complete the assessment.
    Our recent reviews have also highlighted concerns with how States
use and account for the administrative funding provided by the Recovery
Act to oversee SNAP. For example, for the Recovery Act, an
unprecedented level of transparency, oversight, and accountability was
required. Recovery Act funds were to be distributed timely and reported
separately from funding provided through routine annual appropriations.
We found that FNS made Recovery Act administrative funds available for
States to use on a timely basis; however, FNS did not provide adequate
accounting guidance, coordination, and oversight to ensure States fully
complied with transparency and accountability requirements.
Accordingly, we are working with FNS to recover $470,272 that was spent
on unallowable costs.
    We have also recently reported on FNS' controls for authorizing,
reauthorizing, and disqualifying retailers that participate in SNAP.
FNS does not have clear procedures and guidance to carry out key
oversight and enforcement activities to address SNAP retailer fraud, or
adequate authority to prevent multiple instances of retailer fraud. We
recommended that FNS comprehensively review its policies and
procedures, seek legislative change to retain a portion of retailer
penalties, require background checks for retailers, strengthen internal
guidance, improve its automated retailer data system, create and
strengthen safeguards for high-risk stores, and require more
supervisory reviews. We identified nearly $71 million in questioned
costs and $6.7 million in funds to be put to better use. FNS agreed
with 12 of the report's 20 recommendations. We are continuing to work
with the agency to resolve the remaining eight recommendations.
    As OIG's audit work moves into fiscal year 2014, we will continue
to provide oversight of FNS administration of SNAP. For example, we are
currently conducting an audit on the accuracy of the SNAP quality
control error rate. For this review, our objective is to determine
whether FNS and the State agencies responsible for administering SNAP
have adequate controls in place to ensure that SNAP payment error rates
are accurately determined and reported, the appropriate actions are
taken to reduce the error rates, and errors are timely corrected when
detected. We also plan an audit of FNS' implementation of penalties
against SNAP retailers. Our planned objective is to evaluate FNS'
controls over civil money penalties assessed against SNAP retailers,
including oversight of the penalty assessment and collection process.
We also plan to determine whether FNS correctly calculated penalties,
and whether they follow through to ensure penalties are collected once
imposed.
    OIG's Office of Investigations collaborates on a regular basis with
FNS to address SNAP fraud. For example, as a result of recent
discussions, OIG and FNS are coordinating resources on a SNAP
initiative aimed at partnering with Federal, State, and local law
enforcement and non-law enforcement agencies in three States to combat
SNAP fraud. The initiative will focus on ensuring that SNAP benefits
are being used for their intended purpose.
    Question. How does the SNAP program compare with other programs
over which you have oversight?
    Answer. When compared to other USDA programs, SNAP has the largest
dollar value of improper payments. USDA reported in fiscal year 2012
that in fiscal year 2011, 16 of its programs were vulnerable to
significant improper payments (``high risk'' programs) and estimated
$5.5 billion in improper payments for that year--a 5.11 percent error
rate.\3\ SNAP, with outlays of $71.8 billion in fiscal year 2011, had
improper payments totaling approximately $2.7 billion--a 3.8 percent
error rate. That is almost 50 percent ($2.7 billion/$5.5 billion) of
the Department's improper payments in fiscal year 2011.
---------------------------------------------------------------------------
    \3\ Fiscal year 2012 Improper Payment Elimination and Recovery Act
of 2010 Compliance Review (50024-0004-11, March 2013).
---------------------------------------------------------------------------
    Other programs in the Department, however, may have higher improper
payment rates due to the ratio of improper payments to outlays. For
example, the program with the next highest level of improper payments
is the National School Lunch Program (NSLP) at approximately $1.5
billion, or 27 percent of USDA's improper payments. With outlays of
just $10 billion, this translates into an improper payment rate of 15.5
percent for the NSLP. Hence, NSLP's improper payment rate is higher
than SNAP's although its dollar value of improper payments is $1.2
billion less.
    The following table, as cited on page 166 of USDA's Agency
Financial Report for fiscal year 2012, provides the summary level
information for all high-risk programs outlining improper payment rates
for the last 2 years and future reduction targets. When a number cannot
be provided, an explanation is provided in the notes following. The
table includes amounts from program sampling results. USDA programs
report results the year following sampling activity. For example,
results reported during fiscal year 2011 represent measures of fiscal
year 2010 outlays and program activity.

                                        IMPROPER PAYMENT SAMPLING RESULTS
----------------------------------------------------------------------------------------------------------------
                                                Results reported in fiscal year  Results reported in fiscal year
                                                              2011                             2012
                                               -----------------------------------------------------------------
                                                                          IP                               IP
                                                               IP      (dollars                 IP      (dollars
                                                 Outlays   (percent)      in      Outlays   (percent)      in
                                                                      millions)                        millions)
----------------------------------------------------------------------------------------------------------------
Marketing Assistance Loan Program, FSA/CCC          3,054      0.52%        $16      2,878      0.08%         $2
 [Note #3]....................................
Supplemental Nutrition Assistance Program, FNS     64,705       3.81      2,465     71,813       3.80      2,729
 [Note #8]....................................
National School Lunch Program, FNS [Note #1]:
    Total Program.............................     10,739      15.98      1,716     10,024      15.53      1,557
    Certification Error.......................  .........       9.10        977  .........       8.65        867
    Counting/Claiming Error...................  .........       6.88        739  .........       6.88        690
School Breakfast Program, FNS [Note #1]:
    Total Program.............................      2,824      24.96        705      2,987      25.18        752
    Certification Error.......................  .........       9.17        259  .........       9.39        280
    Counting/Claiming Error...................  .........      15.79        446  .........      15.79        472
Women, Infants, and Children, FNS [Note #2]:
    Total Program.............................      4,648       4.13        192      4,886       4.13        202
    Certification Error Component.............  .........       3.05        142  .........       2.98        146
    Vendor Error Component....................  .........       1.08         50  .........       1.15         56
Child and Adult Care Food Program, FNS [Note
 #2]:
    Total Program.............................      2,521        N/A        N/A      2,653        N/A        N/A
    FDC Homes--Tiering Decisions..............        896       1.53         14        900       1.58         14
    FDC Homes--Meal Claims....................  .........        N/A        N/A  .........        N/A        N/A
Milk Income Loss Contract Program, FSA [Note          182       2.00          4          1        N/A        N/A
 #4]..........................................
Loan Deficiency Payments, FSA [Note #5].......        0.2        N/A        N/A        0.1        N/A        N/A
Direct and Counter-Cyclical Payments, FSA           3,877       0.05          2      3,867       0.50         19
 [Note #3]....................................
Conservation Reserve Program, FSA [Note #3]...      1,605       1.77         27      1,686       0.36          6
Miscellaneous Disaster Programs, FSA [Note #6]        235       2.90          7        477       2.16         10
Noninsured Assistance Program, FSA [Note #3]..         90       8.97          8         69       7.00          5
Wildland Fire Suppression Management, FS [Note        491       0.00        0.0        694       0.00        0.0
 #9]..........................................
Rental Assistance Program, RD [Note #9].......      1,020       1.48         15      1,078       3.44         37
Federal Crop Insurance Corporation Program          5,225       4.72        247      4,249       4.08        173
 Fund, RMA [Note #7]..........................
Farm Security and Rural Investment Act              1,433       0.80         11      2,088       0.02        0.4
 Programs, NRCS [Note #9].....................
                                               -----------------------------------------------------------------
      USDA Total..............................    101,024       5.37      5,428    107,696       5.11     5,507
----------------------------------------------------------------------------------------------------------------
 Source: USDA's Agency Financial Report for fiscal year 2012.
 Note #1: Information has not been adjusted for interaction between the different sources of certification error
  and counting/claiming error. NSLP and SBP estimated improper payment amounts reported for fiscal year 2012 are
  based on improper payment rates for school year 2010/2011, multiplied by the fiscal year 2011 outlays.
 Note #2: WIC and CACFP currently test components of their programs measuring fiscal year 2011 outlays for
  fiscal year 2012 reporting. CACFP currently tests and reports on the FDCH tiering decision component of the
  payment process. FNS continues to evaluate the measurement processes for the CACFP meal claim component. The
  agency has not set a date for measurement and reporting.
 Note #3: MAL and NAP information for fiscal year 2012 reporting is based on total outlays for fiscal year 2011.
  DCP and CRP information for fiscal year 2012 reporting is based on October 2011 through December 2011 outlays,
  which represent 98.3 percent of the annual outlays for DCP and 94.7 percent of the annual outlays for CRP. The
  estimated improper payment dollar amounts for MAL, DCP, CRP, and NAP may reflect variances from the
  relationship between the improper payment percentage and the outlays amount. These variances result from the
  complex, multi-stage statistical sampling methodology developed by the contract statistician in calculating
  the independent projections of the dollars and percentages in error. The variances represent a complex ratio
  estimate weighted with respect to the payments within their applicable county stratification. They reflect the
  variability within the payment data and occur with a 90-percent confidence level.
 Note #4: A full statistical sample was not cost-effective due to low outlays during fiscal year 2011 and the
  low improper payment rates in previous years. OMB will evaluate MILC activity annually to determine if
  measurement for a specific fiscal year would be cost-effective.
 Note #5: A statistical sample was not performed; it was not cost-effective due to low outlays during fiscal
  year 2011, and low improper payment rates in previous years. OMB will evaluate LDP activity annually to
  determine if measurement for a specific fiscal year is cost-effective.
 Note #6: FSA measured one component of the several MDP disaster program components for fiscal year 2012
  reporting. A full statistical sample of all MDP components was not cost-effective. The Livestock Forage
  Disaster Program fiscal year 2011 outlays (63 percent of all MDP outlays) were statistically sampled. FSA is
  undergoing a risk assessment of the Livestock Indemnity Program (35 percent of MDP outlays). OMB will evaluate
  MDP activity annually and determine which components to measure for a specific fiscal year.
 Note #7: RMA uses a 3-year running average to calculate its improper payment rate. fiscal year 2012 is based on
  the measurement of 2009, 2010, and 2011 crop year outlays.
 Note #8: SNAP fiscal year 2012 reporting information is based on fiscal year 2011 outlays. SNAP reduction
  targets may be reduced and adjusted in consideration of increased need resulting from further growth in the
  program, which has been unprecedented during the past few years, State budget constraints, and other related
  factors. The SNAP improper payment rate trend line goes from 5.99 percent in fiscal year 2007 to 3.80 percent
  in fiscal year 2012. Due to the above issues, it is not realistic and likely not achievable for SNAP to
  consistently have 3.80 percent or less improper payment rate for future years.
 Note #9: The FSRI, RAP, and WFSM programs' information for fiscal year 2012 reporting is based on fiscal year
  2011 outlays.
 Note #10: The MAL improper payment rate trend line goes from 7.52 percent in fiscal year 2007 to 0.08 percent
  in fiscal year 2012. The 0.08 percent rate for fiscal year 2012 is an outlier compared to rates of the
  previous 5 years. Due to the inherent variables in the statistical sampling measurement process, a fiscal year
  2013 reduction lower than 0.08 percent is not realistic and likely not achievable. The MAL reduction target
  rates for fiscal year 2013, fiscal year 2014 and fiscal year 2015 in Exhibit 27, are more realistic and
  achievable in relationship to the MAL trend line from fiscal year 2007 through fiscal year 2011.
 Note #11: The WFSM program has reported a 0.00 percent improper payment rate for the past 4 years. Due to the
  inherent variables in the statistical sampling measurement process, it is not realistic and likely not
  achievable for WFSM program to consistently have 0.00 percent improper payment rate for future years.
 Note #12: Due to the inherent variables in the statistical sampling measurement process, it is not realistic
  and likely not achievable for FSRI program to consistently have 0.02 percent or less improper payment rate for
  future years.

    Regarding a comparison of SNAP to other USDA programs from the
perspective of our Investigations division, our foremost observation is
the large number of successful SNAP investigations OIG has conducted
recently, and the significant proportion of investigative resources OIG
is allocating to pursue criminal activity in the program. The amount of
convictions and monetary results from recent OIG investigations in SNAP
are higher than for any other USDA program. For example, in fiscal year
2012, the total convictions and monetary results obtained from
investigations pertaining to Farm Service Agency (FSA), Risk Management
Agency (RMA), Rural Housing Service (RHS), Rural Business Service
(RBS), and Grain Inspection, Packers and Stockyards Administration
(GIPSA) programs were 72 convictions and $36.8 million, respectively.
In the same fiscal year, OIG investigative work in SNAP alone resulted
in 342 convictions and $57.7 million in monetary results. Overall, SNAP
investigations produced over 50 percent of the monetary results
achieved by OIG's Investigations division in fiscal year 2012.
    The following chart provides a breakdown by agency of fiscal year
2012 indictments, convictions, and monetary results from OIG
investigations. Note that the overall monetary results OIG
investigations obtained in fiscal year 2012 were approximately $106
million; as mentioned above, SNAP investigations accounted for over $57
million of that total (which is reflected in the Food and Nutrition
Service monetary results below).

----------------------------------------------------------------------------------------------------------------
                                                                                                     Monetary
                             Agency                                Indictments   Convictions \1\      Results
----------------------------------------------------------------------------------------------------------------
Agricultural Marketing Service.................................               2                4            $340
Animal Plant Health Inspection Service.........................              50               75         263,620
Agricultural Research Service..................................               4                2          71,200
Foreign Agricultural Service...................................               3                1          99,191
Food and Nutrition Service.....................................             626              364      68,531,818
Forest Service.................................................               6                9          82,700
Farm Service Agency............................................              28               37      14,554,850
Food Safety and Inspection Service.............................              17                9         371,825
Grain Inspection, Packers and Stockyards Administration........               6                4       1,100,000
Natural Resources Conservation Service.........................               2                2          65,800
Rural Business--Cooperative Service............................               6                4      10,196,005
Rural Housing Service..........................................              29               17       8,937,577
Risk Management Agency.........................................              12               10       2,053,929
Rural Utility Service..........................................               1  ...............  ..............
                                                                ------------------------------------------------
      Totals...................................................             793              538     106,328,855
----------------------------------------------------------------------------------------------------------------
\1\ This category includes pretrial diversions.

    Question. Are there any areas where there are major problems that
the USDA could address within the SNAP program?
    Answer. FNS needs to address the following recommendations issued
in our audit reports:
    27002-0011-13 SNAP Fraud Prevention and Detection Efforts.--In this
audit, issued September 2012, our objective was to evaluate the
adequacy of FNS and State tools used to prevent and detect SNAP fraud,
determine whether the States were using the tools provided, and
identify and evaluate the integrity of amounts reported for recipient
and retailer fraud. We found that States need to more fully use
existing tools to ensure applicant eligibility and detect fraud. We
also found that FNS has not established processes to identify or
estimate the total amount of SNAP fraud occurring nationwide, either by
recipients or by retailers. Overall, the report recommended that for
FNS to better detect and prevent recipient fraud, FNS should specify a
set of tools that States are required to use for fraud detection, and
create associated guidelines for their consistent usage. We have agreed
with FNS on its corrective actions on each of the report's nine
recommendations. In addition, FNS has reported that it has completed
corrective actions on seven of the nine recommendations.
    27001-0001-10 Overlap and Duplication in FNS' Nutrition Programs.--
In this audit, issued June 2013, our objective was to assess FNS'
nutrition programs to identify the potential for overlap and
duplication. We found that the potential for overlap and duplication
exists among FNS' 15 nutrition programs, and determined that FNS may be
duplicating its efforts by providing participants total benefits in
excess of 100 percent of daily nutritional needs when households and/or
individuals participate in more than one FNS program simultaneously.
The overall recommendations in the report were for FNS to determine and
document the requirements for conducting a study, and to identify and
determine the extent to which overlap and duplication may exist in FNS'
nutritional assistance programs. For the report's two recommendations,
we have agreed with FNS on the corrective actions on both
recommendations. FNS is currently working to implement the corrective
actions outlined in those recommendations.
    27703-0001-22 Recovery Act Impacts on SNAP.--In this audit, issued
June 2013, our objective was to determine if FNS had sufficient
internal controls to ensure that SNAP administrative funds provided by
the Recovery Act were used in accordance with the Recovery Act's
provisions, Office of Management and Budget guidance, and FNS
requirements for allowable program costs. FNS did not provide adequate
accounting guidance, coordination, and oversight to ensure States fully
complied with transparency and accountability requirements. The overall
recommendations for the report were for FNS to recover unallowable
expenditures totaling $470,272 from three State agencies and one
county. We have not reached agreement on the report's four
recommendations for corrective actions. We are continuing to work with
the agency to do so.
    27601-0001-31 FNS: Controls for Authorizing SNAP Retailers.--In
this audit, issued July 2013, our objective was to assess FNS' controls
over the retailer authorization process, findings reported by Scripps
Howard News Service of permanently disqualified owners participating in
SNAP, and FNS' recent actions to strengthen its processes. We found
that FNS does not have clear procedures and guidance to carry out key
oversight and enforcement activities to address SNAP retailer fraud, or
adequate authority to prevent multiple instances of fraud--either by a
particular owner or within a particular location. In addition, FNS
regional offices put their limited resources towards other activities,
such as retailer authorization, rather than assessing and enforcing
retailer penalties. The overall recommendations for the report were for
FNS to comprehensively review its policies and procedures, seek
legislative change to retain a portion of retailer penalties, require
background checks for retailers, strengthen internal guidance, improve
its automated retailer data system, create and strengthen safeguards
for high-risk stores, and require more supervisory reviews. Of the
report's 20 recommendations for corrective actions, we have agreed with
FNS' corrective actions on 12 of the recommendations. For the remaining
eight recommendations, we continue to work with the agency to reach a
resolution.

                          SUBCOMMITTEE RECESS

    Senator Pryor. The subcommittee will meet again 10 a.m. on
Thursday, May 16. And I think this is the room where we'll hear
from some of the Under Secretaries.
    So again, thank you for your time and thank you for being
part of this.
    And with that, we'll recess the hearing.
    [Whereupon, at 11:59 a.m., Thursday, May 9, the
subcommittee was recessed, to reconvene at 10 a.m., Thursday,
May 16.]

 
   AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION, AND
          RELATED AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2014

                              ----------


                         THURSDAY, MAY 16, 2013

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 10:05 a.m., in room SD-124, Dirksen
Senate Office Building, Hon. Mark L. Pryor (chairman)
presiding.
    Present: Senators Pryor, Udall, and Cochran.

                       DEPARTMENT OF AGRICULTURE

STATEMENTS OF:
        ED AVALOS, UNDER SECRETARY, MARKETING AND REGULATORY PROGRAMS
        DR. CATHERINE WOTEKI, UNDER SECRETARY, RESEARCH, EDUCATION AND
            ECONOMICS
        DR. ELISABETH HAGEN, UNDER SECRETARY, FOOD SAFETY
        KEVIN CONCANNON, UNDER SECRETARY, FOOD, NUTRITION AND CONSUMER
            SERVICES
ACCOMPANIED BY MICHAEL YOUNG, BUDGET OFFICER

               OPENING STATEMENT OF SENATOR MARK L. PRYOR

    Senator Pryor. I will call this hearing to order, and I
want to say thank you to all of our panelists, our witnesses
today.
    This is the third hearing we've had on the subcommittee,
and today we're going to have a chance to really talk in detail
about some of the items in the budget for the U.S. Department
of Agriculture (USDA).
    I'd also like to thank Senator Cochran for standing in for
Senator Blunt today. Senator Blunt is in Missouri at a
commitment in his hometown that he committed to a long time
ago, and we understand how that goes. So he has left the
responsibilities in the very capable hands of Senator Cochran.
    Of course, it's a delight to have Senator Cochran here. Not
only is he a true gentleman but also the former chairman of the
full committee, former chairman of the Appropriations
Committee, came here in 1979.
    And, Thad, before I came in this morning, I looked at that
list of people that you came in with, and it's a very
impressive list of Senators that you came in with: David
Durenberger, Max Baucus, Nancy Kassebaum, of course, you, Rudy
Boschwitz, Alan Simpson, John Warner, William Armstrong, Bill
Cohen, Paul Tsongas, Larry Pressler, David Boren, Jim Exon,
Carl Levin, of course, Bill Bradley, Howell Heflin, Roger
Jepsen, Gordon Humphrey, and then this one guy named David
Pryor. I don't know whatever happened to him, but I don't think
he ever amounted to much.
    But anyway, great class. And it's great to have you here.
And as everyone here knows, Senator Cochran is really one of
the giants of American agriculture.
    Today, we have four Under Secretaries with us, and so I'm
going to be very brief in my opening statements. And I'll just
go ahead and introduce you here in just a moment, but I'd like
to welcome each one of you to the subcommittee. Well, I'll go
ahead.
    Mr. Kevin Concannon, the Under Secretary for Food,
Nutrition and Consumer Services; Dr. Elizabeth Hagen, the Under
Secretary for Food Safety; Mr. Edward Avalos, Under Secretary
for Marketing and Regulatory Programs; and Dr. Catherine
Woteki, Chief Scientist and Under Secretary for Research,
Education, and Economics.
    The Under Secretaries here today represent a wide range of
activities carried out by the Department. Their combined budget
requests are nearly $12.4 billion in discretionary funding,
which is nearly 69 percent of USDA's total request for fiscal
year 2014.
    The largest portion of that is for the nutrition programs,
which include the Women, Infants, and Children (WIC) program,
the largest single discretionary pot of money in the USDA. The
fiscal year 2014 budget for WIC is $7.1 billion. That's an
increase of $286 million from last year, without accounting for
the sequester. This will support an estimated 8.9 million
women, infants, and children per month in this country.
    For the Food Safety and Inspection Service (FSIS), the
budget actually requests a decrease from last year, again,
without accounting for the sequester. This is in large part due
to USDA's intent to finalize and implement a new poultry
slaughter rule.
    This rule will refocus the efforts of the inspectors and
require fewer Federal resources. I look forward to talking a
little further with you all about this.
    The budget request also includes a slight decrease for the
Animal and Plant Health Inspection Service (APHIS) but includes
a number of programmatic changes to address new and emerging
issues. I'm interested to hear how you plan to balance the
needs of new problems in this budgetary environment while
maintaining appropriate efforts on longer term issues.
    The research budget this year has increased by
approximately $125 million with the vast majority of that
increase being provided through the Agriculture and Food
Research Initiative, AFRI, at the National Institute of Food
and Agriculture (NIFA).
    I'm always pleased to see increased requests for
agriculture research, and I think it's an important and sound
investment of taxpayer dollars.
    Now we talked a bit about this last week, how our farmers
are going to have to produce more in the next 40 years. They're
going to have to produce more than they produced in all of
recorded history. The investments in research are what will
make this possible.
    However, I would also like to say, briefly, I don't think
we should focus all of our attention on competitive research. I
think the land-grant universities and capacity programs funded
in this bill are vital to the work of America's farmers. They
allow for continued focus on local and regional problems and
issues faced by our producers, and they disseminate
information, so it can be used by everyone. We shouldn't lose
sight of their importance.
    With that, what I'd like to do is turn it over to Senator
Cochran and would like to hear his opening statement.

                   STATEMENT OF SENATOR THAD COCHRAN

    Senator Cochran. Mr. Chairman, thank you for presiding over
this hearing this morning. I'm pleased to join you in welcoming
our distinguished panel of witnesses from the Department, who
are here to talk about the budget request for the next fiscal
year.
    Nutrition programs are important, and they're contained in
the part of the budget that will be discussed this morning,
along with other activities, Animal and Plant Health Inspection
Service, funding, and others.
    We thank you for your service through your responsibilities
to the Department of Agriculture and to our consumers and
farmers nationwide. We appreciate your diligence and your
careful attention to our public responsibilities.
    Thank you.
    Senator Pryor. Thank you.
    And I thought what I would do is just, I guess, for ease,
just start over here with Mr. Avalos and just go down the line
here. So let's do 5 minutes for opening statements. Now, your
written statements will be part of the record, so if you want
to summarize and do it in 5 minutes, that would be great.
    Mr. Avalos.

                     SUMMARY STATEMENT OF ED AVALOS

    Mr. Avalos. Thank you, Mr. Chairman, Ranking Member
Cochran. Thank you so much for the invitation to be here.
    I'm just going to take a few minutes to talk about our
budget request. I have a statement that I do have for the
record. So anyway, I just want to highlight our request.
    We are requesting a total discretionary appropriation of
$925 million. It's important to note that this is $84 million
less than 2009. It's $120 million less than 2010.
    Now, we've cut expenses. We've created efficiencies. We've
reduced staff. We're very much on board for reducing Government
spending, for reducing the deficit. But we still have to do our
job.
    At the Agricultural Marking Service (AMS), our budget
request was about $84 million. It includes additional money to
support rural communities by helping producers meet the growing
demand for local and regional foods; also funding to maintain
confidence in the organic label through enforcement and
compliance; and finally, to expand international markets
through equivalency agreements with countries such as Costa
Rica, Korea, India, and Germany.
    At APHIS, our budget request is about $801 million. This
includes additional funding to establish a comprehensive
national feral hog plan. Feral hogs are an invasive species
found in 38 States. They spread disease and cause damage,
damage estimated at $1.5 billion.
    Also additional funding to implement our new animal disease
traceability program. This program has buy-in from producers,
has buy-in from States, buy-in from the tribes, and it's
supported by trading partners.
    And funding to eradicate the Asian long-horned beetle,
which threatens our hardwood forests, and the European
grapevine moth, which threatens the California wine and grape
industry.
    The Grain Inspection, Packers and Stockyards Administration
(GIPSA) request is about $40 million, and it's about making
sure the seller gets paid, about fairness in the marketplace.
And this is created by allowing our field agents to do the
necessary enforcement and compliance work.
    On the grain side, we are requesting funding to purchase
critical equipment that we've been holding back for a long time
from purchasing. This is necessary to maintain the strong
domestic and international trade.

                           PREPARED STATEMENT

    This concludes my opening remarks. I look forward to
working with the subcommittee, and I'm prepared to answer any
questions. Thank you very much.
    [The statement follows:]
                    Prepared Statement of Ed Avalos
    Mr. Chairman and distinguished members of this subcommittee, I am
pleased to appear before you to discuss the activities of the Marketing
and Regulatory Programs (MRP) mission area of the U.S. Department of
Agriculture (USDA) and to present the fiscal year 2014 budget proposals
for the Agricultural Marketing Service (AMS), the Animal and Plant
Health Inspection Service (APHIS), and the Grain Inspection, Packers
and Stockyards Administration (GIPSA).
    Secretary Vilsack has stated that the Administration is strongly
committed to programs that create jobs and expand markets. MRP helps
accomplish this in a variety of ways. For example, AMS and GIPSA
certify the quality of agricultural commodities and provide industry
with a competitive edge earned by the USDA seal of approval for grading
and inspection. GIPSA also works to help ensure that livestock
producers have a fair and competitive market environment. APHIS
protects the health of plants and animals, enhancing the
competitiveness of U.S. producers by keeping production and marketing
costs low. All three agencies help resolve international issues to
maintain and open markets around the world for U.S. products.
    MRP agencies have operated in an environment of tightened budgets.
We have accomplished this through proactive management of, if not
reductions in, staffing; internal reorganizations; office closures;
consolidation of telecommunication services; and reduction of travel
and other expenses. Further, we have prioritized our activities and
made decisions to eliminate or reduce programs that are not central to
our mission. In addition, APHIS has reduced involvement in combating
those pests where good progress could not be made with available means
or which are overshadowed by higher priority threats. Successful
efforts to eradicate pests, such as boll weevil and screwworm allow
savings as well.
    Still, the MRP agencies have achieved significant accomplishments
that I would like to highlight. In fiscal year 2012, APHIS resolved 207
sanitary and phytosanitary trade issues, including opening new markets
and retaining and expanding existing market access for U.S.
agricultural products valued at $2.56 billion. This involved more than
50 countries and plant and animal products such as beef, cherries,
dairy products, grapes, live swine and cattle, peas and pulses,
potatoes, poultry, stone fruit, and many more. In fiscal year 2012,
APHIS personnel stationed overseas successfully secured the release of
324 shipments of agricultural products worth more than $41 million.
APHIS, working with California cooperators, reduced populations of
European grapevine moths (EGVM), so that detections numbered only 77 in
fiscal year 2012 compared with almost 101,000 in fiscal year 2010. EGVM
is a threat not only to producers in California but potentially to
those in 30 other States. APHIS has also achieved success in the animal
health sector. Subsequent to APHIS promulgating the animal disease
traceability rule in December, 2012, the Scientific Commission for the
World Organization for Animal Health (OIE) recommended that the U.S.
risk classification for bovine spongiform encephalopathy be changed
from the second-tier risk rating to the lowest risk rating that OIE
provides. Upon finalization, this will aid efforts to promote U.S.
cattle and beef products abroad.
    AMS achieved notable accomplishments in fiscal year 2012 as well.
AMS purchased about $1.4 billion of food produced by America's farmers
and processors for domestic nutrition assistance programs. In response
to industry requests to improve procurement processes for canned and
frozen fruit and vegetable products, and to better meet the Food and
Nutrition Service's (FNS's) need to supply these products year-round,
AMS redesigned procurement programs in 2012 in a manner that won praise
from industry and FNS recipient agencies. AMS established the United
States-European Union Organic Equivalency Arrangement in June 2012,
which has opened up a $24 billion market to U.S. organic producers and
handlers. AMS also facilitated marketing of U.S. organic products to
Argentina, Australia, Brazil, Costa Rica, China, Germany, and
Guatemala.
    Finally, GIPSA had many noteworthy accomplishments. GIPSA closed
2,545 investigative files on potential violations of the Packers and
Stockyards Act in fiscal year 2012, compared with about 2,050 in fiscal
year 2011 and less than 580 in fiscal year 2000. In addition, GIPSA
also implemented use of new grain moisture meters based on technology
it developed in coordination with the Agricultural Research Service and
transferred to the private sector for commercial use. Two competing
manufacturers' moisture meters were subsequently approved by GIPSA,
which reduced significantly the price paid by the grain industry for
these instruments.
    The 2014 budget requests total budgetary authority of about $2.4
billion for the MRP agencies, of which about $925 million is from
discretionary appropriations, more than $940 million from Customs
receipts, and about $435 million from fees charged to the direct
beneficiaries of MRP services. The discretionary appropriations request
for the MRP agencies combined is about $84 million less than the fiscal
year 2009 appropriation, a decrease of about 8 percent. Continuing our
efforts to address core mandates and high-priority needs while using
taxpayer resources as efficiently as possible, I would like to
highlight the budget requests for the MRP agencies.
                     agricultural marketing service
    The mission of AMS is to facilitate the competitive and efficient
marketing of U.S. agricultural products. AMS accomplishes this mission
through a wide variety of activities in cooperation with partners to
the benefit of U.S. producers, marketers, and consumers. The
President's budget request for AMS proposes a discretionary
appropriation of about $84 million and includes a small number of
important initiatives.
    With additional funding for the Transportation and Market
Development Program, AMS will help producers respond to growing
consumer demand for local and regional food and expand their access to
markets through product aggregation, processing, and distribution. Such
efforts are intended to provide opportunities for smaller producers to
scale up, for mid-sized producers to serve a scale-appropriate market
segment such as institutions and grocers, and for producers of all
sizes to diversify their sales. Expanding local and regional food
systems in a community has been found to increase employment and income
in that community.
    The budget also includes funding to assist the organic sector by
ensuring the integrity of the USDA organic seal and fostering new
organic equivalency agreements while taking actions, such as compliance
monitoring, to maintain existing agreements. As organic sales expand
and the number of certified operations rises, the National Organic
Program must have sufficient resources to accredit, audit, and oversee
the work of certifying agents, keep pace with violation investigation
and enforcement, and maintain and expand trade opportunities provided
by equivalency agreements.
    An initiative under the Federal-State Marketing Improvement Program
(FSMIP) will assist producers in meeting the requirements of the Food
Safety Modernization Act. Under the FSMIP, AMS provides matching funds
to State departments of agriculture for projects aimed at improving
marketing efficiency, reducing marketing costs for producers, and
lowering food costs for consumers.
    The budget requests funding from section 32 for USDA's Web-Based
Supply Chain Management (WBSCM) system to begin a technical upgrade
that must be completed in 2015 to keep the system operating efficiently
and cost-effectively. AMS manages the WBSCM system, which has improved
the procurement, delivery, and management of more than 200 foods (4.5
million tons) through domestic and foreign feeding programs
administered by AMS, FSA, FNS, FAS, and the United States Agency for
International Development.
               animal and plant health inspection service
    The Animal and Plant Health Inspection Service has a broad mission
that includes protecting and promoting the health of U.S. agriculture
and natural resources, administering the Animal Welfare Act, and
carrying out wildlife damage management activities. Together with
customers and stakeholders, APHIS enhances market access in the global
marketplace and helps ensure abundant agricultural products.
    The budget request proposes discretionary appropriations of about
$801 million. In addition, existing user fees of more than $210 million
will support Agricultural Quarantine Inspection activities. The budget
proposes an elimination of funding for programs such as Johne's disease
and chronic wasting disease, which can best be managed at a local or
regional level. Increased cost-sharing will be requested from
beneficiaries of several pest programs related to specialty crops,
trees, and wildlife damage management; this allows lesser demand for
Federal taxpayer resources. These and other carefully considered
reductions, together with aggressive streamlining steps, allow us to
steward taxpayer resources and request a small number of increases for
our highest priorities.
    Given promulgation of the final animal disease traceability rule,
the budget requests funding to support effective implementation. This
includes information technology systems to administer animal
identification devices, allocate location identifiers, and manage the
animal disease traceability information systems. APHIS will continue to
provide the premises identification systems to States and tribes that
wish to use them. Funding for cooperative agreements with State and
tribes to implement the program, provision of low-cost identification
tags, and other needs are included in the request.
    Notably, the President's budget requests an increase to address the
growing problem of feral swine, which are estimated to cause $1.5
billion in damages that threaten animal and human health; crops and
livestock; rural, suburban, and urban properties; and natural resources
and native resources. APHIS will coordinate with other Federal, State,
and local entities to create a national program to address the more
than 5 million feral swine currently found in 38 States. With
populations of feral swine that have increased 21 percent annually in
recent years, prompt and nationally coordinated action is needed.
    Additional resources are also requested for a variety of efforts.
For example, the budget includes additional funding to combat the Asian
longhorned beetle in Ohio and Massachusetts, and to eradicate EGVM in
California. To implement the APHIS rule to protect pets that are sold
over the Internet, by phone and by mail and that are currently exempt
from USDA oversight, the budget requests funds to identify such vendors
and conduct education and licensing activities.
        grain inspection, packers and stockyards administration
    GIPSA's mission is to facilitate the marketing of livestock, meat,
poultry, grain, and related agricultural products and to promote fair
and competitive trade for the benefit of consumers and American
agriculture. GIPSA fulfills this mission through the Packers and
Stockyards Program (P&SP) and the Federal Grain Inspection Service
(FGIS).
    The budget proposes a discretionary appropriation of slightly more
than $40 million. About $23 million is requested for the P&SP while
approximately $18 million is for FGIS activities including
standardization, compliance, and methods development activities. The
budget also includes existing user fees of about $50 million for grain
inspection and weighing. The discretionary budget includes a request
for additional funding to allow the P&SP to facilitate market
protections for buyers and sellers of livestock and poultry through
greater compliance, investigative, and enforcement activities in the
field. Funds would provide equipment and other support expenses needed
for its field staff to effectively conduct regulatory and investigative
work. An increase for FGIS will allow it to purchase long-delayed
scientific equipment, which will provide advanced assessment of rice
characteristics and effective mycotoxin and pesticide residue testing
programs for U.S. grain exporters.
                               conclusion
    In closing, the budget request for MRP supports our key role for
the rural economy and for producers and consumers across the Nation. It
also reflects the comprehensive efforts we have taken to conserve
taxpayer dollars through targeted, common sense efficiencies. Any
further reduction in funding would significantly impair our ability to
deliver critical services and would imperil our efforts to manage an
increasingly complex workload with constrained staffing levels.
    This concludes my statement. I look forward to working with the
subcommittee on the 2014 budget and will be glad to answer questions
you may have on these budget proposals.

    Senator Pryor. Thank you.
    Dr. Woteki.

               SUMMARY STATEMENT OF DR. CATHERINE WOTEKI

    Dr. Woteki. Well, good morning, Chairman Pryor, Senator
Cochran. It's a real pleasure to appear before you today and to
describe the budget request for Research, Education, and
Economics (REE). I'll summarize my written testimony and note
that USDA really has a very long history of enhancing rural
prosperity while helping to provide an abundant and diverse
food supply to rural America and to urban America.
    One of the key ways that these goals are reached is through
our combined investment in research and education. And this
encompasses really cutting-edge research on genetics and
genomics, natural resources and environmental science, human
and animal nutrition and food safety, and local and global food
security. USDA has also invested in public education and
scientific literacy. And details on all of these are available
in our action plan widely available and posted on our Web site.
    Last year marked 150 years of USDA and also 150 years of
the partnership that we have with the land-grant university
community that has been expanded to include historically Black
colleges as well as tribal colleges. And this research
partnership is really essential for bringing together the
research, the education and extension components.
    Public investment in agricultural research is critical to
the innovations that keep our agricultural sector productive
and ensure positive benefits to our economy. For every $1 that
we invest in agricultural research, it returns $20 to the U.S.
economy.
    For the REE mission area, the budget request for 2014 is
$2.8 billion for the four agencies that comprise the mission
area. I'm going to highlight some of the key proposed
investments for each of these four agencies.
    For the Agricultural Research Service (ARS), the budget
request is $1.28 billion. This will go to priorities that we've
identified such as centralizing ARS information technology (IT)
systems, improving production efficiencies through sustainable
agriculture, helping producers adapt to and mitigate the
effects of climate change, protecting crops at high risk of
infestation from insects, continuing the development of
alternative fuels, and building on ongoing research in the
Earth sciences.
    In addition, in 2011, Congress directed ARS to study and
prioritize infrastructure investments. ARS's capital investment
strategy identified 21 low-condition facilities that housed
high-priority research programs that are in need of
modernization.
    And the President's budget requests $155 million for the
number one priority, a replacement facility for the Southeast
Poultry Disease Research Laboratory in Athens, Georgia, where
we're currently conducting research on the avian influenza
strain H7N9 that's causing really human health as well as
animal issues in China.
    USDA's extramural science and education is coordinated
through the National Institute of Food and Agriculture. The
budget request is $1.29 billion and does fund the land-grant
university system through a combination of capacity and
competitive funds.
    As you noted, the President's budget request increased to a
total of $383 million for NIFA's flagship competitive program,
the Agriculture and Food Research Initiative.
    Finally, turning to the statistical agencies, the Economic
Research Service (ERS) and the National Agricultural Statistics
Service (NASS), the President's budget requests $78 million for
ERS. And this is research that addresses all aspects from an
economic perspective of the agricultural enterprise. Within
that is a request for $2.5 million for research innovations to
improve policy effectiveness, to strengthen behavioral
economics research, as well as the statistical uses of
administrative data.
    Finally, for NASS, the budget request is just under $160
million. It will provide funding that will allow the completion
of the Census of Agriculture, as well as $117 million for the
agricultural estimates program.
    The REE mission area has been looking to find
administrative efficiencies in the way we conduct our programs.
For example, we've cut travel spending by 52 percent below the
2010 level.
    These are difficult times, we recognize. But as a Nation,
if we're going to maintain our leadership role in agriculture,
particularly as it relates to agricultural innovation and
productivity, we have an obligation to support research,
education, and extension activities.

                           PREPARED STATEMENT

    Mr. Chairman, I look forward to working with you as we
continue to support a world-class level of science at the
Department of Agriculture, and to maintain and increase the
strength of American agriculture.
    I'm looking forward to your questions, thank you.
    [The statement follows:]
               Prepared Statement of Dr. Catherine Woteki
    Chairman Pryor, Ranking Member Blunt, and members of the
subcommittee, my name is Catherine Woteki and I am the Chief Scientist
and Under Secretary for Research, Education, and Economics (REE) at the
United States Department of Agriculture (USDA). I am pleased to appear
before you to discuss the President's 2014 budgets for the REE mission
area agencies.
    My testimony reflects the unwavering commitment of President Barack
Obama, Secretary Tom Vilsack, and all those who work at USDA to support
our Nation's farmers, producers, and consumers every step of the way
from farm to dinner table. USDA has a long history of enhancing rural
prosperity while helping to provide an abundant and diverse food supply
to urban and rural America. One of the key ways these goals are
achieved is through USDA's cutting edge research on genetics and
genomics, and natural resources and environmental science, nutrition
and food safety, and local and global food security. USDA has also
invested in public education and scientific literacy. Our Action Plan
is available to you at any time and can be found at http://
ree.usda.gov.
    As you know, this commitment to science is one that USDA made long
ago. Last year marked 150 years since President Abraham Lincoln created
the Department of Agriculture along with the 150th anniversary of the
signing of the Morrill Act--the legislation that created our Nation's
network of land-grant universities. This partnership--which was
subsequently expanded in 1890 to include institutions serving the
African American community and in 1994 to include the tribal colleges--
is critical in the advancement of agricultural science in the United
States today. The internationally recognized Extension system that is
housed in these land-grant colleges and universities is an important
incubator for best practices in agriculture.
    The challenges for the next several decades are clear: expanding
and delivering safe and nutritious food to a growing population,
keeping agricultural production profitable, bolstering agricultural
exports, reversing the obesity epidemic, and ensuring that our natural
resources remain available and abundant for future generations while
responding to the threat of a changing climate.
    Scientific research is the cornerstone of agricultural production
and food security. Investing in agricultural research is critical to
the innovations that keep our agricultural sector productive, offset a
shrinking farm safety net, and ensure positive benefits to our economy.
Agricultural productivity is a key component of net farm income, which
last year was the second highest since 1980. Investments in
agricultural science will increase the productivity that is essential
for the long-term prosperity of our Nation. In fact, for every $1 spent
on agricultural research, $20 is returned to the economy. In tough
economic times, investing in agricultural science makes sense.
    The challenge to be responsible stewards of taxpayer dollars is one
that the REE mission area takes very seriously. While each of our four
agencies serves a particular function and constituency, we also
coordinate our work to maximize Federal agricultural research funding.
REE mission area agencies collaborate closely with scientists and
researchers across the Federal Government, industry, academia, and
other stakeholders. These collaborations are particularly important in
conducting scientific research that is not cost-effective for farmers
or producers to undertake. Another benefit of collaboration is that it
reduces the duplication of research endeavors.
    These are some of the key principles that have been brought to bear
as the President's fiscal year 2014 budget request for the REE mission
area was developed. This budget request reflects the belt-tightening
and prioritizing that many Americans have been forced to make in a
challenging economic climate. For the REE mission area, the budget
requests $2.8 billion for the four mission area agencies. I would like
to spend some time highlighting some of our key proposed investments
for 2014 budget.
    For the Agricultural Research Service (ARS), the President's 2014
budget requests $1.28 billion. Investing in several aspects of the vast
research agenda of ARS--from increases in important scientific topics
to responding to emerging priorities and to an aging infrastructure--
this budget request demonstrates the administration's commitment to
agricultural science.
    For example, the budget request allocates $4.6 million to
centralize information technology (IT) systems in ARS. Ensuring robust
systems to capture, track, and compile data will go a long way toward
accelerating the pace of discovery and effectively explaining and
building upon ARS's scientific achievements. These investments will
also help reduce duplication and increase coordination of research
investigations by enhancing their transparency.
    The 2014 budget request also provides funding for priority
initiatives that will improve production efficiencies through
sustainable agriculture ($10 million), help producers adapt to and
mitigate the effects of climate change ($10 million), protect crops at
high risk of infestation from insects ($6 million), continue the
development of alternative fuels ($5 million) and build on ongoing
research in the earth sciences ($4 million).
    In addition, in 2011 Congress directed ARS to study and prioritize
ARS's infrastructure investments. The resulting ARS Capital Investment
Strategy identified 21 low-condition facilities that house high-
priority programs and that are in need of modernization over the next
decade. The President's budget requests $155 million for the number one
priority, a replacement facility for the Southeast Poultry Disease
Research Laboratory in Athens, Georgia. This laboratory is the
country's leading facility for research on emerging and exotic poultry
diseases, including avian influenza, and the request will enable ARS
scientists to advance this critically important area of research.
    The National Agricultural Library has renewed purpose in the
digital age to facilitate research collaboration on interdisciplinary
agricultural problems among Government agencies, industry and academia.
The 2014 budget requests a total of $26 million to continue library and
information services, support a Government-wide Earth Observation and
Environmental Data Activities initiative, and develop and provide
unified and accessible data infrastructure capacity.
    The above proposals represent investments in USDA's intramural
science programs. USDA's extramural science is coordinated by the
National Institute of Food and Agriculture (NIFA). The budget proposes
a total funding level for NIFA of $1.29 billion. NIFA funds capacity-
building programs--grants programs that support a variety of research,
education, and Extension initiatives at land-grant institutions--as
well as competitive grant programs to support scientists, researchers,
and educators from across our Nation that are awarded after a rigorous
peer-review panel selection process.
    For 2014, the President's budget requests $383 million for NIFA's
flagship competitive grant program, the Agriculture and Food Research
Initiative (AFRI). AFRI's programs provide the largest investment in
agricultural science across a number of disciplines that touch every
aspect of American lives; from plant and animal health and production,
to agricultural systems and technologies, to bioenergy and natural
resources, to food safety, human nutrition, and health. Responding to
producer's concerns about the need for quicker response to emerging
problems, the President's budget includes a new Critical Agricultural
Research and Extension (CARE) Competition in the Agriculture and Food
Research Initiative. The CARE Competition will permit us to address
emerging issues important to agricultural production.
    To improve transparency and accountability, the President's budget
provides $7.8 million to consolidate and modernize NIFA's grant
management systems. This critical investment will allow NIFA to
accurately quantify its research successes and help track research
accomplishments as they transfer from the laboratory to our communities
and our homes.
    As a former dean of agriculture at a land-grant university, I am a
strong proponent of ensuring that the bench is deep from which to draw
our next generation of farmers and scientists. The President's budget
reorganizes several Science, Technology, Engineering, and Math (STEM)
programs administration-wide into the Department of Education and the
National Science Foundation, thereby transferring NIFA's STEM education
programs to those agencies. However, NIFA will continue to support
secondary and post-secondary students in other ways. For instance, AFRI
grants to university researchers routinely support fellowships to pre-
and post-doctoral students working with principal investigators on
these grants, representing about $6 million in fiscal year 2010.
Additionally, the President's budget proposes $9.2 million for
Hispanic-Serving Institutions (HSI) Education Partnership Grants
Program.
    Also, the 2014 budget requests $22 million for sustainable
agriculture, in particular, through the Sustainable Agriculture
Research and Education (SARE) program. These funds will help SARE
grantees continue their important research, education, and extension
activities across the Nation. SARE grants focus on keeping American
agriculture profitable while ensuring that we can remain responsible
stewards of our environment.
    In addition to intramural and extramural science, the REE mission
area provides a valuable service to not only other USDA mission areas
but also to America's agricultural producers, industry, academia, and
non-governmental organization (NGOs) through its support of two key
USDA research and statistical agencies, the Economic Research Service
(ERS) and the National Agricultural Statistics Service (NASS).
    The President's budget requests $78 million for ERS. ERS
anticipates and responds to the needs of decisionmakers by applying
economic and social science research to address all aspects of the
agricultural enterprise, from scientific investments to food access to
agricultural trade. For example, the President's budget proposes $2.5
million for ``Research Innovations to Improve Policy Effectiveness'' to
strengthen behavioral economics research and statistical uses of
administrative data. Behavioral economics research is based on the
concept that humans do not always make the most rational choices, but
instead are influenced by external factors like emotion or social
pressure. ERS intends to apply behavioral economics to analyze and
better understand food and agricultural programs and policies.
    The 2014 budget requests nearly $160 million for NASS--which is
well known across the Nation by farmers, ranchers, and other producers
and processors, as well as the commodity markets. For the Census of
Agriculture that is conducted every 5 years, The budget request will
fully fund the Census at $43 million. The 2012 Census is currently
underway and close to 1.9 million responses have been received as of
early April. The results of the Census will be published in 2014 and
will provide data important to the agricultural industry as well as to
the administration of Federal programs. Farmers and commodity markets
have also come to depend on the impartial forecasts of NASS's
agricultural estimates that the agency compiles many times each year.
    Mr. Chairman, the President's 2014 budget for USDA's REE mission
area builds on critical investments in agricultural science. Under the
strong leadership of Secretary Vilsack, we are continuing to leverage
our appropriations by streamlining processes and identifying
efficiencies throughout the Department. REE mission area agencies
collectively have reduced travel spending, on average, by nearly 52
percent below 2010 spending. We have provided retirement options for
those who are eligible and have greatly reduced hiring.
    Mr. Chairman, these are difficult times. Like you, like the members
of this subcommittee, we understand that all too well. But if we, as a
Nation, are to maintain our leadership role in the world of
agricultural innovation and productivity we have an obligation to
support research, education, and Extension activities.
    At a time when China and Brazil are ramping up their investment in
agricultural research, we cannot afford to let ours be gutted, or worse
still, be ignored.
    It is too easy to take for granted the healthy, nutritious, and
safe foods that are available to us, the clean air we breathe, the
fresh water we drink, and even the clothes we wear. These are benefits
that have resulted to a large extent from the discoveries made by
Federal investments in agricultural science.
    Scientific endeavors are not the kind of activity that we can put a
bookmark in and come back when funding is flush. Research requires
ongoing investigation and commitment.
    Mr. Chairman, I look forward to working with you as we continue to
support a world-class level of science at the Department of Agriculture
to maintain and increase the strength of U.S. agriculture.
    Thank you again for your time and I would be pleased to answer any
questions you may have.

    Senator Pryor. Thank you.
    Dr. Hagen.

                SUMMARY STATEMENT OF DR. ELISABETH HAGEN

    Dr. Hagen. Good morning, Mr. Chairman. Good morning,
Senator Cochran. I'm Dr. Elisabeth Hagen, Under Secretary for
Food Safety at the USDA. I am pleased to appear here before you
in support of the President's fiscal year 2014 budget request
for the USDA's Food Safety and Inspection Service (FSIS).
    FSIS is the public health regulatory agency responsible for
ensuring the safety of the meat, poultry, and processed egg
supply. Much of what we do is mandated by law, originating with
the Federal Meat Inspection Act, which passed in 1906, and
later in the 1950s with the passage of the Poultry Products
Inspection Act.
    Much has happened since that time when our statutes were
enacted. And as our scientific understanding has increased,
we're constantly looking for better ways to protect consumer
from foodborne illnesses.
    For instance, the Centers for Disease Control and
Prevention (CDC) data shows that, since the mid-1990s,
significant progress has been made in reducing the incidents of
foodborne infections from pathogens often associated with the
products that we regulate. However, disease rates from
Salmonella have remained stagnant. So reducing these illnesses
is a top priority for FSIS.
    We must ensure that our inspection activities are aligned
with food safety risks. That is why, this past December, we set
new requirements for ground and comminuted poultry
establishments to reassess their hazard analysis and critical
control points (HACCP) plans to account for several recent
Salmonella outbreaks associated with these products. This
reassessment will increase the likelihood that companies will
effectively address the hazards that these products present and
that they will better prevent foodborne illness.
    We've also finalized a baseline study that targets reducing
Salmonella rates in raw chicken parts. This baseline study
provides us with important data on the prevalence and
quantitative levels of Salmonella and Campylobacter in the
chicken products most commonly purchased by consumers.
    Another important way for us to align inspection with risk
and reduce Salmonella rates is to modernize poultry slaughter
inspection. Our proposal focuses inspection on areas of poultry
production that will have the biggest impact on food safety.
Currently, many FSIS in-plant personnel perform quality
assurance tasks, such as looking for visible defects and
sorting birds.
    If we adopt this proposal, FSIS would shift its focus to
critical food safety tasks, such as pathogen testing, verifying
HACCP and sanitation procedures. And the quality assurance
tasks will be turned over to the company.
    The need for modernizing our food safety system is evident.
Scientific assumptions that existed when the Poultry Products
Inspection Act was first enacted in the 1950s are now outdated.
We must ensure that our regulatory tools correspond with
current knowledge and that we are able to tackle modern food
safety challenges. Updating what we do and where we focus will
help the agency prevent foodborne illnesses more effectively
and more efficiently as well.
    In addition to improving food safety, we estimate that this
proposal would save taxpayers approximately $90 million over
the first 3 years of implementation, and would result in a
shared benefit to consumers and industry of about $250 million
annually.
    In our continued effort to better protect public health,
we're also updating the way we collect and report data. We're
doing this through the implementation of the Public Health
Information System, which integrates our data sources to
support a comprehensive, reliable, and data-driven approach to
our inspection.
    We must also align our in-commerce activities with current
risks. For example, FSIS is developing a proposed rule to
require retail operations to maintain accurate grinding records
of source materials and practices, and this would greatly
improve our ability to trace products from retail back to
slaughter facilities.
    While most of our work is done in-plant, we recognize the
importance of good pre-harvest practices on the farm and safe
food handling at home. That is why we're actively engaged in
improving food safety across the farm-to-table continuum. For
example, we hosted a summit that brought together key
stakeholders to discuss pre-harvest practices that will reduce
the likelihood of contamination at slaughter. We're also
working with our Federal food safety partners to share best
practices.
    On the other end of the equation, we provide consumers with
the tools they need to handle food safely at home. And we reach
them through mediums such as TV, radio, print, and social
media.

                           PREPARED STATEMENT

    So in conclusion, I would say that we are continually
assessing whether we are doing the best job that we can do to
prevent foodborne illness in the most effective and the most
efficient way possible. Government can deliver better than
people expect, and we are committed to doing so.
    I am proud to lead the FSIS workforce in the mission to
protect public health, and I appreciate the opportunity to be
here with you today and to answer your questions.
    [The statement follows:]
               Prepared Statement of Dr. Elisabeth Hagen
                              introduction
    Mr. Chairman, Ranking Member Blunt, and members of the
subcommittee, I am Dr. Elisabeth Hagen, Under Secretary for Food Safety
at the U.S. Department of Agriculture (USDA).
    I am pleased to appear before you today in support of the
President's fiscal year 2014 budget request for USDA's Food Safety and
Inspection Service (FSIS) and to discuss the status of FSIS programs.
The President's fiscal year 2014 budget request for FSIS includes
slightly more than $1 billion in appropriated funding. This funding
level ensures that we remain capable of performing our vital regulatory
mission to ensure the safety of meat, poultry and processed egg
products. The notable changes in the fiscal year 2014 budget request
include initial estimated savings from transition to the modernized
poultry inspection system and sufficient funding to continue
implementation of the Cooperative Interstate Shipment program.
Who We Are
    FSIS is USDA's public health agency and is responsible for ensuring
that the Nation's commercial supply of meat, poultry, and egg products,
whether domestic or imported, is safe, wholesome, and correctly labeled
and packaged.
    The dedicated men and women of FSIS all across the Nation are vital
to carrying out our mission. Of the 9,750 people that FSIS employed at
the end of fiscal year 2012, 8,678 of them were on the front lines
protecting public health in 6,263 federally regulated establishments,
in one of the three FSIS laboratories, at approximately 120 ports of
entry, and in 150,000 in-commerce facilities nationwide.
What We Do
    Our mission is unique because much of it is mandated by law. FSIS
enforces the Federal Meat Inspection Act (FMIA) and the Poultry
Products Inspection Act (PPIA), which require the examination and
inspection of all livestock and poultry slaughtered and processed for
use in commerce for human food, with few exceptions. FSIS also enforces
the Humane Methods of Slaughter Act (HMSA), which requires that
livestock be handled and slaughtered humanely. Livestock and poultry
slaughter operations cannot operate without the presence of inspection
personnel, and inspection personnel must also be present at least once-
per-shift per day for meat and poultry processing operations. During
fiscal year 2012, FSIS personnel inspected about 147 million head of
livestock and 8.9 billion birds at slaughter establishments nationwide.
    In addition, under the Egg Products Inspection Act, FSIS inspects
processed egg products, which are primarily used as ingredients in
other foods, such as prepared mayonnaise and ice cream, and by the food
service industry, including hospitals and schools. During fiscal year
2012, FSIS personnel inspected about 4 billion pounds of processed egg
products.
    FSIS also regulates all imports of meat, poultry, and processed egg
products intended for use as human food. In fact, before imports of
FSIS-regulated products are allowed, FSIS establishes the initial
equivalence of every exporting country's food safety regulatory system,
on a product-by-product basis.
    In addition, FSIS cooperates with 27 States to develop and
administer State meat and poultry inspection (MPI) programs that
enforce food safety requirements that are ``at least equal to'' Federal
requirements at about 1,700 establishments. These establishments can
only ship or sell products within their State.
    FSIS has also entered into cooperative interstate shipment
agreements with three States--Ohio, North Dakota, and Wisconsin. FSIS
signed its first agreement with Ohio on August 8, 2012, marking the
implementation of section 11015 of the Food, Conservation, and Energy
Act of 2008. FSIS signed agreements with North Dakota and Wisconsin on
January 11 and 14, 2013, respectively.
                      preventing foodborne illness
    In addition to meeting our statutory obligations, we are constantly
looking for ways to better protect American consumers from foodborne
illnesses and evolve our methods to address modern food safety
challenges.
    In September 2011, FSIS unveiled its Strategic Plan for fiscal year
2011 through fiscal year 2016, outlining strategies and measurable
goals to reduce foodborne illness. Since then we have taken a number of
very significant steps toward accomplishing these goals, which I'm
proud to share with you today.
    On June 4, 2012, FSIS began testing for six serogroups of Shiga
toxin-producing E. coli--O26, O103, O45, O111, O121 and O145--in
addition to O157:H7. Between June 4, 2012, and April 29, 2013, FSIS
tested 3,531 samples of domestic and imported raw ground beef
components for non-O157 E. coli, and found 50 of those samples to be
positive.
    Also, on February 8, we implemented our ``hold and test'' policy,
which means that since then, meat and poultry establishments have held
FSIS-sampled product from commerce until the test results have come
back negative. This new policy will help to prevent meat and poultry
products that test positive for dangerous pathogens from reaching store
shelves or consumers' tables. FSIS calculates that if this new
requirement had been in place between 2007 through 2010, nearly 20
percent of the meat and poultry recalls that occurred during that time
would have been prevented, because the product would not have been
released into commerce in the first place.
    The Centers for Disease Control and Prevention's (CDC) most recent
Foodborne Diseases Active Surveillance Network (FoodNet) data shows
that since the 1996-1998 baseline was established, significant headway
has been made in reducing the incidence of foodborne infection caused
by pathogens often associated with FSIS-regulated food. Unfortunately,
the same cannot be said for illnesses caused by salmonella.
                               salmonella
    Our estimates of illnesses caused by salmonella from FSIS-regulated
products mirror this trend, despite recent interventions and
significant improvement in contamination rates measured by our
verification testing. Reducing illnesses due to salmonella remains a
top priority for FSIS. As long as people continue to get sick from
food, we must ensure that our inspection activities align with food
safety risks. A multifaceted effort will be necessary in order to
achieve reductions in salmonella rates.
    This past December, we advised establishments that produce ground
and comminuted poultry products that they needed to reassess their
Hazard Analysis and Critical Control Points (HACCP) plans in light of
recent developments that could affect how they analyze the hazards the
products present. Companies producing raw ground or comminuted poultry
products will be required in their reassessments to account for several
salmonella outbreaks that were associated with those types of products
over the past few years. This reassessment will increase the likelihood
that the establishments will effectively address the hazards these
products present and thus better prevent foodborne illness.
    We have also finalized a raw chicken parts baseline that targets
reducing salmonella rates in other poultry products. This
microbiological baseline study provides us with important data on the
prevalence and quantitative levels of certain foodborne pathogens, such
as salmonella, and other microorganisms.
    To stay ahead of emerging risk and trends with salmonella, FSIS has
charged its newly established Strategic Performance Working Group with
identifying potential interventions or actions to decrease FSIS-
attributable salmonellosis.
                  modernization to improve food safety
    Another important method for preventing salmonella illnesses is to
align inspection with risk by modernizing poultry slaughter inspection,
which is why we announced a proposed rule that would focus inspection
on areas of poultry production with the biggest impact on public
health. Currently, FSIS in-plant personnel perform quality assurance
tasks such as looking for visible defects, but they are unable to
detect invisible pathogens and microbes this way. Therefore, FSIS would
focus on critical food safety tasks, such as pathogen testing and
verifying HACCP and sanitation standard operating procedures, and the
quality assurance tasks would be turned over to the company. FSIS would
continue to inspect every carcass, as required by law. We estimate that
the new poultry inspection system would prevent at least 5,000
illnesses from salmonella and campylobacter each year.
    The need for modernizing our food safety system is evident. As
pathogens evolve, and as our scientific knowledge of what causes
foodborne illness improves, we must ensure that our food safety system
and our inspection process responds to these challenges. Scientific
assumptions that were applied in the 1950s, when the Poultry Products
Inspection Act was first enacted, are outdated, so we must ensure that
our regulatory tools correspond with current knowledge.
    This is why modernizing the poultry inspection system is so
important. Updating our approach would help the Agency prevent
foodborne illness more effectively and efficiently.
    The implementation of the Public Health Information System (PHIS)
also provides us with another important decisionmaking tool to enable
us to protect public health more effectively, efficiently, and rapidly.
This Web-based system integrates our data sources to support a
comprehensive, timely and reliable data-driven approach to inspection.
This approach allows FSIS to identify food safety threats and emerging
trends more rapidly and accurately. In January 2012, FSIS completed a
full implementation of the domestic component of the system, and we
began implementation of the import component in spring 2012. In
addition, FSIS completed a staggered implementation of PHIS to industry
users last month and began implementation of the system to State MPI
programs, which is expected to be completed by the end of this year.
    Until we can ensure that no contaminated product is ever released
into commerce, we must also align our in-commerce activities, such as
traceback investigations, with risks. For example, FSIS is developing a
proposed rule to require retail operations to maintain accurate
grinding records of source materials and particular practices, which
would greatly improve the Agency's ability to trace products from
retail back to slaughter facilities.
                          targeting resources
    In addition to improving food safety, we must be good stewards of
taxpayer money, and that is why FSIS continues to examine ways to
target resources where they can be most effective.
    For example, we estimate that the previously mentioned
modernization of poultry slaughter inspection would save taxpayers
approximately $90 million over a 3-year period upon full
implementation. FSIS also believes that participating establishments
will see lower production costs resulting in a shared benefit to
consumers and industry of about $250 million annually.
                          leveraging resources
    While our primary focus is preventing foodborne illness by ensuring
that industry produces safe food, we can also improve food safety by
collaborating with our Federal partners and educating consumers.
    For example, we have met with our stakeholders to discuss ways that
we can promote good pre-harvest practices that will reduce the
likelihood of contamination at slaughter. We also work with our Federal
food safety partners to share food safety expertise and best practices.
    In addition to doing everything we can to ensure the safety of
meat, poultry and processed egg products before they get to the store
shelves, we feel it is also our responsibility to provide consumers
with the tools they need to handle food safely at home.
    That is why FSIS, CDC, and FDA teamed up with the Ad Council to
launch a national public service campaign called Food Safe Families,
which educates consumers about the risks of foodborne illness and how
to prevent it. For an investment of $2.8 million over 3 years, the Ad
Council has been able to run a national TV, radio, and print ad
campaign worth an estimated $46 million through donated media.
    To better reach consumers and ensure that our food safety messages
are received by a larger audience, FSIS also utilizes various social
and new media platforms to reach out about key food safety messages,
such as recalls and safe food handling practices.
    FSIS actively disseminates food safety messages through its virtual
food safety expert, Ask Karen; Twitter; Facebook; Blogs; and YouTube.
For example, the number of views of Ask Karen answers increased from
444,000 in fiscal year 2011 to more than 1.1 million in fiscal year
2012. The @USDAFoodSafety Twitter account had 332,600 followers at the
end of fiscal year 2012, representing a 66 percent increase over fiscal
year 2011. We are currently able to reach more than 390,000 followers
with each tweet, and that number grows by about 2,000 weekly.
                               conclusion
    We are continually assessing whether we are doing our best to
prevent foodborne illnesses in the most effective and efficient way
possible. Government can deliver better than people expect, and we are
committed to doing so.
    We at the Office of Food Safety and FSIS are one team, with one
purpose, working toward a common and extremely important goal. I am
proud to lead the FSIS workforce in its mission to protect public
health.
    Thank you for the opportunity to testify before you today.

    Senator Pryor. Thank you.
    Mr. Concannon.

                  SUMMARY STATEMENT OF KEVIN CONCANNON

    Mr. Concannon. Thank you, Mr. Chairman and Ranking Member
Senator Cochran, for this opportunity to present the
administration's 2014 budget for the USDA's Food, Nutrition,
and Consumer Services (FNCS).
    I'm pleased to join you at a time when the economy shows
promising signs of recovery. New jobs are being added each day,
and caseloads in the Supplemental Nutrition Assistance Program
(SNAP) are forecasted to decline.
    Indeed, in some States, SNAP caseloads have already begun
to drop. This news is encouraging, but I remain concerned that
many families still struggle to put nutritious food on the
table. The latest census data shows that almost 49 million
Americans remain in poverty. And program data shows that
families participating in SNAP are much poorer than those who
participated 10 years ago.
    Many of these poor families are in the workforce. Over the
past 20 years, the source of SNAP households income has shifted
from welfare to earnings. In 1991, 41 percent of all SNAP
households received cash welfare and only 20 percent had
earnings. In 2011, only 8 percent of SNAP households received
cash welfare, while 31 percent had earnings. And 80 percent of
SNAP participants who can reasonably be expected to work do so.
    I'm pleased that these families have found employment, but
I'm troubled that their income may not be sufficient to meet
their needs. USDA is dedicated to reducing SNAP roles the right
way, by helping clients transition to good paying jobs.
    As we fight food insecurity and hunger, we're also tackling
an unprecedented obesity epidemic that threatens our Nation's
health, budget, and national security. Hunger and obesity are
connected, and we're working to solve them both, too often in
the same person.
    The President's budget request reflects the ongoing need
for nutrition assistance and the longstanding commitment of
Congress and various administrations to fully fund the major
programs. And it invests targeted resources to improve program
integrity to support implementation of the Healthy, Hunger-Free
Kids Act of 2010 with school equipment grants, and to modernize
technology and build the foundation for WIC EBT.
    I recognize that this request asks our Nation to entrust to
us over $102 billion of taxpayer money at a time when resources
are tightly constrained. I am profoundly aware of our
responsibility to manage these hard-earned tax dollars with the
highest accountability, efficiency, and integrity.
    Through state-of-the-art technology and collaboration with
law enforcement, FNCS succeeded in reducing the trafficking
rate from 4 percent to 1 percent over the last 15 years. We
have permanently disqualified the owners of thousands of retail
stores for trafficking. And since trafficking involves both the
retailer and the recipient, FNCS is working with States to
identify clients with suspicious transaction patterns for
further investigation.
    Additionally, FNCS has successfully worked with States to
reduce the problem of multiple card replacement. While many
card replacements are legitimate, repeated and frequent
requests for replacement cards may indicate fraudulent
activity.
    FNCS has encouraged States to warn clients with this
suspicious behavior that they are being monitored. These
efforts have reduced multiple card replacement card requests
nationally.
    Our strategies are working, but there's more to be done.
While rare, fraud undermines public confidence and jeopardizes
SNAP's ability to serve the struggling families who need it the
most. We cannot and do not tolerate fraud.
    Our budget includes additional resources for integrity-
focused activities and related information systems to enhance
integrity efforts across all of our programs, including the
school meals and the WIC program.
    This request also provides support to improve the eating
habits of program participants. This past year, we've worked
closely with our State partners to implement the Healthy,
Hunger-Free Kids Act of 2010, including new science-based
school meals nutrition standards that offer flexibility for
schools while ensuring meals high in nutrients, adequate in
calories, and reflecting appropriate portion size.
    Almost all of us at every income level could improve our
diets to better protect our health. The Center for Nutrition
Policy and Promotion leads that effort to improve the diets of
all Americans.

                           PREPARED STATEMENT

    In conclusion, the budget fully supports the Nation's major
nutrition assistance programs so that they can meet their
missions while making smart investments, promoting integrity,
and supporting a healthier future.
    Thank you, and I look forward to your questions.
    [The statement follows:]
                 Prepared Statement of Kevin Concannon
    Thank you, Mr. Chairman, and members of the subcommittee for the
opportunity to present the administration's fiscal year 2014 budget
request for USDA's Food, Nutrition, and Consumer Services (FNCS).
    I am pleased to join you at a time when the economy shows promising
signs of recovery. New jobs are added each day and caseloads in the
Supplemental Nutrition Assistance Program (SNAP), the cornerstone of
the Nation's nutrition assistance safety net, are forecasted to
decline. Indeed, in some States, SNAP caseloads have already begun to
drop--Utah has seen a participation drop of 10.1 percent and North
Dakota has seen a participation decrease of 12.9 percent from February
2012 to February 2013. This news is encouraging, but I remain concerned
for the large number of families who still struggle to put nutritious
food on the table. The latest data from the U.S. Census Bureau shows
that almost 49 million families remain in poverty, and the U.S. Bureau
of Labor Statistics reports that 11.7 million Americans are looking for
work. Of particular concern, our own administrative data shows that the
families participating in SNAP are much poorer than those 10 years ago;
in 2011, 43 percent of SNAP recipients had gross income at or below 50
percent of the Federal poverty level and 33 percent had no net income.
In 2001, 38 percent had gross income at or below 50 percent of the
Federal poverty level and 18 percent had no net income.
    Many of these poor families are in the workforce. Over the past 20
years, the source of SNAP households' income has shifted from welfare
to earnings, showing that SNAP is serving as an important support for
working families. In 1991, 41 percent of all SNAP households received
cash welfare and only 20 percent had earnings. In 2011, only 8 percent
of SNAP households received cash welfare, while 31 percent had
earnings. Further, when you look at employment both before entering
SNAP, as well as after exiting the program, 80 percent of SNAP
participants who can reasonably be expected to work do in fact work. I
am pleased that these families have found employment, but am troubled
that their income is not sufficient to meet their needs. As we continue
to ensure that working families can get the nutrition assistance
support that they need, I am committed to improving work services for
SNAP recipients through the employment and training program, which
fills a critical gap in workforce training services and helps SNAP
recipients obtain and retain jobs.
    These circumstances underscore that while we are steadily
recovering from the economic downturn, the nutrition assistance
programs managed by the Food and Nutrition Service remain critically
important to millions of low-income Americans. Programs like SNAP, the
school meals programs, and the Special Supplemental Nutrition Program
for Women, Infants and Children (WIC) help bridge the gap for families
in need by preventing hunger or extreme economic hardship as they
regain self-sufficiency.
    At the same time we are fighting food insecurity and hunger in our
Nation, we are also tackling an unprecedented obesity epidemic that
threatens are Nation's health, budget, and national security. It is
important to understand that these two problems, hunger and obesity,
are connected. We are working to solve them both, too often in the same
person.
    The President's budget request for nutrition assistance reflects
the ongoing need for these programs, and the longstanding commitment of
Congress and various administrations over the years to fully meet
anticipated funding needs for the major nutrition assistance programs.
The budget also makes targeted investments to:
  --Focus additional resources on program integrity and payment
        accuracy;
  --Extend the enhanced SNAP benefits provided through the American
        Recovery and Reinvestment Act (ARRA) until March 31, 2014;
  --Support implementation of the Healthy, Hunger-Free Kids Act of 2010
        with school equipment grants; and
  --Continue to modernize technology and build the foundation for WIC
        EBT.
              improving the way federal dollars are spent
    I recognize that this budget request asks the Nation to entrust us
with over $102 billion of taxpayer money to maintain a robust nutrition
safety net, at a time when resources across Government are tightly
constrained. I am profoundly aware of the depth of this responsibility,
and the imperative to manage these hard-earned tax dollars with the
highest accountability, efficiency and integrity. Now more than ever,
we must ensure that every dollar helps to feed a person in need, and is
not wasted or misused, in order to maintain public confidence in the
programs. I am committed to good stewardship, reducing inefficiency and
increasing cost-effectiveness. USDA has reduced its costs through the
Department's Blueprint for Stronger Service, which is modernizing and
accelerating service delivery while improving the customer experience
through use of innovative technologies and business solutions. FNCS has
methodically reviewed its policies and procedures, maximized our
limited resources, and saved Federal dollars by centralizing SNAP
retailer operation functions. Reengineering the authorization process
of retailers in SNAP into one nationalized, integrated structure
provides stronger oversight, greater consistency, better communication,
and improved quality of operations. This streamlining process
consolidated 31 field offices in 28 States into a single national
office. The newly formed national retailer management organization
continues to take full advantage of available technology and improved
policies and procedures to better fight fraud and protect Federal
dollars.
    Americans expect and deserve a government that operates with
integrity and efficiency, and we are committed to fighting error and
waste. Over the past decade, SNAP successfully reduced the payment
error rate from 8.9 percent in 2000 to 3.8 percent in 2011--the lowest
ever payment error rate in the history of the program. The result of
the error rate reduction from fiscal year 2000 to fiscal year 2011 is a
decrease in erroneous benefits of more than $3.67 billion had the
fiscal year 2000 rate stayed the same for fiscal year 2011. However, we
are not satisfied with this historic achievement and remain engaged and
committed to collaborating with our State partners in order to identify
additional strategies to improve the program's accuracy even further.
    FNCS has also made substantial strides in reducing the prevalence
of trafficking, the illegal selling of SNAP benefits for cash. We have
strengthened procedures, established a stronger front-end retailer
screening process, toughened sanctions, and acted to better hold
retailers that violate program rules accountable. Through state-of-the-
art technology and collaboration with law enforcement partners, FNCS
succeeded in reducing trafficking from 4 cents of every benefit $1 to
about 1 cent of every benefit $1 over the last 15 years. Along with
these efforts, FNCS permanently disqualified the owners of 8,300 retail
stores for trafficking during the last 10 years, and sanctioned or
disqualified the owners of almost 2,100 stores in 2012 alone.
    Since trafficking involves both the retailer and the recipient,
FNCS is working with State agencies to identify client households that
have suspicious transaction patterns for further investigation of
potential recipient trafficking violations. In fiscal year 2011, State
agencies conducted nearly 798,000 fraud investigations and disqualified
over 46,000 individuals for intentional program violations.
Additionally, FNCS has focused on and successfully worked with States
to reduce the number of multiple replacement cards requested by each
household. While many replacement requests are legitimate, repeated and
frequent requests for replacement cards may indicate fraudulent
activity. I am happy to report that the majority of States now use the
model letter as a trigger to warn clients with this suspicious behavior
that they are being monitored; these efforts have resulted in a
reduction in multiple replacement card requests nationally.
    Our strategies are working, but there is more to be done. While
rare, fraud undermines public confidence and jeopardizes the ability of
SNAP to serve the tens of millions of struggling families who need it
the most. Despite these achievements, any amount of fraud cannot be
allowed in a program that is the cornerstone of our efforts to reduce
food insecurity. We cannot and do not tolerate it. Our budget includes
additional resources for integrity-focused activities and related
information technology systems to enhance our program integrity efforts
further. Fraud is not a static. FNCS and our State partners must remain
vigilant, ready to identify those few bad actors that try to exploit
the program in new ways and ready to make the necessary technological
or systems changes that will thwart those efforts.
    FNCS is committed to ensuring the integrity of all of our nutrition
assistance programs. We have been working to reduce improper payments
in the school meals programs for several years, while making sure that
these efforts do not compromise access for low-income children or
unduly burden schools. We continue to implement new program integrity
tools provided by the Healthy, Hunger-Free Kids Act of 2010. We are
restructuring and increasing the frequency of oversight program
reviews, strengthening direct certification, and implementing rules
that provide additional oversight and integrity tools for the schools
meals program. Direct certification not only reduces administrative
costs for schools, but also reduces the burden on eligible families.
FNCS has provided States with extensive technical assistance and grants
to improve direct certification systems to certify children receiving
SNAP for free meals without an additional application from their
families.
    FNCS is also committed to ensuring program integrity in WIC.
Nationwide data show that payment accuracy is relatively high in WIC--
certification errors were approximately 3 percent and vendor charging
errors were about 1.1 percent of food spending. But as with the other
programs, no level of improper payments is acceptable. When WIC vendor
management problems were discovered in a few States last year, we took
quick, decisive action, investigating these issues thoroughly and
working to develop solutions that did not impair program operations for
clients. FNCS continues to monitor these States to ensure the problems
are resolved.
            preventing hunger and supporting healthy eating
    This budget request sustains the nutrition assistance safety net
and provides support to improve the eating habits of participants in
its programs and of all Americans. The support of healthy eating is
perhaps best observed in our implementation of the provisions of the
Healthy, Hunger-Free Kids Act of 2010. This past year, we have worked
closely with our State partners to implement new science-based school
meals nutrition standards that provide meals high in nutrients,
adequate in calories, and reflecting appropriate portion sizes to help
children lead healthy lifestyles. Some schools have implemented these
changes with ease, such as those that were already following approaches
similar to the new nutrition standards, while other schools have had to
make greater changes to improve the nutrition quality of meals they
provide each day. FNCS has provided extensive technical assistance to
these schools, including offering increased flexibilities as the
schools make this important transition.
    The Department also recently published a proposed rule implementing
new authority to set nutrition standards for foods sold in vending
machines and a la carte lines in schools. In the coming years, FNCS
will develop educational and training standards for school nutrition
professionals and will help schools strengthen their local wellness
policies.
    Additionally, FNCS works to help improve the diets of all
Americans. Almost every household in this Nation--of any income level--
could make substantial improvements in their diet to better protect
their health. The Center for Nutrition Policy and Promotion (CNPP)
works hard to provide Americans with information and tools to make
their food and physical activity choices more consistent with the
Dietary Guidelines for Americans. We are pleased with the success of
the popular Web site, MyPlate SuperTracker, which allows all Americans
to track their food intake, physical activity, and weight online. More
than 2 million people regularly use the program. MyPlate SuperTracker
uses the new MyPlate icon, which prompts consumers to think about
building a healthy plate with fruit, vegetable, grains, proteins, and
dairy food groups.
    The mission of FNCS provides us with a powerful opportunity to
promote healthy diets, physically active lives, and healthy weights for
those we serve. Our strong commitment to improve the health of
Americans can be found in our work with MyPlate, which educates
Americans about healthy diets, and in our nutrition assistance
programs, which provide eligible low-income families in need with
access to healthy foods. The efforts of the Food and Nutrition Service
(FNS) and CNPP thus complement each other; both are critical to the
health and future success of our people.
    Let me turn now to a few highlights of the budget request.
               supplemental nutrition assistance program
    The President's budget requests almost $78.4 billion for SNAP,
enough to serve an average of 44.7 million people each month in fiscal
year 2014. This is a projected 2.4 million person decrease from the
number of participants estimated for fiscal year 2013. We've included a
proposal in this year's budget to extend the Recovery Act portion of
the SNAP benefit for an additional 5 months until March 31, 2014. We
currently estimate that on November 1, a family of four will see their
SNAP benefit reduced by about $37. This proposal will enable SNAP to
continue to provide an enhanced benefit to low-income American families
as they continue the effort to get back on their feet.
    In addition, because rooting out fraud, waste and abuse is a top
priority for this administration, the budget builds on our current
program integrity efforts by seeking additional funds to invest in
compliance specialists, investigators, quality assurance and data
mining efforts as well as more frequent integrity reviews, management
evaluations and fraud investigations. Fraud and trafficking--and even
unintentional errors that allow SNAP assistance to be provided to
households that do not need it--risk undermining the credibility of the
program and distract attention from the real needs of low-income
Americans who turn to SNAP to put food on the table.
    The budget also fully supports authorized food purchases for The
Emergency Food Assistance Program (TEFAP). Local food banks, soup
kitchens and food pantries have seen increased demand for food
assistance, and TEFAP plays a critical role in ensuring that these
organizations have a stable source of food and administrative funds to
get food to those in need.
                        child nutrition programs
    The budget requests about $20.5 billion for the Child Nutrition
Programs, to assist State and local governments in serving nutritious
meals to children in public and private schools, child care
institutions, and summer recreation programs. The budget renews a
request for $35 million to provide school meals equipment grants to
school districts to purchase the equipment needed to serve healthier
meals as required by the Healthy, Hunger-Free Kids Act (HHFKA), improve
food safety, and expand access. The need for updated equipment is
great; FNS has received requests totaling $600 million from States and
school districts around the country and the current budget request will
be an important step toward addressing this need. These equipment
grants also support the establishment or expansion of the School
Breakfast Program since our prior experience shows that lack of
adequate kitchen equipment is a prime reason why many schools are not
able to initiate or expand their breakfast programs. The budget also
includes a request for $3 million in increased resources for Child
Nutrition integrity efforts including support for State integrity
efforts and technology solutions to local program management and
monitoring challenges.
                                  wic
    The President's budget includes over $7.1 billion for the Special
Supplemental Nutrition Program for Women, Infants and Children, or WIC,
to ensure that all eligible persons seeking to participate can be
served. The request will allow local communities to provide food,
nutrition education and a link to healthcare to 8.9 million women,
infants and children expected to participate in the program in an
average month. The budget request also includes $30 million to continue
the work with State agencies, food retail vendors and the payments
industry to implement WIC EBT nationwide by 2020. Recognizing the
established benefits of breastfeeding for mothers and infants, the
budget sustains the investment in breastfeeding peer counseling at $60
million. The budget also maintains a $125 million Contingency Fund and
includes an additional $5 million in Federal Administration and
Oversight for additional program integrity efforts including providing
direct technical assistance to States on vendor management, monitoring
competitive price criteria and maximum allowable reimbursement rates;
performing in-depth, targeted reviews of high-risk program areas; and
development of model software to assist State agencies in preventing
and identifying program abuse.
                      commodity assistance program
    The President's budget includes $272 million for the Commodity
Assistance Program, including an increase of almost $16 million for the
Commodity Supplemental Food Program (CSFP). Funding for CSFP continues
to support the current caseload by providing supplemental food
assistance to many low-income seniors and others struggling to meet
their monthly food needs. The request also includes over $51 million
for The Emergency Food Assistance Program (TEFAP) administrative costs.
This funding enables hundreds of regional food banks, soup kitchens and
food pantries to provide food to families who need it. Of the $51
million requested, $2 million would fund oversight activities such as
management evaluation reviews and technical assistance for State and
local TEFAP operations, to help ensure that program funds are being
spent in accordance with law and regulation.
                   nutrition programs administration
    Finally, the President's budget requests $146.6 million to fund
Nutrition Programs Administration and the Center for Nutrition Policy
and Promotion. The request includes $2 million to complete phase I of
developing unified, Federal dietary guidance for infants and very young
children from birth to 2 years of age. To date, the Dietary Guidelines
for Americans have focused on Americans over the age of 2 because of
the complexity of assessing the scientific evidence on the dietary
needs and health outcomes of children in this age group. However, in
light of emerging science on the importance of early nutrition on long-
term health outcomes, unified Federal guidance is needed. The budget
request also includes $2 million for promotion of the Dietary
Guidelines and MyPlate.
    In conclusion, the President's budget supports the Nation's
nutrition assistance programs so that they can fulfill their vital
missions and provide benefits to eligible families who wish to
participate. This budget makes smart investments that will improve the
way Federal dollars are spent, while avoiding waste and focusing on
program integrity. It also focuses resources on promoting better eating
choices, both among program clients and the general population, to
support a healthier future. I look forward to your questions.

    Senator Pryor. Thank you and we're not going to ask Mr.
Young to say anything, but you're welcome to if you like to.
    Mr. Young. I'm fine, thank you.
    Senator Pryor. You'll stay right where you are?
    Okay, listen, I have several questions for each of you, so
I'll just jump right in. And we'll do 5-minute rounds, and then
Senator Cochran I know has lots of questions as well.

                            RESEARCH FUNDING

    Let me start with Dr. Woteki, if I may. I'll say I was
pleased to see the funding increase request for NIFA. We're the
world leader in agricultural production, and the demands on the
industry are growing. We're being far outspent by China, India,
Brazil, and others, when it comes to agricultural research. If
we want to remain the world leader, we need to keep up our
game.
    While competitive funding is an important tool, capacity
funding at our land-grant universities is equally important.
Unlike competitive research, it provides a steady stream of
revenue to allow a wide range of real-time, real-world research
that can solve local and regional problems immediately and can
be disseminated through the extension service to make that
research effective when it's implemented.
    Our land-grant universities have provided the bedrock
support that has made our agricultural research system the envy
of the world and helped position the United States to be the
world's largest food exporter.
    Now some of the benefits that go along with this are lower
transaction costs, increased relevancy for local stakeholders,
assurance of broader distribution of funds, more diverse
agricultural landscape, lower overhead, consistent support for
core base and foundation research.
    So, in addition, and one last thing, these funds are often
highly leveraged with State and local governments often putting
in as much as 10 times as much to do matching and to help
maximize the effectiveness.
    So, Dr. Woteki, I know you know this. I know you understand
the value in the formula grant programs, even though the budget
doesn't provide an increase for that. So why isn't the research
increase provided in USDA's budget split between competitive
and formula programs?
    Dr. Woteki. Well, Mr. Chairman, we do agree with you on the
importance of having a balanced portfolio of capacity and
competitive funds. And the budget, we believe, expresses that
continued commitment to have a balanced portfolio.
    Our emphasis on increasing the competitive grants program
is based on a series of studies and recommendations that have
been made over the last decade-plus, the most recent one from
the President's Council of Advisors on Science and Technology,
which was issued in December of last year. And these studies
have recommended that in our portfolio of agricultural research
we should be changing that balance to include a greater
proportion in the competitive grants area.
    So this budget is reflecting that outside advice that has
come through this most recent President's Council of Advisers
on Science and Technology, as well as other studies that the
National Academy of Sciences has done.

                             FSIS FURLOUGHS

    Senator Pryor. We may have some follow-up on that in a few
minutes, but, first, I wanted to ask Dr. Hagen about the FSIS,
which is something that Senator Blunt and I worked on recently
to make sure that we found some funding to make sure there were
going to be no furloughs and layoffs, et cetera.
    Can you provide assurance to the subcommittee that no FSIS
inspectors will be furloughed in fiscal year 2013, and that
plant operations will not be impacted due to any lack of
inspectors onsite?
    Dr. Hagen. Thank you. Thank you for your question, Mr.
Chairman.
    And I'd like to take this opportunity to thank you and
Senator Blunt for coming to our assistance in that situation.
We are very grateful.
    And yes, I can assure you that the supplemental funding
that we received is going to be adequate to avoid furloughs for
the workforce. And therefore, the economic impacts that
would've been attached to those furloughs will not be incurred
by the regulated industry.

                               WIC BUDGET

    Senator Pryor. Right. That's great news.
    Mr. Concannon, the budget includes a total of $7.1 billion
for WIC. Will this amount fully fund the anticipated
participation?
    Mr. Concannon. Yes, Mr. Chairman, the amount funded in the
budget will fully fund WIC. As the chair and members of the
subcommittee may be aware, WIC now serves in excess of 50
percent of American infants in the first year of life, and
nearly as many births.
    We anticipate next year, this budget is based on a forecast
of 8.9 million participants each month, and the budget will
fully fund the WIC program.

                           WIC PARTICIPATION

    Senator Pryor. Okay, so, given the, I guess I'd say
volatile nature of this program, I guess you can say that, are
you concerned that food prices or participation will increase
over the next several months?
    Mr. Concannon. Mr. Chairman, we have been working with
State agencies across the country, urging them to particularly
review their food packages in an effort to make sure they are
fully availing themselves of efficiencies, and we have been
seeing the effects of that in a lowered average food cost
package.
    For example, we're urging States not to reduce the amount
of calories or the food groups, obviously, available to these
moms or their children, but rather to look at, for example,
moving from name brand, for example, whole grain breads to
generic brands or house brands, which we have seen in some
States make a considerable difference in the average food
package cost.

                        WIC CONTINGENCY RESERVE

    Senator Pryor. Okay. And I've noticed also that the budget
includes an increase of $50 million for the WIC contingency
reserve. Do you anticipate using any of that reserve in this
fiscal year?
    Mr. Concannon. Yes, Mr. Chairman. We anticipate relying
upon that contingency reserve to get through this year. That's
why the request is there for the contingency reserve for next
year. It will be necessary.
    Senator Pryor. Do you know how much of that you will use?
    Mr. Concannon. I don't off the top of my head. I know that
the $50 million is needed for next year, but I don't know how
deep we're going to have to go this year.

                     IMPACT OF SEQUESTRATION ON WIC

    Senator Pryor. And what impact has sequestration had on
WIC, if any?
    Mr. Concannon. Well, earlier, the earlier forecast would've
been an impact on 600,000 participants, between sequestration
and the budget that was enacted. But we have been able to--with
additional resources provided, are assured that we can serve
all of the caseload this year without reductions.
    Senator Pryor. Okay.
    Senator Cochran.

                        CHILD NUTRITION PROGRAMS

    Senator Cochran. Mr. Chairman, it's a pleasure to join you
and other members of the subcommittee in reviewing the budget
request that will provide funding for food safety, research,
nutrition, marketing, regulatory mission areas of the
Department of Agriculture. That's a lot of stuff to keep up
with and to monitor and administer in a fair way.
    We were talking about food programs in the schools, and I
couldn't help but remember back when my father was a principal
of a small school in North Mississippi when I started school.
And inevitably, there would be some children that didn't have
lunch money that would be turned into the classroom teachers at
the beginning of the week, and tickets could be bought to go
through the lunchroom line. It was a soup and sandwich program,
really, and totally locally administered and managed and funded
through contributions either from the students themselves who
could afford to contribute at very modest amounts to go through
the line.
    Anyway, we've come a long way since that, and I'm glad
we're beyond that stage in our history, and we have programs
now whose intent and purpose is to provide access to nutritious
lunch programs in schools.
    And my question is, is there something that we need to be
doing that we're not doing to help achieve these goals? Are
there weaknesses in the way the programs are operating or do we
need to provide additional funding earmarked--oh my gosh--for
certain special attention, if that's required?
    Mr. Concannon. Well, Senator, the Healthy, Hunger-Free Kids
Act authorized and funded by Congress has made a huge leap
forward in terms of assuring that American children, not only
the 32-plus million that participate in the National School
Lunch Program, but all American schoolchildren, nearly 50
million, will be affected by that Healthy, Hunger-Free Kids
Act.
    Where there remains real challenges, as I've traveled the
country, is in the equipment available to schools across the
country. The President's budget request is for $35 million for
equipment grants. The stimulus fund of several years ago
authorized $100 million for schools across the country. We
received $600 million in requests.
    As we've traveled to schools, particularly heating
equipment and cooling equipment--schools for the most part have
set aside those deep fryers and so on for deep-frying foods.
They're using convection ovens. They're serving healthier
foods.
    And I would say the challenge for schools across the
country, beyond the reimbursement provided in this bill for
school meals, which is adequate, is really going to be in the
equipment, the capital equipment area. And that's why there is
a request for $35 million this year.
    Senator Cochran. Thank you.
    Thank you, Mr. Chairman.
    Senator Pryor. Thank you.
    Senator Udall.
    Senator Udall. Thank you, Mr. Chairman.
    And it's good to see Mr. Ed Avalos here, a fellow New
Mexican, and I know very popular in our State and a real credit
to the Department.
    So good to see you here today, Ed.

                       COUNTRY OF ORIGIN LABELING

    As you're very well aware, I've been working since I've
been in the Congress, both the House and the Senate, on the
COOL issue. I was wondering if you could bring us up to date on
that. Is the USDA on track to get the rule to modify country of
origin labeling provisions finalized by May 23? And can you
share with the subcommittee what kind of input you receive from
producers on the proposed rule?
    Mr. Avalos. Absolutely, Senator Udall. Before I answer your
question, I just wanted to comment. I got calls this week that
we're actually getting rain in New Mexico.
    Senator Udall. The next question was going to be about
drought. Good to hear, so go ahead. Yes, that's very exciting,
especially when we're in this exceptional drought situation for
a big chunk of the State and also extreme drought for other
parts of it, so it's a very difficult situation.
    Mr. Avalos. Well, as you know, we did publish a proposed
rule. The proposed rule had labeling requirements that had to
show the production steps to identify where the animal was
born, where it was raised, and where it was slaughtered.
    The comment period closed, I think it was April 11. We
received hundreds of comments. And I just want to assure you
that we do plan to move forward with a final rule before the
deadline of May 23.
    Senator Udall. Great, thank you very much.

                      DROUGHT MITIGATION RESEARCH

    And Under Secretary for Research, Education, and Economics,
you've heard me talk a little bit about the drought and New
Mexico's situation. I'm wondering if you could share with the
subcommittee the ways in which your mission area is currently
helping producers face water and drought challenges, and share
your vision of how these efforts can be increased in the
future. How does the President's fiscal year 2014 budget
reflect this need for new ideas and research on dealing with
water scarcity?
    Dr. Woteki. Senator Udall, one of the themes that runs
through our current research priorities is building resilience
into agricultural systems, cropping systems or livestock
systems. And in that concept of resiliency is how do we make
the best use of water resources; how do we develop new crop
varieties that are going to be able to sustain too much water
or too little water, depending on what time of the season it
may come; and also how to build in disease resistance and pest
resistance at the same time. So water is a central focus of our
research priorities.
    And the way that we're addressing it is through a
combination of research programs to develop livestock systems
and cropping systems with the resiliency to drought as well as
to flooding conditions. Doing economic analysis is going to be
helpful to farmers to understand what the impacts of this most
recent drought has been, as well as future perspectives. And to
work with the cooperative extension and our land-grant
university partners to get information that's coming from
research programs, whether it's the intramural program at ARS
or work that's being funded at the land-grant universities, and
to get that information into farmers' hands, so that they can
be making the best choices on seed purchases for an upcoming
planting season, based on the projections of weather conditions
for that region. So it's kind of a package of activities.
    And we've also been using a lot of forecasting and remote-
sensing information, cooperating with our partners in the
National Oceanic and Atmospheric Administration (NOAA) to
provide more information in easily accessible forms like our
drought Web pages that have received, literally, tens of
thousands of visits, so it's a package approach.
    Senator Udall. That's a good approach. Thank you both for
your answers and really appreciate the service of all of the
panel members. Thank you.
    I yield back, Mr. Chairman.
    Senator Pryor. Thank you.

                   NATIONAL POULTRY IMPROVEMENT PLAN

    Mr. Avalos, let me start with you, if I may. The National
Poultry Improvement Plan (NPIP) for almost 70 years now has
been recognized as the gold standard here and around the world
when it comes to poultry disease control.
    Are you aware of any proposed changes to the governance,
structure, or mission of NPIP that would jeopardize USDA's
avian influenza surveillance in commercial poultry, the
continued indemnification of poultry workers in case of a
disease outbreak, or make more difficult to U.S. ability to
meet all appropriate World Organization for Animal Health
standards?
    Mr. Avalos. Mr. Chairman, I just want to emphasize that
avian health is very important to us at APHIS. Just last week,
we had representatives from the poultry industry that came in
to visit with us. They talked about the National Poultry
Improvement Plan and how important it was to them.
    And I just want to emphasize that we feel that the National
Poultry Improvement Plan is a model, really a model for the
world. It demonstrates tremendous cooperation between the State
and Federal Government and the poultry industry. And we are
going to fully support it in 2014, just like we do today.
    On surveillance, the budget cuts that we have would not
impact whatsoever on surveillance. It's a top priority for us,
and we are going to maintain the same level of surveillance for
the poultry industry.
    Senator Pryor. Okay. So you don't anticipate any changes at
all that will hurt your ability to do that?
    Mr. Avalos. We do not.
    Senator Pryor. Great.

                    POULTRY SLAUGHTER MODERNIZATION

    And let me go ahead and jump back to Dr. Hagen, and let me
just say the Department is continuing to move forward with the
implementation of new methods of poultry inspection. And we
appreciate the USDA, that it has piloted and analyzed these
procedures at a variety of plants for some years.
    If you could discuss with us the results of your analysis
of the pilot, particularly to provide assurances that food
safety will be improved, and worker safety, both inspectors and
plant employees, will not be impaired.
    Dr. Hagen. Thank you for your question, Mr. Chairman.
    And I just want to be clear when I start that we are not
yet moving forward. This is a proposed rule. We don't have a
final rule. And obviously, we can't really predict the outcome
of notice-and-comment rulemaking.
    This is an opportunity, a rare opportunity, the regulatory
agency has to actually move our mission forward, which is to
protect consumers and to reduce illnesses. While we do this at
greater efficiency and while we are better stewards of taxpayer
dollars, often we find that in order to do something better, it
costs more. And in this case, we're finding a way to do it more
efficiently.
    We also find that there are real, tangible benefits beyond
the food safety for consumers and for the industry in the way
of shared financial benefits.
    So this is a top priority for us. We have been inspecting
poultry for the same way basically since the 1950s, so we've
got to do better.
    So we started with the premise that we need to be focused
on the things that matter most for food safety, that the things
that we knew about in the 1950s were not the things that we
should be focused on now. We started with a very common-sense
premise. We took a look back at our experience. We've been
engaged in a pilot program since 1998 in 25 establishments,
three of which are in your State, Mr. Chairman, or three of
which are in your State. I think two are in your State, Senator
Cochran.
    And we looked at a series of performance standards that
were set from the beginning of that pilot program, everything
from visible defects and contamination rates in comparison
plants versus pilot plants, to bacterial contamination rates.
And across-the-board, we found that the plants in the pilot
actually were doing better when it came to these performance
measures.
    So we found that we had not only an equal level of consumer
protection but an enhanced level of consumer protection.
    We then went ahead and analyzed what we thought would
happen if we implemented this across the board, so we did a
quantitative, peer-reviewed risk assessment, an internationally
accepted tool for supporting public health policy. And we asked
how many illnesses will be reduced if we take these people off
of these tasks on the line, and we have them do more of these
tasks over here. And we found that, at minimum, 5,200 illnesses
per year would be prevented simply by changing where our
inspectors are focused and the tasks that they are performing.
    Those assessments didn't include additional interventions
that might be employed by the industry. They didn't include
additional data that we anticipate gathering on Campylobacter
as we implement our verification program there.
    So I think this is a real opportunity for us. We have the
data to prove that we're headed in the right direction. And we
look forward to hopefully finalizing this proposal.
    Senator Pryor. And I guess my next two questions are, why
is it not already final, because you've been working on this
for a long time, and it seems like the evidence is steering you
in that direction? So why is it not already final? And then,
when do you think it will be final?
    Dr. Hagen. We don't control the timetable for all of
notice-and-comment rulemaking. We have a piece of that. We
really value the public input, that's a cornerstone of the
notice-and-comment rulemaking process.
    So we received thousands of comments about this rule. There
are a lot of opinions from multiple different perspectives, and
we have an obligation to actually consider and address every
single one of those opinions that has been expressed to us.
    So that's the process that we have been engaged in.
    We've also been trying to make sure that we are focused to
the extent that we can on worker safety issues. We know what
the limits of our expertise are. We know what the limits of our
authority are. We know the leadership in the administration
that has that expertise, at the Occupational, Safety, and
Health Administration (OSHA) and at the National Institute for
Occupational Safety and Health (NIOSH), and so we've been
focused on whether there is some ability for us to facilitate
better data-gathering by those entities and to support them as
they make worker safety policy. So we've been focused on that
to some extent.
    But we are in the process of preparing the final rule, and
we hope to get it through the interdepartmental review process
very soon.

                      POULTRY INSPECTOR POSITIONS

    Senator Pryor. Do you have a sense of if, once the rule
becomes final--you might not be able to answer this yet. But do
you have a sense of how many fewer poultry inspectors you'll
need in the system?
    Dr. Hagen. Over time, we anticipate that there will be 500
to 800 fewer positions, on-line positions. I want to be clear
that we aren't eliminating individuals' jobs. We have a plan
for every inspector to have an opportunity to take a different
position in the agency.
    We actually have a significant amount of attrition every
year in the inspection workforce, so we're going to be managing
this through simply not filling, backfilling vacancies as they
come about.

                              AQUACULTURE

    Senator Pryor. I want to ask something, if I may, to Mr.
Avalos, and this is something that both Senator Cochran and I
have in our States, and that is aquaculture.
    Since APHIS's Wildlife Service has reduced funding for
aquaculture, it's my understanding that on-site visits to fish
farms in most States have been stopped. These visits, among
other things, are an extremely important part--in fact, a
central part of the process for farmers to apply to the U.S.
Fish and Wildlife Service Migratory Bird Depredation Permit.
    Can you look in to this matter and make sure that our fish
farmers will be able to protect their products? And also, would
you support a budget line item that will prevent aquaculture
funding from being taken away in future years?
    Mr. Avalos. Mr. Chairman and Ranking Member Cochran, first,
I want to say that at USDA, we really appreciate the importance
of aquaculture industry to the United States, and the
importance it has to the rural communities, especially in the
South. I personally am very familiar with the catfish industry.
And I understand and I acknowledge a lot of the difficulties
they've had in the marketplace with depressed prices.
    In fact, last year, we did a section 32 buy for catfish. We
removed $10 million worth of catfish from the marketplace. This
year, we're looking at another section 32 buy for catfish.
    So first of all, I want you to know we're not abandoning
the aquaculture industry, whatsoever. Just with the budget
cuts, we did have to prioritize. We only have so much money to
go around, and we did have to cut aquaculture. But I want to
emphasize that we still have the research facility in
Mississippi. It's a very, very important component at USDA.
    And our Wildlife Services people will still be able to
verify bird damage, and we'll still be able to help producers
obtain the depredation permits.
    Senator Pryor. Yes, I think the way it's worked up to this
point is pretty much that person has to come out on the farm
and there's various things, information that's shared and data
that's gathered and whatnot. And that's been an essential part
of getting those permits. So we just need to make sure that if
the visits stop, that the permitting process doesn't stop.
    Mr. Avalos. I understand that very well, Mr. Chairman,
absolutely.
    Senator Pryor. Thank you.

                        SNAP CONTINGENCY RESERVE

    Next, for Mr. Concannon, the budget proposes an increase of
$2 billion for SNAP contingency reserve. If participation is
expected to decrease slightly, why are you asking for an
increase in reserve?
    Mr. Concannon. Mr. Chairman, the request this year in this
budget is for a $5 billion contingent, contingency fund, which
is approximately 1 month of benefits. This year, we are reliant
upon $2.7 billion in contingency to get through the year for
SNAP. And we're able to accommodate that this year. But the
request for that increase in the contingency fund next year
recognizes that it's about 1 month of benefits and that we want
to be assured that we can successfully get through the next
year.
    Senator Pryor. But am I correct that you think
participation is expected to decrease?
    Mr. Concannon. Yes, Mr. Chair, where the budget forecasts a
2.4 million reduction based on again, as I mentioned in my
testimony earlier, we're seeing signs already in about eight or
so States of reductions year to year, looking back over the
past year. So I anticipate that reduction, that proposed budget
forecast, the 2.4 million average participation reduction.
    Senator Pryor. Does that translate into a guess that you
will not need the reserve amount this fiscal year?
    Mr. Concannon. We will need $2.7 billion that is moved
forward from last year for this current year.
    Senator Pryor. You think you'll use that? You'll actually
use the $2.7 billion?
    Mr. Concannon. Yes, sir.
    Senator Pryor. All right, let me ask Dr. Hagen another
question, this time about the hazard analysis and critical
control points. I know that you have been working with several
interested parties on the HACCP plan reassessment for not-
ready-to-eat poultry products. I don't have a question really,
I just want to encourage you to continue those good faith
discussions and want you to know that if I can be of assistance
in that, I want to try to help on that, if I can.

                DALE BUMPERS SMALL FARMS RESEARCH CENTER

    Again, Dr. Woteki, let me ask you about a facility in
Arkansas, the small farm center in Booneville, actually named
the Dale Bumpers Small Farms Research Center. And I talked to
the Secretary about this last week, and I'm not going to go
through all the details of it, but basically, I'm just going to
assume that the reason the funding is the way it is in this
budget, or the lack of funding, is just because of the unusual
timing of the request. And I just mentioned to Secretary
Vilsack last week, but it does bear repeating, that I don't
intend to close Booneville ARS lab in this bill, so as we're
working on things for next year, I hope we'll take that
possibility off the table and just continue to work on that.
    But I do have a question about the ARS extramural human
nutrition centers. We have one in Arkansas. It's at the
Arkansas Children's Hospital. And it's unique among the human
nutrition centers at ARS, and it is housed within Arkansas
Children's, as I mentioned. And I would just like in another
setting to visit with you about that funding, what makes it
unique, and make sure that we all understand what's going on
there with the ARS system and, hopefully, continue that
funding.
    Dr. Woteki. We'd be happy to do that, Senator.

               AGRICULTURAL RESEARCH SERVICE ASSESSMENTS

    Senator Pryor. Thank you. And also, Dr. Woteki, I'm really
not trying to pick on you. I just have a few questions for you.
    But in the ARS budget, the budget itself, as you know, is--
let's be kind and say it's somewhat difficult to navigate. Can
we just say that? That it's a hard budget to understand, and
it's difficult just to get your hands around. And I'd like to
find a better and maybe simpler way to improve it or at least
make it more transparent.
    And without a line item for administrative expenses, can
you please discuss the different types of assessments that
might be levied on your various research locations as well as
on your extramural cooperators, and why they would ever vary
from one location to another?
    Dr. Woteki. To answer the first part of your question about
what are the types of costs that are in the overhead that ARS
is charging against all of its locations, we have a centralized
administrative and financial management unit that's responsible
for human resources, for contract activities, for all of our
financial oversight and management. And so all of those costs
are built in to the overhead.
    We have had, as you point out, some extraordinary problems
over the last 3 years. The total budget cuts that have come to
the mission area are approaching 20 percent. And in 2012, we
were implementing the closures of 12 programs within ARS that
were located at 10 different locations that required the
closing of those 10 locations.
    The costs that are associated with that have to be taken,
and ARS imposed an additional levy on all of its facilities in
order to manage that one-time cost associated with closure of
facilities. So that was another source of the overhead costs
that you're referring to in 2012.
    Senator Pryor. I think what we'd like to do is, I'd like to
get a better understanding of how that works. I know it's hard
to follow and hard to understand, and maybe there are ways that
we can improve it. Sometimes you need to be careful of what you
ask for, but hopefully, maybe we can find ways to improve it
and make sure that we're doing our role here and doing some
oversight and making sure it's working as it should.
    Let me turn it over to Senator Cochran, he has a few more
questions.
    Senator Cochran. Mr. Chairman, thank you.

                          CATFISH INSPECTIONS

    In connection with the inspection programs, I wonder what
is the status of our effort to increase the effectiveness of
our inspection of domestic fish production.
    The catfish industry is very important in some Deep South
States now. And there's concern that even though we have
authorized and provided funding, which we hope would be used by
the Food Safety and Inspection Service to assure that supplies
of catfish that are being produced in several southern States
now, and maybe others too, are fit for human consumption and
are safe to eat.
    What is the status of our effort to make sure we're meeting
the challenge of the catfish inspection and grading program?
    Dr. Hagen. I'll take that question, Senator. I know how
important this is to you. I remember that you and I visited
about this issue when I was coming up through confirmation, and
I remember that we visited again in your office as we were
getting close to a proposed rule. So I know how important this
is for you and for the producers in your State. And I
understand the frustration with the delay.
    I think it has turned out to be more complicated than we
thought it would be. I am committed to trying to get this out,
getting a final rule out by the end of the fiscal year. And as
I alluded to earlier with the chairman, sometimes there are
pieces of that timetable that we don't control. But our staff
knows that this is a priority, and I look forward to visiting
with you about a final rule.
    Senator Cochran. Thank you very much. We appreciate your
good efforts.
    Senator Pryor. Thank you, Senator Cochran.

                     ADDITIONAL COMMITTEE QUESTIONS

    And with that, we have other questions that we're going to
submit for the record. And I know that some of our colleagues
who could not join us today will have some questions. So I
would like to thank all of our panelists today, all of our
witnesses for being here, and tell you how much I appreciate
your time and your testimony, and all the follow-up that will
come with it.
    I also want to give a special thanks to Senator Cochran.
Thank you not just for being here today but for all that you've
done for American agriculture.
    So for all of the members of the subcommittee, what we're
going to do is we'll leave the record open for 1 week, which is
Thursday, May 23. And we would appreciate if you would get your
questions in as quickly as possible and then get it to USDA.
We'll try to get those back as quickly as we can as well.
    [The following questions were not asked at the hearing, but
were submitted to the Department for response subsequent to the
hearing:]
                    Questions Submitted to Ed Avalos
              Questions Submitted by Senator Mark L. Pryor
                  plant and animal pests and diseases
                              feral swine
    Question. Mr. Avalos, the Animal and Plant Health Inspection
Service (APHIS) is responsible for controlling domestic plant and
animal pests and diseases, and guarding against the introduction of new
threats from foreign sources. This budget seeks a substantial increase
in funding to address the spreading feral hog problem, but cuts funding
for other established, but uncompleted, programs (such as the cotton
pests program, emerald ash borer, and chronic wasting disease).
    Feral hogs are a growing menace, and pose substantial health and
economic risks to agriculture and rural areas. But, how do you evaluate
the relative threats of pests and diseases, and determine that for this
budget feral hogs pose the most immediate or potentially costly menace?
    Answer. APHIS continues to evaluate its existing animal and plant
health programs to determine the best use of resources. For example,
the longstanding Cotton Pests program remains a priority for the agency
but we have proposed reductions due to the progress made over the years
toward eradication. As of the end of fiscal year 2012, we have
eradicated the boll weevil from 98 percent of 16 million acres of U.S.
cotton and pink bollworm from 99 percent of infested cotton acreage.
APHIS has also proposed reductions for other programs because we are
unable to make progress, such as in addressing the emerald ash borer
where tools to control the pest do not currently exist, or because the
States and industry are in a better position to address the disease,
such as where States have implemented herd certification programs for
the detection and prevention of chronic wasting disease. In addition,
for pest and disease programs that have been in place for many years,
and where State and local partners directly benefit from the program
activities, it is expected that all parties share in the cost of the
program.
    Feral swine pose a growing threat and we do not currently have a
coordinated effort to address the problem. The expanding range and
increasing population of feral swine are significantly affecting animal
and human health; crops and livestock; rural, suburban and even urban
areas; and natural resources, causing an estimated $1.5 billion in
damages annually. The sooner we can begin a broad scale program, the
more likely we can minimize further expansion and damage, and minimize
expenditures, program duration, and ecological impacts. We have an
opportunity now to resolve an economic and public health problem before
the swine population is too large and too distributed to contain. In
addition, our plan to reduce feral swine is strongly supported by a
broad array of Federal and State, and tribal partners.
                         resource flexibilities
    Question. Please describe the flexibility that you have to address
new and emerging threats during the year.
    Answer. APHIS' budget is structured by commodity group, such as
Cattle Health and Specialty Crop Pests. The structure provides the
agency the flexibility to prioritize existing as well as new and
emerging threats within each of these commodity groups and adjust
resources as necessary throughout the year. APHIS works with its
partners to develop an action plan for addressing the various threats,
including the estimated resources to be provided by each party. When a
new or emerging threat requires additional Federal resources of a
smaller scale in nature, the agency may use its Contingency Fund, which
was established for the prevention, control, and management of animal
and plant threats. In recent years, contingency funds allowed for an
initial response to the European grapevine moth in California and a
pilot effort in addressing feral swine in New Mexico. The Secretary of
Agriculture also has the authority to transfer funds, as necessary, to
address animal and plant health emergencies. In fiscal year 2012, APHIS
used flexibility within the Tree and Wood Pests line item, along with
additional funds the Secretary transferred from the Commodity Credit
Corporation, to respond to an infestation of Asian longhorned beetle
detected in Ohio, which was of larger scale in nature. These resource
flexibilities, along with the early detection and emergency response
capabilities of the agency, ensure that new and emerging agricultural
threats can be addressed as they arise.
                              avian health
    Question. What role does USDA have in monitoring the new H7N9 virus
in China?
    Answer. USDA personnel continue to work closely with the Centers
for Disease Control and Prevention, the Department of the Interior
(DOI), and other Government agencies to monitor the H7N9 virus
situation, assess potential pathways for introduction, and modify
existing preparedness and response plans if deemed appropriate. USDA,
in collaboration with DOI, concluded that the potential for whole
genome introduction of H7N9 in North America is low. USDA has also
determined that the current sampling strategy for domestic commercial
poultry is more than adequate to detect avian influenza H7N9 from China
if it were introduced to the United States.
    USDA officials overseas facilitate agricultural trade, maintain
contact with host country agricultural officials, monitor agricultural
health, and lead efforts in sanitary and phytosanitary standard
setting. USDA offices located in Asia provide points of contact for
U.S. agricultural interests and help collect relevant real-time
information, including updates on avian health and the current
situation with regard to the H7N9 virus. Specifically, APHIS' office in
Bangkok, Thailand, remains focused on avian health in Southeast Asia's
lesser developed economies. APHIS conducts surveillance and capacity
building activities, provides training and oversees epidemiology and
diagnostic testing throughout the region.
    Question. How is the Department working to ensure the virus does
not infect our domestic poultry flocks?
    Answer. USDA protects against the introduction of highly pathogenic
avian influenza into the United States and the spread of low pathogen
avian influenza within the United States. USDA personnel work
cooperatively with State animal health officials and the poultry
industry to conduct surveillance of breeding flocks at slaughter
plants, live-bird markets, livestock auctions, and poultry dealers. The
agency continues to work closely with stakeholders to address issues
and ensure program activities are sufficient to protect the health of
U.S. poultry.
    USDA has determined that the risk of spread of the novel low
pathogenic avian influenza virus, H7N9, from China to the United States
through migratory waterfowl and trade is low. USDA surveillance
activities in wild birds would detect the virus should an introduction
occur. Our current efforts in monitoring for avian influenza meet the
requirements of our trading partners. Furthermore, USDA has trade
requirements in place to prevent the legal entry of potentially
infected materials.
    The United States does not import poultry, unprocessed poultry
products, or non-domestic birds (with the exception of pet birds that
are quarantined and tested) from China. Additionally, low pathogen
influenza viruses are not found in meat or eggs. Therefore, there is
also a low risk of spread through products brought illegally into the
United States. Finally, our current efforts in monitoring for avian
influenza meet the requirements of our trading partners.
sequestration and furloughs of grain inspection, packers and stockyards
                        administration employees
    Question. The Grain Inspection, Packers and Stockyards
Administration's (GIPSA's) Grain Regulatory Services program
facilitates and promotes domestic and international trade of grains and
oilseeds, etc., by establishing standards, inspections, and weighing
services. Will sequestration disrupt provision of these services and
harm the domestic and international markets for these commodities?
    Answer. Due to cost-savings efforts, GIPSA was able to avoid
furloughs in fiscal year 2013, and continue to provide the necessary
services for establishing standards, inspections, and weighing services
for the domestic and international trade of grains and oilseeds. As a
result, we do not anticipate any disruptions of services this fiscal
year.
    Question. If so, do you foresee long-term damage to our export
trade?
    Answer. Since GIPSA did not furlough employees, we do not currently
foresee immediate or long-term damage to our export trade. However,
continued decreases in funding for the Grain Regulatory Services may
require GIPSA to make reductions in the inspection and weighing
services that provide support for U.S. grain producers, handlers and
marketers of U.S. grain, domestic and export.
                                 ______

                Questions Submitted by Senator Roy Blunt
                     fresh produce import protocols
    Question. How often does APHIS review and evaluate existing fresh
produce import protocols given the many advancements in agricultural
sciences and technology, historical sampling data and risk level
assessment?
    Answer. APHIS monitors and evaluates data from multiple sources on
a continual basis to ensure that inspection protocols provide
protection for U.S. agriculture without over-burdening importers.
Customs and Border Protection (CBP) agricultural specialists at U.S.
ports of entry conduct inspections on APHIS' behalf and enter the
inspection results into APHIS-managed databases. APHIS continually
evaluates this data to detect significant pest interception trends and
changes to produce import trends (for those commodities inspected by
CBP). APHIS may adjust port-of-entry inspection protocols based on
these trends and, depending on the situation, may require changes in
inspection techniques or changes in the levels or frequency of
inspections. For example, APHIS and CBP developed the National
Agricultural Cargo Release program several years ago to facilitate the
entry of high-volume, low-risk commodities such as onions, carrots, and
parsley from three major trading partners (Mexico, Guatemala, and
China). Currently, 34 commodities are covered by the program, which
expedites the entry of cargo by significantly reducing the frequency of
inspections. Low-risk cut flowers from five countries are also covered
through the Cut Flower Release Program. Through these programs, more
than 400,000 shipments of fruits and vegetables and 1.9 billion stems
of flowers were imported in fiscal year 2012. Since the programs began
in fiscal year 2006, more than 2.9 million shipments of fruits and
vegetables and more than 16.6 billion stems have been imported using
these streamlined risk-based efforts.
    In addition to inspection protocols, APHIS uses other means to
ensure that the appropriate pest mitigation measures are in place to
protect U.S. agriculture while considering agricultural technology
advances. For example, APHIS partners with USDA's Agricultural Research
Service and universities to develop molecular and other diagnostic
techniques for improved identification, coordinates with counterparts
overseas to identify and address pest risk issues at their source, and
makes regulatory changes on an emergency action basis, if necessary, to
address immediate and significant risks. In addition, APHIS collects
pest information (for example, reports of new pests, pests in a new
area, or found attacking new hosts) offshore from various sources.
APHIS uses this information to assess potential import pathways and
determine whether regulatory or inspection protocol changes are
necessary to mitigate the risks. Additionally, APHIS evaluates new
phytosanitary treatments developed through technological advances as
they become available.
    When the treatments are effective and/or exporting countries
request it, APHIS may adjust import regulations and protocols to permit
additional commodities to enter the United States and provide new
options for U.S. consumers and importing businesses. For example, the
use of irradiation as a phytosanitary treatment is currently used on
mangoes from Mexico and persimmons from South Africa.
    Question. Is CBP data taken into consideration when APHIS revises
inspection protocols and does APHIS discuss these protocols with CBP?
    Answer. Customs and Border Protection (CBP) agricultural
specialists at U.S. ports of entry conduct inspections on APHIS' behalf
and enter the inspection results into APHIS-managed databases. APHIS
continually evaluates these data, as well as information from a variety
of other sources, to detect significant pest interception trends and
changes to produce import trends. If APHIS determines that inspection
protocols need to be adjusted to protect U.S. agricultural health,
APHIS discusses the situation and the specific recommendations for
protocol changes with CBP. Inspection protocols consist of both
recommendations related to amount, frequency, and methodology for
sampling, as well as inspection techniques designed to focus on high
risk pests and methods to best find them on various commodities. The
discussions with CBP take place in advance of implementing changes to
ensure that resources are available to conduct the work in a manner
that minimizes disruption to trade. APHIS is currently working with CBP
through the Automated Commercial Environment/International Trade Data
System to enhance data sharing, which will further improve APHIS' risk
evaluation and trend analysis.
    Question. How does USDA work with CBP to ensure maximum efficiency
for safe and timely entry of fresh produce and adequately allocate
resources relative to the level of risk without creating an excessive
financial burden on the importer, thereby negatively impacting local,
regional businesses and consumers?
    Answer. USDA works closely with Customs and Border Protection (CBP)
to focus resources towards inspection activities that will have the
greatest impact to ensure the safe and timely entry of fresh produce by
using data collected through the inspection process by CBP as well as
data from external resources, such as APHIS' offshore risk analysis
efforts. USDA provides guidance to CBP in various forms, including
import manuals, pest notifications, and inspectional training, to help
maximize the efficiency and effectiveness of port-of-entry inspections.
For example, APHIS and CBP developed the Cargo Release Authority (CRA)
program several years ago to ensure that cargo is not held
unnecessarily for pests of low risk. Through this program, APHIS
provides training to CBP agricultural specialists to identify
frequently intercepted, low-risk insects. CBP agricultural specialists
can earn CRA for 173 different species or groups of organisms. Once CBP
agricultural specialists have demonstrated the ability to reliably
identify a particular insect and have earned the CRA for that insect,
they can release future shipments affected by that insect without
waiting for additional confirmation from APHIS.
    Additionally, APHIS and CBP developed the National Agricultural
Cargo Release program several years ago to facilitate the entry of
high-volume, low-risk commodities such as onions, carrots, and parsley
from three major trading partners (Mexico, Guatemala, and China).
Currently, 34 commodities are covered by the program, which expedites
the entry of cargo by significantly reducing the frequency of
inspections. Low-risk cut flowers from five countries are also covered
through the Cut Flower Release Program. Through these programs, more
than 400,000 shipments of fruits and vegetables and 1.9 billion stems
of flowers were imported in fiscal year 2012. Since the programs began
in fiscal year 2006, more than 2.9 million shipments of fruits and
vegetables and more than 16.6 billion stems have been imported, saving
importers time through less frequent inspections. APHIS and CBP
continue to work together to ensure that agricultural inspections are
effective, efficient, and risk-based.
    Question. How does USDA collaborate with CBP to ensure proper
resources are available so that USDA inspections can be completed
within on 1 day of freight being available after discharging from the
vessel?
    Answer. Customs and Border Protection (CBP) agricultural
specialists conduct inspections on APHIS' behalf, and these inspections
may not always be conducted within 1 day of freight discharge. Once
shipments are inspected, CBP forwards any interceptions for which the
CBP agricultural specialist does not have CRA to APHIS identifiers
located at 32 ports of entry. In most cases, APHIS identifiers can make
the identification immediately. Additionally, identifiers have a state-
of-the art digital imaging system so that, in the event of an unusual
or difficult specimen to identify, images of the organism can be
forwarded to a network of highly specialized experts in the various
fields of entomology, plant pathology, botany, etc., to help make the
identification. In certain cases, APHIS port-of-entry identifiers need
to send specimens to APHIS national specialists or to specialists at
the USDA Agricultural Research Service Systematic Entomology
Laboratory, all of whom understand the need for immediate
identification and treat these specimens as urgent cases. In these
cases, APHIS is able to complete the vast majority of identifications
and report back to CBP within 1 working day.
                                 ______

              Questions Submitted to Dr. Catherine Woteki
              Questions Submitted by Senator Mark L. Pryor
         agricultural research service buildings and facilities
    Question. Dr. Woteki, the Agricultural Research Service (ARS)
budget includes $155 million to build a new poultry lab. Why did you
decide, in this budget climate, to ask for a brand new, very expensive
building, instead of attempting to take care of some of the deferred
maintenance needs at the rest of the ARS labs?
    Answer. At the request of Congress and the Secretary of
Agriculture, the USDA Agricultural Research Service (ARS) conducted a
review of its research facilities and presented a report to Congress in
April 2012, which details a Capital Investment Strategy for the agency.
The report establishes criteria for assessing and determining capital
investment needs and priorities for ARS scientific research
laboratories, based upon relative facility physical conditions and
research program priorities. The highest priority facility need
identified through this process was a new National Poultry Research
Center which will enable needed research on poultry diseases to be
conducted.
    ARS research on poultry diseases is critical to American
agriculture. The United States is the world's largest poultry producer,
the second-largest exporter of poultry meat, and a major egg producer.
Poultry diseases such as avian influenza, virulent Newcastle disease,
Marek's disease, and avian leukosis threaten our national poultry
industry and our export markets. ARS currently conducts poultry disease
research at the Avian Diseases and Oncology Laboratory (ADOL) in East
Lansing, Michigan, and at the Southeast Poultry Research Laboratory
(SEPRL) in Athens, Georgia. The fiscal year 2014 President's budget
proposes to consolidate ADOL with SEPRL in Athens, Georgia. The
proposed consolidation of ARS poultry resources into a National Poultry
Research Center will enable the integration of our avian genomics
research program at ADOL with our avian diseases research program at
SEPRL and provide significant programmatic synergies and critical mass
needed to implement a national research program responsive to the needs
of the poultry industry.
    The existing facilities at both ADOL and SEPRL require major
improvements because the structures and systems have exceeded their
useful service life. Both of these facilities have outdated equipment
for biological containment, insufficient laboratory space, and
facility-imposed inefficiencies in program and facilities operations.
SEPRL has Biosafety Level (BSL)-2 Laboratory and BSL-3 Ag facilities
that were constructed in 1964 and 1976. There are 32 small, inefficient
buildings designed for four scientists and support staff. Currently,
there are 11 ARS scientists and their support staff. Critical, cutting-
edge research that is needed to address poultry diseases cannot be
conducted because of these facility limitations. A new facility is
required to continue efforts to protect our poultry industries from new
and emerging influenza viruses and emerging/exotic poultry diseases
which threaten the Nation's poultry industry and potentially U.S.
public health. The new National Poultry Research Center will have ABSL-
3E animal and BSL-3E laboratory space which will enable ARS scientists
to handle and conduct research on exotic poultry diseases. These are
facilities that meet requirements for handling infectious materials and
have special engineering and design features to prevent exposure to
dangerous diseases. ARS infrastructure, including our laboratories, is
a valuable asset for science and we are committed to leveraging our
assets to increase USDA's capacity to conduct critical research and to
solve emerging problems.
                                 ______

               Questions Submitted to Dr. Elisabeth Hagen
              Questions Submitted by Senator Mark L. Pryor
                cooperative interstate shipment program
    Question. Dr. Hagen, your request includes $2.4 million and a staff
increase of 15 employees to continue implementation and expansion of
the Cooperative Interstate Shipment Program. This program will assist
small and very small meat and poultry plants in expanding business
opportunities through interstate commerce.
    Please describe how this program works and the need for 15
additional employees.
    Answer. Section 11015 of title XI of the Food, Conservation, and
Energy Act of 2008 (the 2008 farm bill), enacted on June 18, 2008,
amended the Federal Meat Inspection Act (FMIA) and the Poultry Products
Inspection Act (PPIA) to establish the Cooperative Inspection Shipment
(CIS) program under which certain small and very small State-inspected
establishments will be eligible to ship meat and poultry products in
interstate commerce. The law provides that the Secretary of Agriculture
(FSIS by delegation) ``in coordination with the appropriate State
agency of the State in which the establishment is located,'' may select
State-inspected establishments with 25 or fewer employees to ship meat
and poultry products in interstate commerce. The program is limited to
establishments located in States that have established and continue to
maintain an ``at least equal to'' State meat or poultry inspection
(MPI) program. Inspection services for these establishments must be
provided by State inspection personnel that have ``undergone all
necessary inspection training and certification to assist the Secretary
with the administration and enforcement of [the acts]''. Meat and
poultry products inspected and passed by the State inspection personnel
will bear a ``Federal mark, stamp, tag, or label of inspection'' and
will be permitted to be shipped in interstate commerce.
    The law requires that FSIS designate an employee to ``provide
oversight and enforcement'' of the program. The statute requires FSIS
to appoint a Federal employee to be a Selected Establishment
Coordinator (SEC) and the SEC is required by statute to visit selected
establishments with a frequency that is appropriate to ensure that such
establishments are operating in manner that is consistent with the FMIA
and PPIA. Based on a mission analysis, we estimate that full
implementation of the CIS will require 15 full-time equivalent FSIS
employees to provide oversight and enforcement as well as complete
periodical audits of the State inspection program laboratory systems to
ensure the sampling and testing program are equivalent to the Federal
program.
    FSIS published a final rule to implement the CIS program on May 2,
2011 (see ``Cooperative Inspection Programs: Interstate Shipment of
Meat and Poultry Products,'' available on the Internet at: http://
www.fsis.usda.gov/OPPDE/rdad/FRPubs/2008-0039F.pdf). The regulations
that implement the CIS program are in 9 CFR 321.3, 9 CFR part 332, 9
CFR 381.187, and 9 CFR part 381 subpart Z.
    Question. How are costs shared between the Department and
participating States?
    Answer. The law requires that FSIS reimburse a State for costs
related to the inspection of selected establishments in the State in an
amount of not less than 60 percent of eligible State costs. Currently,
FSIS is reimbursing States for 60 percent of their eligible costs. The
law also states that FSIS ``may provide grants to appropriate State
agencies to assist the appropriate State agencies in helping
establishments covered by this Act to transition to selected
establishments''. This includes normal operating expenses associated
with field operations including office space, communications costs,
information technology costs such as laptops, other equipment, and
travel costs.
    Question. What do you think the ultimate potential is in terms of
increasing the value of products shipped, jobs and income generated?
    Answer. Under the CIS program, small, State-inspected businesses
will be allowed to sell meat products across State lines. Prior to the
establishment of this program, State-inspected businesses could only
sell products within their State. The Cooperative Interstate Shipment
(CIS) program will expand economic opportunities for America's small
meat and poultry processors, strengthen State and local economies, and
increase consumer access to safe, locally produced food. The CIS
program allows a small processor to sell products to neighbors in
nearby States. A number of small plants believe that access to this
interstate shipment will help them develop profitable niche markets for
their products. The CIS program expands the market opportunities for
meat from local processors and makes these small businesses more
viable, while also ensuring that participating establishments have
robust food safety systems in place to produce safe food for consumers.
In addition, the CIS program is going to focus on strengthening the
critical connection between farmers and consumers and supporting local
and regional food systems.
             implementation of new poultry inspection rule
    Question. The Department is continuing to move forward with the
implementation of new methods of poultry inspection. These new
procedures will shift more of the visual inspection responsibilities to
industry personnel. This will reduce the number of FSIS online carcass
inspectors, allow faster line speeds, and re-focus FSIS efforts on
improved food safety. We appreciate that USDA has piloted and analyzed
these procedures at a variety of plants, for some years.
    Several swine slaughter plants were included in this pilot project.
The Office of Inspector General (OIG) has just released an audit of
swine slaughter operations which includes a review of these plants.
    The OIG found that ``The swine HIMP pilot program lacks sufficient
oversight.'' Specifically, it found that FSIS did not evaluate whether
the program resulted in measurable improvements to the inspection
process. FSIS allowed one plant to forgo standard policy and not
perform required visual inspections. Furthermore, three of the five
pilot plants audited had some of the highest numbers of regulation
violations (``non-compliance records'') of all plants nationwide.
    What is your response to these criticisms?
    Answer. It is important to note that HIMP for poultry and HIMP for
swine are not the same pilot programs, so they cannot be compared to
each other.
    FSIS intends to complete an evaluation of HIMP market hog
establishments by March 31, 2014, including an analysis of HIMP
establishments' performance compared to non-HIMP establishments as well
as their performance with respect to performance standards established
by an independent consulting firm contractor. In the meantime, it is
important to note that the same criteria for regulatory compliance are
applied to both non-HIMP and HIMP establishments. Establishments that
exhibit a pattern of serious regulatory non-compliance may be subject
to a Notice of Intended Enforcement Action, a suspension of inspection
activities, and even withdrawal of the grant of inspection.
    Question. What are your plans regarding future changes in swine
inspection procedures?
    Answer. FSIS has no plans to change swine inspection procedures at
this time. If the agency decides to make any changes in the future,
FSIS will follow the normal notice-and-comment rulemaking process.
    Question. If you expand the regulation to include swine slaughter,
can you provide assurance that the Nation's food safety will not be
jeopardized?
    Answer. Yes. FSIS does not make policy changes unless the agency
determines that those changes will help us to better ensure food safety
and protect public health.
                                 ______

              Questions Submitted By Senator Thad Cochran
                  mechanically separated poultry meat
    Question. USDA is actively considering proposals to impose new
requirements on the treatment of mechanically separated poultry meat.
There are concerns that these new rules could impose significant
economic harm on the poultry industry--particularly with regard to
exports. The export value of these products make up about 5 percent of
the value of all U.S. poultry exports each year. We certainly do not
want to place this market in jeopardy.
    Has USDA conducted a full economic impact analysis of the
requirements and policies announced in the notice dealing with
mechanically separated poultry meat?
    Answer. FSIS did not analyze the economic impact of the notice
because the notice did not impose any new sampling requirements on
establishments.
    Question. Is the USDA coordinating with industry and other
departments to ensure these rules don't unnecessarily disrupt valuable
markets?
    Answer. Yes. Although no country has taken action against these
products at this time, we understand the industry's concerns about the
potential impact on trade if this action is misunderstood by trading
partners. Since the announcement of this action, FAS has assisted
industry in exploring alternatives that could minimize the potential
for negative responses by foreign governments.
    FSIS solicited comments from the public, including industry, in the
December 6, 2012, notice. On March 7, 2013, FSIS extended the original
comment period until April 20, 2013 (78 Federal Register 14635.) The
agency expects to respond to the comments in a separate Federal
Register notice.
    Development of the December 2012 notice was based on protecting the
public health and fulfilling FSIS' statutory and regulatory obligations
to ensure food safety. The outbreaks described in the notice indicate a
change that requires a reassessment of HACCP plans based on the
existing regulation (9 CFR 417.4(a)(3)). There are no new requirements
as a result of the notice. Establishments can continue to export
comminuted product, even if FSIS conducts testing of the product.
                                 ______

                 Questions Submitted to Kevin Concannon
              Questions Submitted by Senator Mark L. Pryor
                  commodity supplemental food program
    Question. Mr. Concannon, the budget requests a significant increase
for Commodity Supplemental Food Program (CSFP). When looking at the
increase it seems the majority is not for food costs but for
administrative expenses.
    Can you explain why the budget is requesting such a large increase
for this program?
    Answer. The increased funding for CSFP is necessary to maintain
current program participation, and will be used for food purchases.
Administrative grants are determined by a legislatively mandated
adjustment in the State and local expenditure index for State and local
agencies.
    Question. Since no new States are being added, is the majority of
the increase due to food costs or administrative expenses?
    Answer. Ninety-two percent (92 percent) of the increase in funding
for CSFP is due to food costs.
                    public health information system
    Question. We have been apprised that the Public Health Information
System (PHIS) is very slow and unwieldy for users. If data input is
interrupted due to other work requirements, PHIS ``times out'' the user
and forces them to re-enter data. We are told that users frequently
take their laptops home to enter data uninterrupted. Surely with the
investments made in PHIS, we can expect a better product than this.
    Are you aware of these problems?
    Answer. The agency is aware of some customers experiencing
connectivity issues when trying to use PHIS and improving connectivity
of PHIS is the top priority of the Administrator. It is important to
note that the agency does not expect, nor does it allow its inspection
program personnel to take their laptops home to enter data into PHIS
outside of their tour of duty. That being said, issues such as the
system being ``slow and unwieldy,'' are typically caused by Internet
connectivity and not by PHIS. These connectivity issues have to do with
available commercial technology in an area, the use of mandated
contract carriers and USDA network traffic; much of this is outside of
the agency's control. In addition, PHIS meets Federal security
guidelines and times out when users are inactive.
    FSIS has inspection personnel in plants across the country, and
unfortunately, connectivity is not as consistent in some rural parts of
the country as it is in more urban areas. A small percentage of FSIS
field personnel, who are mostly located in rural areas, are
experiencing connectivity issues. The agency is working toward
implementing additional wired and wireless solutions for our personnel
with Internet connectivity issues. One solution that has already been
implemented is the availability of a disconnected version of PHIS.
Personnel can enter data into this disconnected version when Internet
connectivity is unavailable, and upload that data to PHIS once the
Internet is available. Connectivity is not provided at every
establishment; rather it is provided at large and/or high-volume
establishments and at least at one point on every patrol assignment.
    Question. How much has been invested in PHIS to date?
    Answer. As of May 2013 the agency has invested $57.9 million in the
Development and Operations and Maintenance of PHIS.
    Question. Is development of PHIS complete now or are you still
enhancing the product?
    Answer. PHIS development continues. Initially, FSIS' immediate
focus was on its domestic component and getting approximately 4,500
field employees transitioned onto the system. Once full domestic
implementation was completed in January 2012, FSIS turned its attention
to the system's import component. Having completed implementation of
these two high-priority components, FSIS launched the system to
industry users and State meat and poultry inspection programs. In the
next fiscal year, FSIS will continue improving and enhancing the
components that have already been implemented, while also integrating
the agency's foreign equivalence and export processes.
    Question. What are the annual operating costs of PHIS?
    Answer. The agency projects future operations and maintenance costs
for PHIS to be approximately $1,340,903 per year.
    Question. What are your plans to increase the speed and usefulness
of this system?
    Answer. The agency is taking a multifaceted approach to enhancing
the system for speed and utility. We are constantly looking at ways to
improve the system, agency processes, training and support guidance as
well as new enhancements and updates released on a regular basis. In
addition, we are prioritizing increased use of the disconnected version
of PHIS with personnel located in areas where Internet connectivity is
unavailable. This disconnected version allows personnel to record
critical food safety information while Internet connectivity is
unavailable and upload it to PHIS at a location on their assignment
where the Internet is available.
                               food waste
    Question. There has been some concern that increasing the nutrition
standards for foods has caused increased plate waste. Kids are simply
throwing out that apple and going to class hungry. The Little Rock
School District has come up with an innovative approach to dealing with
this. All food groups are represented by a color and students must
select three groups including at least one fruit or vegetable.
    Are you concerned with increased plate waste?
    Answer. Plate waste has been a long-standing concern of USDA, which
has examined the issue in various studies and developed several
policies to decrease plate waste. For instance, ``offer versus serve''
is a service method that allows students to select only those foods
they intend to eat. It was developed to prevent food waste and
encourage the consumption of healthful foods. Additionally, USDA
continues to offer extensive technical assistance to States and local
agencies in an effort to assist in the reduction of plate waste in
cafeterias, including the Recipes for Healthy Kids Competition, Chefs
Move to Schools, fact sheets, and other resources offered through Food
and Nutrition Service's (FNS's) Team Nutrition.
    USDA is committed to future research to expand understanding of the
issue. A study will be conducted in school year 2014-2015 that will
examine the extent of plate waste in the school meal programs, looking
at both types of foods and specific nutrients lost.
    Question. What is FNS doing to encourage school districts to come
up with creative ways to help students eat more fruits and vegetables,
as we're seeing in Little Rock?
    Answer. FNS recognizes that innovative approaches can increase
consumption of school meals. FNS is collaborating with the Economic
Research Service to support research conducted by the Cornell Center
for Behavioral Economics in Child Nutrition Programs. The Center's
Smarter Lunchrooms Initiative focuses on new efforts to reduce plate
waste, particularly fruits and vegetables, in school meal programs by
going beyond what is served to how it is served--including lighting,
placement of foods, creative food item names, and signage. For
instance, the Center has found that relabeling foods with appealing
names resulted in an increase in the sale of vegetables in the school
cafeteria by 27 percent. We are currently working to increase State and
local awareness of and access to the ample resources and training
available from the Center.
    We also know that it is very important that schools provide enough
time to eat, and at the right time of day. For example, implementing
``grab and go'' meals in addition to traditional meal service in the
school cafeteria may provide students with the flexibility to eat in a
preferred setting and at a time when they are most hungry. Providing
meals just before or after physical activity can also increase student
appetite and meal appeal. Lastly, we recognize the importance of
resource sharing, and have created the Best Practices Sharing Center
Web site, which allows States and schools to share their own innovative
menus, training materials, and signage with a nationwide audience.
                                 ______

               Questions Submitted by Senator John Hoeven
                         wic enrollment trends
    Question. The WIC program is designed for low-income infants,
children up to age 5 and pregnant and postpartum women. The USDA and
WIC repeatedly point to its own data to show that the program is being
increasingly utilized by women and children. The data reflects that WIC
enrollment encompasses 53 percent of all the infants in the country.
This seems to be a figure that exceeds other measures of infant and
child poverty. Accordingly, please outline what policies have led to
such an increase in WIC enrollment?
    Answer. A USDA analysis released in January 2013 estimated that
just over 2 million infants, fully half of the infants in the United
States, had family incomes below 185 percent of the Federal Poverty
Guidelines in 2010 (National and State-Level Estimates of Special
Supplemental Nutrition Program for Women, Infants, and Children (WIC)
Eligibles and Program Reach, 2010). These infants would be income
eligible for WIC because they meet the income requirements established
by the Child Nutrition Act. The increase in enrollment was not a result
of changes in WIC policies.
    USDA's most recent analysis of State WIC administrative data showed
that 69 percent of WIC participants received benefits through SNAP,
TANF, or Medicaid in 2010. But that same data finds that the great
majority of those WIC participants reported incomes below 185 percent
of the poverty guidelines. Among all participants for whom we have
income information in 2010, just 2.9 percent reported incomes above the
185 percent threshold. For infants, the number was 2.7 percent.
             local and state income eligibility discretion
    Question. The Government Accountability Office (GAO) produced a
study showing extensive State-level and local WIC agency discretion
regarding aspects of measuring income for assessing eligibility. States
and local WIC agencies set the terms of what to include or exclude when
counting income, including what time periods must be considered when
measuring income, or the size of the family unit used to calculate
income. Apparently, over 60 percent of the States require income data
reflecting only the last 30 days, even though the Federal standard for
WIC eligibility is ``annual gross household income.'' Furthermore, the
States evaluate only the income of the mother and child, and disregard
income of any other member of the household. We understand that in
response to the GAO report in April 2013, FNS issued new income
eligibility guidance to the States that is uncannily similar to FNS's
14-year-old 1999 income eligibility determination guidance in effect at
the time GAO identified extensive inconsistencies across State and
local WIC agency income eligibility determinations. How does FNS intend
to monitor State and local WIC agency compliance with this new
guidance, given that there is no training or technical assistance
provided along with the new guidance to ensure compliance?
    Answer. In April 2013, FNS issued updated guidance to State
agencies to help standardize income eligibility determinations. The
guidance consolidates policy memoranda issued over the past several
years. Included in the guidance are various aspects of WIC
certification, including, but not limited to: income eligibility
guidelines, definition of income (including military income),
determination of family/household income and adjunctive/automatic
income eligibility, clarification on the use of ``current'' income, and
the number of temporary certifications allowed when an applicant lacks
necessary income documentation. FNS is also hosting regional webinars
for State agencies to provide technical assistance on the guidance.
    In addition, management evaluations (MEs) conducted by FNS
routinely address issues related to income eligibility determinations.
The WIC ME Tool, a Web-based, interactive tool implemented in fiscal
year 2010, establishes standard questions to be used across regions and
allows FNS to generate reports to identify common findings and develop
policies or other corrective actions. FNS will develop a process, which
will be effective October 1, 2013, for the systematic review and
analysis of WIC certification/eligibility MEs at the national office
level. The process will help FNS identify areas in need of correction
or improvement so that additional guidance and technical assistance can
be provided to FNS regional offices and WIC State agencies as necessary
and appropriate.
            food and nutrition service oversight and review
    Question. Apparently, FNS for some years has been collecting USDA
regional offices' reports of State and local WIC agencies' compliance
with Federal WIC policy, including income eligibility determinations.
However, the GAO observed that FNS refrains from examining those
reports to assess State or local WIC agency compliance with Federal
regulations. How can FNS be assured of the integrity of the WIC program
when it does not monitor State and local WIC agencies' compliance with
Federal policies, especially in the area of income eligibility
determinations? What does FNS intend to do to rectify these issues in
the future?
    Answer. FNS routinely reviews all WIC State agencies for compliance
with Program operation and administration requirements, including the
critical area of certification and eligibility, during its management
evaluation reviews. Where deficiencies are found, FNS requires that
State agencies undertake corrective actions and monitors compliance
with those corrective action plans. To improve WIC oversight and
administration, and in response to the GAO's recommendation, FNS will
develop a process, effective October 1, 2013, for systematically
reviewing its monitoring reports to assess national program risks and
target assistance specific to WIC certification and eligibility.

                          SUBCOMMITTEE RECESS

    Senator Pryor. The subcommittee will meet again for its
final fiscal year 2014 budget hearing at 10 a.m. on Thursday,
May 23, in this room. At that time, we'll hear testimony from
USDA undersecretaries for Farm and Foreign Agricultural
Services, Natural Resources and Environment, and Rural
Development.
    So again, I want to thank you all for your attendance
today. And with that, the hearing is recessed.
    [Whereupon, at 11:05 a.m., Thursday, May 16, the
subcommittee was recessed, to reconvene at 10 a.m., Thursday,
May 23.]

 
   AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION, AND
          RELATED AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2014

                              ----------


                         THURSDAY, MAY 23, 2013

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 10:01 a.m., in room SD-124, Dirksen
Senate Office Building, Hon. Mark L. Pryor (chairman)
presiding.
    Present: Senators Pryor and Blunt.

                       DEPARTMENT OF AGRICULTURE

STATEMENTS OF:
        DOUG O'BRIEN, ACTING UNDER SECRETARY, RURAL DEVELOPMENT
        ANN MILLS, ACTING UNDER SECRETARY, NATURAL RESOURCES AND
            ENVIRONMENT
        DARCI L. VETTER, ACTING UNDER SECRETARY, FARM AND FOREIGN
            AGRICULTURAL SERVICES
ACCOMPANIED BY MICHAEL YOUNG, BUDGET OFFICER

               OPENING STATEMENT OF SENATOR MARK L. PRYOR

    Senator Pryor. I'll go ahead and bring the hearing to
order. I want to thank everyone for being here. We have a
little bit of a new game plan today because the Senate has
announced that we're having votes at 10:30 a.m. So what I
thought I would do is shorten my opening statement. Senator
Blunt has agreed to shorten his opening statement, and we'd ask
you to shorten your statements if possible, maybe a couple of
minutes. Then of course your statements will be submitted for
the record so we'll have the official record.
    But let me go ahead and jump in, and our goal would be to
actually try to finish the hearing shortly after 10:30 a.m. so
the two of us could go make our votes and just try to recess
the hearing from there instead of taking a break and coming
back.
    So I want to thank you for coming. This is our final budget
hearing. Today we will hear from: Ms. Darci Vetter, the Acting
Under Secretary for Farm and Foreign Agricultural Services; Ms.
Ann Mills, the Acting Under Secretary for Natural Resources and
Environment; and Mr. Doug O'Brien, the Acting--are you noticing
a pattern here----
    Senator Blunt. I am.
    Senator Pryor [continuing]. The Acting Under Secretary for
Rural Development. I'd like to welcome each one of you and
thank you for being here and thank you for your preparation. In
a lot of ways you are the face of the USDA out there in the
field. If there is such a thing, you are the boots on the
ground in the real world of all the services that you provide.
Each of you is doing things that are very, very important for
rural America and for agriculture, and for that we want to say
thank you.
    You continue to do good work. However, we're in a budget-
shrinking environment, and I notice that the Rural Development
staff, for example, the Rural Development staff has been cut by
18 percent since 2010, and there have been over 20 Farm Service
Agency (FSA) office closures in the last couple years and
conservation activities have been increasingly limited, and all
that's done before the sequester.
    So we understand that this is a shrinking environment in
you guys have had to make some tough choices. But on a positive
note, we see that you've made a lot of progress in the world of
technology with the MIDAS system, and I'd like to visit about
that in a few moments. I hope that what that does is it makes
it easier for you to provide better service to American
farmers, and it sounds like you're making progress there.
    So with that, I'd like to turn it over to Senator Blunt for
his statement.

                     STATEMENT OF SENATOR ROY BLUNT

    Senator Blunt. Thank you, chairman. Thank you for your
leadership of the subcommittee.
    We're glad to have all of you here today. I do want to get
right to what you want to tell us and then what we want to ask
about. Obviously, these have been good times for agriculture,
but also challenging times for agriculture. In the State of
Missouri, every one of our counties was declared a disaster
county in the last year. At the same time, our agricultural
production has continued to be astonishing as a State and as a
Nation.
    Rural development makes a real difference in the rural
communities. Valued at $185 billion, the rural development loan
portfolio is extensive, it's healthy, and it provides financing
to many borrowers that wouldn't be able to obtain loans in
other ways.

                           PREPARED STATEMENT

    It's evident that the vast reach of your agency is being
managed in new ways because of technology and, like the
chairman, I look forward to hearing about that. I think I'll
just submit my statement for the record and let's get started.
    [The statement follows:]
                Prepared Statement of Senator Roy Blunt
    Good morning. Thank you Chairman Pryor for holding today's hearing
on the Farm and Foreign Agricultural Service, Natural Resources and
Environment, and Rural Development mission areas of the Department of
Agriculture. I am pleased to join you in welcoming the Under
Secretaries.
    The mission areas we will examine in detail today play an important
role in delivering USDA programs. They represent the frontline of USDA
efforts to promote agriculture and improve rural communities.
    Missouri is home to over 100,000 farms, the second most nationwide,
and almost 30 percent of Missouri's population lives in a rural area.
The agencies represented here today are critically important to their
daily lives. These agencies are responsible for:
  --Working with farmers to respond to natural disasters and conserve
        resources;
  --Financing critical infrastructure in rural communities; and
  --Promoting agricultural exports by opening foreign markets.
    Agriculture supports 16 million jobs nationwide and has been a
bright spot in the country's economic recovery. U.S. agricultural
exports are expected to break records again this year.
    However, challenges remain prevalent. Last year, about 80 percent
of agricultural land across America experienced drought. It was the
most extensive drought our country has experienced since the 1950s, and
all 114 Missouri counties were declared a disaster area.
    Many farmers in my State and throughout the country would not have
been able to financially weather the drought had it not been for the
safety net of the crop insurance program.
    Farmers face risk and uncertainty unlike any other industry--
unpredictable weather conditions, skyrocketing input costs, and
volatile world markets to name a few.
    Without a robust safety net in place, farmers would have tremendous
difficulty rebounding after a disaster like last year's drought. I
commend the Department for its continuous efforts to make these crop
insurance products more affordable and useful to producers.
    Agencies represented here today play integral roles in solidifying
America's leading role in global agriculture production, as well as its
preservation of natural resources.
    USDA's conservation efforts aim to ensure that future generations
benefit from our country's natural beauty and quality resources as we
have, and I firmly believe America's farmers are America's best land
stewards.
    Agriculture remains the cornerstone of rural America, but USDA's
reach is much broader than most Americans realize.
    Housing ownership loans, rural business start-up grants, and
drinking water infrastructure are only a few of the financing
opportunities that Rural Development provides to rural communities.
    Valued at nearly $185 billion, Rural Development's loan portfolio
is extensive, healthy, and provides financing to many borrowers that
are not able to obtain loans from private lenders.
    It is evident by the vast mission areas of the agencies represented
here today that USDA serves a role in nearly every aspect of rural
America.
    I want to again thank our witnesses for being here today, and I
look forward to hearing their testimony.

    Senator Pryor. Thank you.
    Mr. O'Brien, you're recognized for 2 minutes.

                   SUMMARY STATEMENT OF DOUG O'BRIEN

    Mr. O'Brien. Thank you, Mr. Chairman, Ranking Member Blunt.
I want to say thank you for the opportunity to appear before
you today, and I will keep my statement very brief.
    The Rural Development budget features a mix of grants and
loans to help rural families, rural communities, small
businesses, and cooperatives capture the historic opportunities
in rural America. While certainly difficult choices needed to
be made in this budget environment, we believe this budget
strikes the right balance by targeting resources where there is
greatest need and where there is greatest opportunity. In
short, this budget continues the commitment to rural America.

                           PREPARED STATEMENT

    I will stop there and look forward to your questions, and
thank you for the opportunity to be here today.
    [The statement follows:]
                   Prepared Statement of Doug O'Brien
                           rural development
    Chairman Pryor, Ranking Member Blunt and members of the
subcommittee, thank you for the opportunity to present the President's
2014 budget for the Department of Agriculture's (USDA's) Rural
Development mission area. I am accompanied this morning by Mr. Michael
Young, USDA's Budget Officer.
    President Obama believes that ``strong rural communities are the
key to a stronger America.'' USDA Rural Development, as the only
Federal Department with the primary responsibility of serving rural
areas, takes seriously our responsibility to support the continued
revitalization of rural America and the Nation.
    Since 2009, President Obama's commitment and this subcommittee's
support have brought about significant investment in rural communities
that has made them stronger and more vibrant. USDA Rural Development
alone has directly invested or guaranteed more than $131 billion over
the last 4 years in broadband, businesses, housing, safe water,
community facilities and more that have benefited not only the
communities our agency serves, but the overall economy.
    As you know, rural America has unique challenges and assets. Rural
communities are characterized by their isolation from population
centers and product markets and benefit most from initiatives that
integrate local institutions and businesses with State and Federal
agencies that have intimate knowledge of local needs. To address these
unique challenges, Congress has provided USDA with a variety of
programs that comprehensively attend to the rural dynamic.
    The presence of USDA field offices in every State helps us serve
the specific needs of local communities. USDA Rural Development
employees are able to identify a wide range of community and economic
development resources for local elected officials, business owners,
families, farmers and ranchers, schools, nonprofits, cooperatives and
tribes. USDA Rural Development staff are located throughout the Nation
and are members of the communities they serve so they possess expert
knowledge of the economic challenges and opportunities that exist in
their particular region.
    USDA Rural Development assistance includes direct and guaranteed
loans, grants, technical assistance, and other payments. We provide
assistance to intermediaries that make loans or provide technical
assistance to the ultimate beneficiaries. We require or encourage
recipients, in several programs, to contribute their own resources or
obtain third-party financing to support the total cost of projects, in
which case these programs leverage USDA's support with private sector
financing.
    Through USDA Rural Development's infrastructure development
programs, we make investments in rural utility systems that help
improve and expand the rural electrical grid, provide clean drinking
water to rural communities, and deliver increased Internet service to
rural families and to businesses, allowing them to compete in the
global economy. In 2012, we provided more than 8 million consumers with
new or improved electric service, provided 2.5 million of our
borrower's customers with new or improved water or wastewater service,
and provided nearly 64,000 rural households, businesses and community
institutions with new or better access to broadband Internet service.
    Through USDA Rural Development's business and cooperative loan,
grant, and technical assistance programs, the agency helped thousands
of rural small business owners and agricultural producers improve their
enterprises, including those related to renewable energy. Beyond direct
assistance to these business owners and producers, financial support
from USDA also creates lasting economic development opportunities in
the rural communities where the projects are located. Business and
cooperative funding created or saved over 52,000 rural jobs in 2012.
    Not only have we supported small businesses, but we also support
the social infrastructure that makes rural communities attractive to
small business owners and their employees. USDA Rural Development's
Community Facilities loan and grant program provided assistance to
construct or improve 215 educational facilities, and supported 168
healthcare projects--part of more than 1,400 Community Facilities
projects nationwide in 2012. Other key projects included support for
local, rural emergency responders.
    Finally, the USDA Rural Development housing program ensures that
rural families have access to safe well-built, affordable homes. In
2012, more than 153,000 families with limited to moderate incomes
purchased homes utilizing our housing programs. We also helped about
7,000 rural individuals or families repair their existing homes under
our home repair loan and grant program. More than 400,000 low- and very
low-income people were able to live in USDA-financed multi-family
housing thanks to rental assistance.
    At Rural Development we continue to recognize the responsibility we
share to help shoulder the burden of deficit reduction and, as such,
have pursued continual process improvements to ensure that our agency
operates as a responsible steward of taxpayer dollars. Over the past 10
years, Rural Development's portfolio has more than doubled and now
stands at $183 billion.
    The agency has also embraced multiple streamlining efforts to
reduce operating costs. USDA Rural Development contributed to savings
under the Secretary's Blueprint for Stronger Service by consolidating
and reorganizing its field office structure, providing projected
savings of $758,000 annually. These efforts are continuing and are
expected to result in additional savings over the next few years. Rural
Development achieved savings of $1.3 million with reductions in
printing, supplies and promotional items. Furthermore, the agency
anticipates savings from data center consolidation at our National
Information Technology Center and using specific services that would
cost less money. Those savings are cumulative and have not been broken
down by individual agencies.
    In terms of staff, since the beginning of fiscal year 2012, USDA
Rural Development has decreased its workforce by 18 percent, totaling
1,079 people. Those reductions will save the agency more than $95
million per year in staff costs moving forward, however, at a certain
point we risk the integrity of the delivery of the programs and the
servicing of a burgeoning portfolio. The chart below illustrates the
agency-wide challenge of rapidly increasing program level funding and a
steady decrease in staffing resources. This type of dynamic strains the
agency's ability to responsibly deliver and service the programs
provided for and funded by Congress.

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


    Despite our best efforts to prepare for additional funding
reductions through these prudent actions, we cannot prevent the
negative impact of the March 1 sequestration or across-the-board
reductions in every Rural Development program as outlined in the
Consolidated and Further Continuing Appropriations Act of 2013. We will
have to cut back on essential services. The reduced level of program
funding will mean that rental assistance will not be available for more
than 15,000 very low-income rural residents, generally elderly,
disabled, and single heads of households, who live in multi-family
housing in rural areas. As you know, the Secretary has notified this
subcommittee and your colleagues in the House of his intention to use
interchange authority to avoid furloughs and minimize the disruption
caused by these cuts to rural communities.
    We know that American taxpayers expect more, so we are continually
looking for ways to improve, innovate and modernize. The Rural Housing
Service (RHS) directed each State office to centralize the loan
guarantee process for the Single Family Housing Guaranteed program. The
purpose of the initiative is to maximize efficiencies that enable a
reduction in staff time while still meeting audit requirements and
providing States flexibility. Each State was instructed to centralize
the guarantee process into one entry point, and then electronically
distribute workflow to the appropriate workstation where the designated
employee was located. The purpose was not to reassign employees to a
central office location, but to deploy technology for a process
improvement as a remedy for staff reductions. The result of the
centralization initiative has been a success. All States have
centralized their guarantee workflow process or are in the process of
implementing it. Some States even implemented the same workflow for
other Rural Development programs.
    RHS hopes to go even further in 2014 with a proposal that will make
USDA's guaranteed home loan program a direct endorsement program, which
is consistent with Veterans Affairs and Housing and Urban Development's
guaranteed home loan programs. This will make RHS more efficient and
allow the Single Family Housing staff to focus on other unmet needs.
    RHS is also in the process of instituting an automation project
known as automated loan closing, or ALC, that will eliminate the need
for staff to process paper checks for guarantee fees. It will eliminate
the double entry of data and automate the scanning of critical loan
closing documents. It will also enable an e-signature feature which
will eliminate the need for staff to print and sign a loan note
guarantee. The ALC project will begin deployment nationwide this
summer.
    The Rural Utilities Service (RUS) has also undertaken initiatives
to improve performance and accountability measures. For example, in
fiscal year 2010 we launched a process improvement project to address
issues related to the Rural Alaska Village Grant Program. A Steering
Committee composed of senior officials from both the national and State
offices of USDA Rural Development, Alaska Department of Environmental
Conservation, Alaska Native Tribal Health Consortium, Indian Health
Service, Environmental Protection Agency and the Denali Commission was
formed and convened in Anchorage. In June 2011, the partners, signed a
memorandum of understanding outlining a streamlined application
process, new grant agreements, improved accountability measures and
other critical documents. Today, we are seeing the results of those
efforts with projects being built serving Alaskan villages, many for
the first time. Based on these successes, we are in the process of
codifying the streamlining of this program through a regulation that we
plan to announce later this year.
    RUS is also undergoing a business process review (BPR) in electric
and telecom programs to consolidate and streamline program activities,
both in the field and in the national office as a result of exponential
increases in the portfolio size, coupled with diminishing staff
resources. This activity includes increased use of technology, staff
reorganization and retraining, and potential revision of program
regulations to increase the efficiency and effectiveness of program
delivery.
    In Rural Business and Cooperative Service (RBS) we established a
field structure, consisting of 10 regions. The structure allows the
national office to provide direction and oversight for all RBS programs
nationally, with reliance on two regional coordinators (East and West),
and 10 RBS team leaders (State program directors) that provide guidance
to the State RBS program directors in their regions. This regional
structure improves agency efficiency and effectiveness, which is vital
as RBS addresses reductions to budget and staffing levels.
    With its regional structure, RBS is able to save on travel and
training expenses by reducing the number of staff that attend training.
Typically, regional coordinators work with national office staff to
train team leaders who then provide guidance and direction to the
program directors in their region.
    This approach also improves communication across the agency,
resulting in greater consistency in program delivery. The regional
structure provides a network for sharing institutional knowledge, best
practices, and solutions to common challenges within a region.
    RBS' regional structure also enables offices to address gaps in
staffing by sharing human resources. For instance, a team leader can
temporarily help with program delivery in a State if a program director
retires or leaves the agency. This is especially important now, as RBS
has lost a number of program directors over the last several years. Not
only do team leaders help fill in where a program director position is
vacant they also provide training and guidance to new program
directors. Over the last few years this has been essential to the
agency's success in supporting the many programs delivered by RBS, with
fewer staff.
    Under the budget proposal, we continue to seek efficiencies to
better serve the American people. For example, the budget includes $55
million for a new economic development grant program designed to target
small and emerging private businesses and cooperatives in rural areas
with populations of 50,000 or less. This new program will award funding
to grantees that meet or exceed minimum performance targets, and that
agree to be tracked against those performance targets. This
consolidation will utilize all existing authorities available under the
Rural Business Opportunity Grant, Rural Business Enterprise Grant,
Rural Microenterprise Assistance Grant, Rural Cooperative Development
Grant, Small/Socially Disadvantaged Producer Grant and Rural Community
Development Initiative Grant programs. Doing so will enable RBS to
leverage resources to create greater wealth, improve quality of life,
and sustain and grow the regional economy. The new program is also
expected to improve the agency's current grant allocation and
evaluation process.
    The President's budget reflects his commitment to jobs, growth and
opportunity for America. With a proposed budget authority of $2.3
billion and a proposed program level of $35 billion, the three agencies
of Rural Development are fully engaged in efforts to increase
opportunities and address the challenges unique to rural America. The
budget provides $662 million in funding for salaries and expenses
needed to carry out USDA Rural Development programs. This level of
funding will support an estimated staff level of 5,000 in 2014--many of
whom are located in rural areas throughout the United States and Puerto
Rico. In addition, the budget requests that $32 million of the total
funding provided for salaries and expenses to be set aside for
information technology investments for the Comprehensive Loan Program.
Investing in modernizing this system will ensure that all loan programs
are serviced with up to date technology safeguarding the portfolio from
cyber threats and upgrading the management capabilities for the agency.
    I should note that our largest programs at Rural Development, the
Electric, Telecommunications, Community Facilities Direct Loan, and the
Single Family Housing Guarantee programs require no Federal funding and
are all operating at a negative subsidy rate. The budget also supports
$1.2 billion in Water and Waste Disposal direct loans at no Federal
cost due to improved performance of the program. However, I note that
as savings from programs have been realized due to program performance
and low interest rates, funding for S&E has not kept pace. The S&E
request needs to be fully funded in order to realize the full
authorized loan levels in these most efficient programs. The execution
of these programs, particularly in an extremely challenging economic
environment, is a win for taxpayers, rural residents and communities
working to enhance their quality of life and increase their economic
opportunities.
    Rural Development is known as an agency that can help build a
community from the ground up. Today, we are assisting rural America
prepare for the global challenges of the 21st century by looking not
only within a community for defining strengths and opportunities, but
to regions and strategic partners, where one community or program can
complement and draw upon the resources of another to create jobs and
strengthen economies.
    We are resolutely pursuing President Obama's vision of an America
that promotes the economic well-being of all Americans. In rural
communities, we support entrepreneurs and innovators, individuals and
families, the youth and the elderly. We support entire communities. We
do so by financing housing for individuals, families and the elderly,
building schools and emergency centers, connecting leading doctors to
rural clinics and hospitals, and encouraging business startups and
expansions. We know our investments will pay dividends for years to
come.
    I appreciate the opportunity to work with members of the
subcommittee to build a foundation for American competitiveness. The
President has offered a responsible, balanced budget that continues to
meet key priorities and includes targeted investments to support long-
term job creation and renewed economic expansion. Moving forward will
require hard work and sacrifice from everyone, and Rural Development is
committed to doing its part. I am confident that the agencies of Rural
Development will successfully implement the programs needed for a
thriving rural America.
    I appreciate the opportunity to testify today before members of the
subcommittee. This budget proposal supports our efforts and helps us
fulfill the promise of rural communities. Thank you for your support of
Rural Development programs. I am happy to answer your questions on the
budget proposals at this time.

    Senator Pryor. Thank you.
    Ms. Mills.

                     SUMMARY STATEMENT OF ANN MILLS

    Ms. Mills. Thank you, Mr. Chairman and Ranking Member
Blunt. I'm very pleased to present to you the Natural Resources
Conservation Service's (NRCS) fiscal year 2014 budget, and we
appreciate your ongoing support for voluntary rural lands
conservation. NRCS remains committed to helping America's
farmers and ranchers achieve their conservation goals while
also meeting the challenges and opportunities of the 21st
century.
    We are using--I want to highlight just a couple things
where NRCS is coupling its traditional strengths of on-the-
ground assistance with a whole new generation of conservation
approaches that will allow America's farmers to remain the most
productive in the world. We're using science to help focus our
investments. We're supporting the development of nonregulatory
incentives, like agricultural certainty in environmental
markets, that also help introduce private dollars into the farm
economy. We're promoting soil health that is going to boost
farmer productivity while at the same time helping them get
buffered from extreme weather events. When these weather events
do occur, NRCS is there in drought-stricken States, during
flooding events, and even yesterday in Oklahoma. Today we're
doing damage assessments there.
    We're also focusing our efforts to support the Department's
Strike Force Initiative to address poverty in persistent
poverty counties. This budget reflects tough cuts, but also
some strategic investments, such as improving our business
functions, where we can continue to deliver excellent services
to America's farmers and ranchers.

                           PREPARED STATEMENT

    In a changing climate and high commodity prices, now more
than ever America's farmers and ranchers need NRCS to help them
protect our natural resource base.
    Thank you very much.
    [The statement follows:]
                    Prepared Statement of Ann Mills
                   natural resources and environment
    Mr. Chairman and members of the subcommittee, I am pleased to
appear before you today to present the fiscal year 2014 budget for the
Natural Resources Conservation Service (NRCS) of the Department of
Agriculture. I appreciate the ongoing support of the chairman and
members of the subcommittee for USDA's work on voluntary, private lands
conservation and the protection of soil, water and other natural
resources.
    Our Nation's prosperity--particularly the prosperity of our rural
communities--is closely linked to the health of our lands and natural
resources. USDA remains committed to helping the Nation's farmers and
ranchers meet their conservation goals. NRCS is working hard to couple
its traditional strengths of site-specific, science-based technical and
financial assistance with innovative efforts to leverage funding from
private and non-governmental organizations in an effort to extend the
value of taxpayer dollars. NRCS is also supporting the establishment of
forward-thinking, incentive-based conservation and restoration programs
including water quality, wildlife certainty, and environmental markets.
    Natural resource conservation does not just protect the water we
use, the air we breathe, and the soil that is necessary for producing
our food. In many cases, the conservation practices that producers
implement, with NRCS's assistance, can reduce production costs and
improve productivity, making improvements to a producer's bottom-line
and helping sustain rural communities.
    The President's fiscal year 2014 budget requests a total of about
$4 billion for NRCS conservation programs, including approximately $3
billion in mandatory funding and $808 million in discretionary funding.
Although the agency will continue to face budgetary pressures,
particularly in discretionary spending, this budget represents a
significant investment in conservation programs and related activities.
    Secretary Tom Vilsack recently testified that, under President
Obama's leadership, USDA has taken significant steps to strengthen
rural America and provide a foundation for continued growth and
prosperity. Today, I will highlight for you how USDA, through NRCS, is
working smarter to achieve natural resource improvements by leveraging
resources and modernizing business operations in order to reduce
administrative overhead and complexity. USDA employees are setting a
tremendous example in this regard, delivering record levels of service
to their customers with fewer resources and staff.
                        resource accomplishments
    With implementation of the 2008 farm bill, NRCS and its customers
have benefited from historic levels of technical and financial
assistance, provided through the agency's dispersed workforce working
one-on-one with farmers and ranchers. The agency has remained flexible,
allowing for quick and agile responses to acute challenges, such as the
Deepwater Horizon oil spill and 2012's historic drought. For example,
since 2008, NRCS has:
  --Established landscape conservation initiatives in targeted areas
        such as the Gulf of Mexico, the California Bay Delta, the
        Everglades, and the Great Lakes. NRCS initiatives in targeted
        areas address high-priority natural resource concerns and have
        improved the Federal return on investments in conservation.
  --Helped producers adapt to drought conditions. In 2012 farmers and
        ranchers experienced the worst drought since the 1950s,
        according to the National Climatic Data Center. As the severity
        of the drought became apparent, NRCS moved quickly with
        partners to get technical and financial assistance to farmers
        and ranchers. Funding was provided to plant cover crops to
        minimize soil erosion, install livestock watering facilities,
        and install more efficient irrigation systems to limit impacts
        on aquifers. In fiscal year 2012 and fiscal year 2013, NRCS
        provided nearly $44 million for drought mitigation that was
        used to address drought issues in 22 States.
  --Instituted a Working Lands for Wildlife partnership that will allow
        farmers and ranchers to protect threatened wildlife species
        while ensuring continued agriculture and forestry production.
        Working Lands for Wildlife is a new partnership between NRCS
        and the U.S. Fish and Wildlife Service (FWS) that uses agency
        technical expertise, combined with financial assistance from
        the Wildlife Habitat Incentive Program, to combat the decline
        of seven specific wildlife species whose habitat needs overlap
        significantly with agricultural landscapes. For example, at one
        time Longleaf pine forests covered 90 million acres in the
        southeastern United States. Now only 3.4 million acres remain.
        By increasing the use of management practices such as
        prescribed grazing and forest stand improvements, forest
        landowners can make many of these acres more functional and
        viable.
  --Played a major role in helping Gulf Coast States and landowners
        address water quality impacts to the Gulf of Mexico. The Gulf
        of Mexico Initiative (GoMI) provides assistance to agricultural
        producers in the five Gulf Coast States to improve water
        quality, conserve water, and enhance wildlife habitat within
        watersheds draining into the Gulf of Mexico. NRCS obligated
        approximately $8 million in contracts and easements under the
        initiative in fiscal year 2012 and will commit up to $30
        million more over the next 2 years to provide conservation
        assistance to farmers and ranchers in priority areas along
        seven major rivers that drain to the gulf.
  --Addressed water quality issues through NRCS's Mississippi River
        Basin Initiative. This effort builds on the past efforts of
        producers, NRCS, partners, and other State and Federal agencies
        in a 13-State area, in addressing nutrient loading in selected
        small watersheds in the Mississippi River Basin. Excess
        nutrient loading contributes to both local water quality
        problems and the hypoxic zone in the Gulf of Mexico. In fiscal
        year 2011 and fiscal year 2012, NRCS directed over $50 million
        in financial assistance for this initiative.
  --Played a leadership role in emergency responses to natural
        disasters, including the Deepwater Horizon oil spill and
        Hurricane Sandy. Responses to these events are ongoing. Many of
        the producers in the States affected by the oil spill are still
        providing wintering habitat after their crops are harvested.
        NRCS is helping private landowners and communities recover from
        the effects of Hurricane Sandy through the Emergency Watershed
        Protection Program.
  --Instituted a pilot program through the Environmental Quality
        Incentive Program (EQIP) that will allow producers to comply
        with EPA regulations by using EQIP financial assistance to
        prevent on-farm oil spills. The Oil Spill Prevention, Control
        and Countermeasure (SPCC) pilot is in its third year. In its
        first 2 years (fiscal year 2011 and fiscal year 2012), it
        provided more than $4.2 million to over 1,000 producers in nine
        States to develop professionally prepared and certified SPCC
        plans and provide for appropriate secondary containment of oil
        storage facilities.
               looking ahead--innovations in conservation
    Despite the recent decreases in the NRCS budget, the agency
continues to keep pace with changes in conservation approaches and
resource needs. Our landscape initiatives, guided by information
gleaned from the Conservation Effects Assessment Project (CEAP), are
just one example. Below are additional examples of how NRCS will help
farmers and ranchers through what we call 21st century conservation.
  --CEAP, composed of a series of resource assessment efforts, has
        enhanced our data-driven capabilities for getting targeted
        conservation on the ground. CEAP has also helped spawn the next
        generation of technical tools--such as the Soil Vulnerability
        Layer and the CEAP Conservation Benefits Identifier--that will
        take our ability to target conservation to a higher level. A
        user-friendly version of the APEX model (the field-level model
        powering CEAP) will help field staff and producers to
        determine, at a glance, which suites of practices offer the
        greatest conservation benefit.
  --In recent years NRCS has regularly heard from producers around the
        country that they are concerned that the potential for shifting
        regulatory requirements will make it difficult to plan their
        business operations. One solution is to give producers
        certainty that the rules won't change for them for a set period
        of time, in exchange for their implementing practices proven to
        address water quality concerns. USDA has been a staunch
        supporter of voluntary State certainty programs. In January
        2012, Secretary Vilsack signed a memorandum of understanding
        with the Governor of Minnesota and the EPA Administrator,
        announcing the establishment of Minnesota's Agricultural Water
        Quality Certification Program. Other States are pursuing water
        quality certainty programs, including Virginia and Maryland.
        NRCS is also supporting the certainty approach for addressing
        wildlife habitat issues through our Working Lands for Wildlife
        partnership. Farmers, ranchers, and forest managers have
        regulatory predictability and confidence that the conservation
        investments they make on their lands today will not result in
        regulatory penalties and that they can help sustain their
        operations over the long term. Our partnership with the USFWS
        provides landowners with regulatory predictability should the
        target species be listed under the Endangered Species Act at
        some point in the future.
  --Emerging greenhouse gas, water quality, and wildlife markets
        present opportunities for agricultural producers to receive
        compensation for the ecosystem services they generate from
        certain voluntary conservation practices. NRCS is developing
        the science and decision tools to help producers quantify the
        environmental benefits generated by these practices.
    Researchers and programmers at the NRCS National Technology Support
        Center (NTSC) in Portland, Oregon, are working with experts
        from across the Department to create tools that will quantify
        the soil carbon footprint of all agricultural activities at the
        farm gate--from nutrient management to buffer strips. These
        tools will be used by farmers, ranchers, and USDA field staff
        to identify practices that result in greenhouse gas emission
        reductions and carbon sequestration.
    To advance our ability to address water quality concerns, NTSC in
        Portland is working with experts from across the Department to
        develop the Nutrient Tracking Tool (NTT). NTT is a Web-based
        application that allows a farmer to calculate the differences
        in nitrogen, phosphorus, and sediment runoff and yields at the
        field scale when current farming practices are compared to
        conservation practices. This tool will be improved with
        additional investments by NRCS in its new Edge-of-Field Water
        Quality Monitoring program that, combined with instream
        monitoring efforts, will allow us to more accurately measure
        the effects of our conservation practices and strengthen our
        APEX/CEAP modeling efforts. Taken together, these tools will
        help NRCS better understand the benefits of Federal
        conservation investments, while also supporting producer
        efforts to pursue new business opportunities and help ensure
        the integrity of environmental credits used in trading markets.
    The agency is also supporting pilot projects that help create
        market supply for the environmental credits generated by
        farmers and ranchers, with the goal of acclimating producers to
        the general requirements for participation in environmental
        markets. Special Conservation Innovation Grant (CIG)
        opportunities used greenhouse gas projects (fiscal year 2011)
        and water quality trading projects (fiscal year 2012). For both
        of these efforts, NRCS established awardee networks--forums for
        the awardees to convene regularly and share information and
        lessons learned.
  --NRCS is working on thoroughly integrating soil health into the
        agency's policies and programs. Partners and stakeholders,
        recognizing the potential benefits from widespread adoption of
        soil health management systems, benefits in productivity,
        natural resource condition and profitability, are stepping up
        to amplify and support our soil health effort. By focusing more
        attention on soil health and by educating our customers and the
        public about the positive impact healthy soils can have on
        productivity and conservation, we can help the Nation's farmers
        and ranchers feed the world more profitably and sustainably
        while also helping them adapt to extreme weather events and new
        climate patterns.
  --NRCS is comprehensively restructuring the Budget and Financial
        Management, Property and Procurement, and Human Resources
        functions to improve service and lower costs. The vision of the
        future is to enable our employees to service more customers.
        The plan includes functionally aligning the work between the
        field and headquarters staffs and ultimately looks to
        streamline functions, reduce redundancies and realize cost-
        savings.
                        fiscal year 2014 budget
    In the fiscal year 2014 budget, we propose difficult cuts to some
programs, but also strategic investments in other programs to maintain
NRCS's position as the country's leading private lands conservation
agency. We have been working for some time to modernize our business
operations to better serve our customers in a constrained budget
environment. Our goals are to deliver effective on-the-ground
conservation, maintain the flexibility to address emerging resource
issues and protect mission critical strengths including our technical
capacity and our ability to work with local partners in addressing
resource priorities.
    We continue to improve the condition of our natural resources, but
more needs to be done. Through CEAP we have learned that approximately
15 percent of the Nation's nearly 300 million acres of cultivated
cropland needs a high level of treatment in order to reduce impacts on
water quality, while 33 percent needs a moderate level of improvement.
Water quality concerns resulting from the subsurface loss of nitrogen
through natural pathways or tile drains remain a significant resource
concern. Climate change and extreme weather call for better adaptation
strategies for producers.
    We must find ways to maintain strong ties to local experts who can
provide valuable insight into local and regional resource concerns. We
also need to maintain investments in the agency's technical strengths
that have supported NRCS's operations for over 75 years and--more
importantly--that are critical to solving ongoing and emerging
conservation challenges. Our technical products and services benefit
local economies and are necessary to maintain a viable agriculture
sector. They are increasingly used by other sectors of the economy as
well. These products include: the National Resources Inventory (NRI), a
widely respected source for natural resource conditions and trends in
the United States; the National Soils Information System, which
provides practical applications of soils data for many audiences and is
delivered to more than 12,000 individual customers per day; and the
Snow Survey and Water Supply Forecasts which provide reliable, accurate
and timely forecasts of surface water supply to water managers and
water users in the West. NRCS's water supply data are more important
than ever in this time of highly variable precipitation and changing
climate patterns.
    These services will become more valuable as we seek to address
sustainable food production for the world's growing population. In
addition to these information resources, our most essential technical
assistance component is our capable technical field staff who help our
farmers, ranchers, and nonindustrial private forest land owners at the
field level. It is in the field where we are going to address the
natural resource challenges now and into the future.
                               conclusion
    The President's budget enables NRCS to continue fulfilling its
historic commitment to providing assistance to farmers, ranchers and
forest landowners. We will continue to work to find solutions that
allow us to provide efficient, effective service to all our customers.
This budget provides the resources needed to equip NRCS to confront new
challenges such as climate change, manage conservation activities while
maximizing food production, and reduce loss of open space. As we
explore new opportunities for protecting our environment while creating
wealth in rural communities, our conservation efforts will continue to
make a real difference in the health and prosperity of the Nation. NRCS
employees have stepped up time and time again to manage key programs in
an effective manner and we will continue to do so.
    I thank members of the subcommittee for the opportunity to appear,
and would be happy to respond to any questions.

    Senator Pryor. Thank you.
    Ms. Vetter.

                  SUMMARY STATEMENT OF DARCI L. VETTER

    Ms. Vetter. Good morning, Mr. Chairman and Ranking Member
Blunt. I'm pleased to be with you today. The Farm and Foreign
Agricultural Services (FFAS) mission area has reviewed our
programs and developed budget proposals for 2014 that
streamline agency operations, improve efficiency, and reduce
our administrative costs.
    Turning first to the Farm Service Agency, or FSA, our total
request from appropriated resources is $1.6 billion, which
reflects a modest increase of $83 million from the 2013 level
enacted after sequester and rescission are factored in, but a
$179 million decrease from our 2012 enacted level.
    As you know, FSA provides producers with a broad range of
services, from disaster assistance and income support payments,
the conservation reserve program, and our loan programs to
farming families, and the 2014 budget proposes a total program
level of about $5.6 billion, an increase of $1 billion from the
2013 enacted level.
    For the 2012 crop year, the Risk Management Agency (RMA)
provided a record $117 billion in crop protection on a record
282 million acres of farmland. Due to widespread drought,
hurricanes, and other natural disasters, RMA paid out insurance
indemnities in excess of $17 billion to producers. But our
current projections for the 2013 crop year are that total crop
protection will decline to about $82 billion, largely as a
result of lower commodity prices.
    For the Foreign Agricultural Service, we are of course the
lead agency for the Department's international trade activities
and are at the forefront of efforts to expand overseas markets
and to foster global food security. Our 2014 budget is designed
to ensure that FAS has the resources needed to continue these
activities globally.
    For FAS trade expansion and promotion programs, the budget
includes $200 million for the Market Access Program. Our other
trade programs are subject to reauthorization and their
appropriation levels will be set in the next farm bill.
    For the international food assistance programs, the budget
includes discretionary funding of $185 million for McGovern-
Dole and mandatory funding of $255 million for Food for
Progress. For Public Law 480, or title II, no funding is
requested as part of the USDA budget, a decrease of $1.4
billion from the 2013 level. Rather, the budget seeks to reform
our largest food assistance program by providing $1.47 billion
into the accounts of USAID. The goal here is to make our food
assistance more efficient by moving away from strictly U.S.
commodity assistance and including other options, such as local
and regional procurement and cash vouchers. However, the
proposal requires that at least 55 percent of the International
Disaster Assistance funding be used for the purchase and
transport of U.S. agricultural commodities.

                           PREPARED STATEMENT

    Mr. Chairman, thank you for the opportunity to be with you
today. I look forward to your questions.
    [The statement follows:]
                 Prepared Statement of Darci L. Vetter
                 farm and foreign agricultural services
    Mr. Chairman and distinguished members of the subcommittee, I
appreciate the opportunity to appear before you today to present the
2014 budget and program proposals for the Farm and Foreign Agricultural
Services (FFAS) mission area of the Department of Agriculture (USDA).
    My statement will summarize FFAS agencies' budget and program
proposals, after which I will be pleased to respond to your questions.
    Mr. Chairman, the FFAS mission area carries out a diverse array of
programs and services that support a competitive agricultural system
and provide the foundation for prosperity throughout rural America.
Price and income support, farm credit assistance, conservation and
environmental incentives, risk management tools, and trade expansion
and export promotion provide a critical safety net for our producers
and have spurred record exports. The importance of this safety net has
been apparent particularly during the 2012 drought, the worst since the
1930s.
    The 2014 budget reflects a number of legislative proposals that
would reduce the deficit by $38 billion over 10 years compared to
current baseline spending. Several of these proposals affect the
programs of this mission area, and lower the deficit while maintaining
a strong safety net for American agriculture. The savings would result,
in part, from eliminating direct farm payments, decreasing payments to
crop insurance companies and premium subsidies to producers, and
capping the Conservation Reserve Program (CRP) at 25 million acres. The
budget also proposes to extend some disaster assistance programs for
the 2014 through 2018 crops and provides additional assistance to dairy
farmers through expansion of the dairy gross margin insurance program.
    Also reflected in the budget is the Department's Blueprint for
Stronger Service. Since 2009, USDA has undertaken historic measures to
save more than $700 million in taxpayer funds through the streamlining
and modernization of management and operations. These improvements have
allowed the Department to strengthen its mission of building a stronger
middle class and economy in rural America and to continue the success
of American agriculture. The Blueprint for Stronger Service takes a
realistic view of the needs of American agriculture in a challenging
budget climate, and outlines USDA's plans to renew and accelerate the
delivery of services and enhance the customer experience through the
use of up-to-date technologies and business solutions. Ultimately,
these improvements will help producers and rural businesses drive
America's economy and respond to 21st century challenges.
    Today, American agriculture is strong, with record income and
exports over the past 4 years. During that period, our mission area has
worked hard to do more with less, to manage current and future budget
challenges, and to ensure that critical investments in rural America
continue. Specifically, FFAS has taken a variety of steps to cut costs
and improve services, including:
  --Saved $4 billion over 10 years with the negotiation by Risk
        Management Agency (RMA) of a new standard reinsurance agreement
        for the Federal Crop Insurance Program;
  --Cut travel, printing and supplies budgets;
  --Cut burdensome paperwork for farmers and administrative costs for
        RMA and FSA condensing 70 common dates down to 15 for reporting
        acreage and crop data;
  --Consolidated 125 service centers in compliance with the 2008 farm
        bill while improving high quality service from the remaining
        2,100 plus offices;
  --Closed two overseas locations while strengthening trade policy,
        trade promotion, and capacity building efforts in 96
        international locations; and
  --Implemented employee buy-out and early-out authorities. All three
        agencies are operating with fewer staff. Staffing levels in
        Farm Service Agency (FSA) have declined 32 percent since 2003;
        and, during the past decade RMA staff years declined by nearly
        8 percent, while the value of insurance protection has more
        than tripled.
                          farm service agency
    FSA provides producers with a broad range of helpful services, such
as farm ownership and operating loans, disaster assistance, income
support payments, commodity marketing assistance loans, and certain
conservation programs, such as the CRP. FSA administers discretionary
programs as well as mandatory programs that are funded through the
Commodity Credit Corporation (CCC).
Salaries and Expenses
    The 2014 budget requests $1.49 billion for salaries and expenses
from appropriated sources, including credit reform transfers. This
level is adequate to maintain a staffing level of 4,436 Federal staff
years and 7,980 non-Federal staff years.
    We are grateful for the subcommittee's support for FSA's efforts to
upgrade its aging information technology. FSA continues to implement
paperless, Web-based services and more streamlined business
applications for more timely, more accurate, and more reliable service
to farmers and ranchers. This year, FSA expects to reach its target of
76 percent of FSA programs with Web-enabled applications and plans to
boost this to 88 percent in 2014.
    The 2014 budget also recommends $65.5 million in funding for the
continued development and operation of MIDAS (Modernize and Innovate
the Delivery of Agricultural Systems). In 2012, FSA developed the first
version of MIDAS and began testing the system to prepare for
implementation. The first version of the MIDAS system was released in
April 2013 and provides farm records, customer data, and acreage
reporting with GIS mapping capability. For the first time, FSA staff
now has access to this data through a single operating system,
eliminating the need for staff to re-enter data because the systems
were not interlinked. This change alone will speed the application
process, reduce input errors, and improve program compliance and
integrity.
Commodity Credit Corporation
    The farm commodity price and income support programs are financed
through the CCC, a Government corporation for which FSA provides
operating personnel. CCC also provides funding for conservation
programs, including CRP and certain programs administered by the
Natural Resources Conservation Service. CCC also funds some export
promotion and foreign food aid activities administered by FAS. The
commodity programs were mandated by provisions of the 2008 farm bill.
The American Taxpayer Relief Act of 2012 (ATRA) extended the authority
to operate some farm bill programs through 2013.
    Under provisions of current law, CCC outlays are projected to be
$10.1 billion in 2013 and $9.1 billion in 2014, down from the record
high of $32.3 billion in 2000. The reductions since 2000 are due
primarily to reduced commodity program outlays, reflecting higher
prices for most commodities. Commodity prices are expected to remain
relatively robust into 2014 resulting from strong exports and demand
for production of bio-based products and bio-energy. The increase in
CCC outlays from 2012 to 2013 reflects 2008 farm bill changes which
eliminated the option for producers to receive advance direct payments.
This shifted some direct payments that would have been paid in 2012
into 2013.
Conservation Reserve Program
    CRP is a voluntary program that provides annual rental payments and
cost-share assistance to agricultural producers in return for
establishing long-term plant cover on highly erodible and other
environmentally sensitive farmland. CRP assists farm owners and
operators to conserve and improve soil, water, air, and wildlife
resources. Since CRP began in 1985, over 8 billion tons of soil has
been prevented from eroding, with an estimated 308 million tons in 2012
alone. Approximately 200,000 stream miles are protected with CRP
riparian and grass buffers.
    Twenty-seven million acres were enrolled in CRP as of March 2013.
In 2012, FSA held a general sign-up, accepting 3.9 million acres while
contracts expired on 6.5 million acres. The American Taxpayer Relief
Act of 2012, provided USDA the authority to enroll new acres in CRP
through 2013. Contracts on 3.3 million acres will expire at the end of
2013; however, USDA will hold a general sign-up from May 20 to June 14,
2013. FSA also offers ``continuous'' signup, which now makes up about
20 percent of total CRP acreage. The budget baseline projects CRP
enrollment will end at about 27.6 million acres for 2014.
Farm Loan Programs
    FSA plays a critical role for our Nation's agricultural producers
by providing a variety of direct loans and loan guarantees to farm
families who would otherwise be unable to obtain the credit they need
to continue their farming operations. By law, a substantial portion of
the direct and guaranteed loan funds are reserved each year to assist
beginning, limited resource, and socially disadvantaged farmers and
ranchers. In 2012, 66 percent of direct loan funds went to beginning
farmers. To further assist small and socially disadvantaged farmers,
FSA recently implemented a streamlined microloan program, under the
authorities of the direct operating loan program.
    The 2014 budget proposes a total program level of about $5.6
billion. Of this total, over $1.9 billion is requested for direct loans
and about $3.7 billion for guaranteed loans offered in cooperation with
private lenders. These levels reflect credit usage forecasts at the
time the budget was developed. Due to the excellent performance of the
farm loans portfolio, we will be able to provide this level of
assistance with just $92 million in budget authority. With this
funding, we will be able to serve about 34,000 farmers and ranchers.
                         risk management agency
    The Federal crop insurance program represents the primary risk-
mitigation tool available to our Nation's agricultural producers. It
provides risk management tools that are market driven and reflect the
diversity of the agricultural sector; including specialty crops,
organic agriculture, forage and rangeland, as well as traditional row
crops.
    Over its 75-year history, the value of the Federal crop insurance
program to American agriculture has grown. In 2012, the crop insurance
program provided coverage on more than 282 million acres of farm and
ranch land and protected nearly $117 billion of agricultural
production. This represents a 10-fold increase from the $11 billion in
crop insurance protection provided just two decades ago. We currently
project that indemnity payments to producers on their 2012 crops will
be about $17 billion on a premium volume of about $11 billion. Our
current projection for the 2013 crop year shows the value of protection
will decline, to about $82 billion. The decline is based on the
Department's November 2012 estimates of planted acreage and expected
changes in market prices for the major agricultural crops.
    The 2014 budget requests an appropriation of ``such sums as are
necessary'' as mandatory spending for all costs associated with the
program, except for Federal salaries and expenses. This level of
funding will provide the necessary resources to meet program expenses
at whatever level of coverage producers choose to purchase. For
salaries and expenses of the RMA, $71 million in discretionary spending
is proposed to support 455 employees. Compared to 2010's $80 million
appropriation that supported 528 employees, it is a reduction of nearly
11 percent and about 14 percent, respectively.
                      foreign agricultural service
    Agricultural trade significantly contributes to the prosperity of
local and regional economies across rural America through increased
sales and higher commodity prices. USDA estimates that every $1 billion
of agricultural exports generates $1.3 billion in economic activity and
supports 6,800 American jobs throughout the economy. The Department,
with the FFAS mission area in the lead, plays an important role to
remove agricultural trade barriers, develop new markets, and enhance
the competitive position of U.S. agriculture in the world marketplace.
    U.S. farm exports reached $135.8 billion in fiscal year 2012, the
second highest total on record, and the agricultural trade surplus
reached $32.4 billion. The fiscal year 2013 forecast for U.S.
agricultural exports was recently revised to $142 billion--the highest
total on record. In 2013, agricultural exports are expected to
contribute a positive trade balance of $29.5 billion to the Nation's
economy. For U.S. agriculture to continue to thrive, we must continue
to open, expand, and maintain access to foreign markets, where 95
percent of the world's consumers live.
    Fiscal years 2009 through 2012 represent the strongest 4 years in
history for agricultural trade. To achieve this, USDA worked with the
Office of the U.S. Trade Representative, the Department of Commerce,
the White House, Congress and industry stakeholders to gain approval
for new trade agreements with Panama, Columbia, and South Korea. These
agreements will result in an estimated $2.3 billion in additional
agricultural trade each year and support nearly 20,000 domestic jobs.
Since 2009, the United States has also entered into free trade
agreements with Jordan, Oman and Peru; and an organic equivalency
agreement with the European Union. This progress will be continued
under President Obama's National Export Initiative, which has set a
goal to double U.S. exports by the end of 2014.
    Today, Foreign Agricultural Service (FAS) trade negotiators are
involved in two major negotiations: the Trans-Pacific Partnership (TPP)
and the Transatlantic Trade and Investment Partnership (TTIP). The TPP
is an opportunity to shape a high-standard trade agreement in a region
that represents more than 40 percent of global trade. Key objectives in
the TTIP negotiations are to eliminate duties on agricultural goods and
eliminate or reduce trade distorting non-tariff barriers between the
United States and the European Union (EU), currently our fifth largest
agricultural export market. Expanding markets abroad creates more jobs
and boosts the bottom line for companies all along the supply chain.
    As we work to open new and maintain existing markets overseas, we
face many challenges and barriers that must be addressed. In the past
year, FAS and has been instrumental in resolving numerous sanitary,
phytosanitary and technical barriers to trade. USDA efforts to remove
trade barriers led to billions of dollars in additional U.S. exports
around the world in fiscal year 2012. We've expanded beef market access
with Japan, Mexico, and Hong Kong. We've removed barriers in the Korean
market to U.S. cherries--U.S. cherry exports to Korea for the 2012
season totaled nearly $74 million, compared to $39 million in the
previous year. We have also participated in negotiations with the
European Union that resulted in the elimination of its ban on the use
of lactic acid as a pathogen reduction treatment on beef and
discussions that led authorities in Taiwan to adopt and implement a
maximum residue limit for ractopamine in beef. Monthly shipments of
U.S. beef to Taiwan more than doubled from $2 million to $5 million per
month and remain at record levels.
    The FFAS mission area also makes a significant contribution to the
Department's strategic goal of enhancing global food security. Through
foreign food assistance, technical assistance, training, and capacity
building activities, we are working closely with other U.S. departments
and agencies to address global food insecurity. USDA is well positioned
to encourage the adoption of new technologies and production practices
that can help increase the availability of food and improve its
marketing and distribution.
Salaries and Expenses
    FAS is the lead agency for the Department's international
activities and is in the forefront of our efforts to expand and
preserve overseas markets and foster global food security. FAS carries
out its activities through a network of 96 overseas offices and its
headquarters staff here in Washington. FAS overseas staff represents
American agricultural interests world-wide.
    The 2014 budget is designed to ensure that FAS has the resources
needed to continue to represent and advocate on behalf of American
agriculture on a global basis and to create new market opportunities
overseas. The budget provides a program level of $185 million. This
level of funding is expected to be sufficient to maintain the agency's
overseas presence at current levels. The budget reflects ongoing cost
avoidance in headquarters through the continuation of a hiring freeze
and further reductions to travel and training.
    In 2012, under the Blueprint for Stronger Service, FAS closed two
overseas offices. The 2014 budget provides an increase of $1.5 million
for higher operating costs at the agency's overseas posts, including
increased payments to the State Department for administrative and
security services provided at overseas posts. FAS has no administrative
staff overseas and, therefore, relies on the State Department for those
services.
International Food Assistance
    For the McGovern-Dole International Food for Education and Child
Nutrition Program, the 2014 budget provides funding of $185 million.
The requested level is expected to assist as many as 4.3 million women
and children during 2014. About 34 million children throughout the
world have now received benefits from the McGovern-Dole program and its
predecessor, the Global Food for Education Initiative.
    The 2014 budget proposes to replace $1.47 billion in funding for
Public Law 480 title II food assistance with an equivalent amount in
U.S. Agency for International Development accounts, including
International Disaster Assistance (IDA). The proposed reform replaces
title II funding with robust levels of flexible emergency food aid and
related development funding, with the goal of making food aid more
timely and cost-effective. The reform will improve program efficiencies
and performance by shifting resources to programs that will allow
greater ability to use the right tool at the right time for responding
to emergencies and chronic food insecurity. The tools include
interventions such as local and regional purchase, cash vouchers and
transfers, and cash for work programs. As part of the reform proposal,
appropriations language is included requiring that at least 55 percent
of the requested fiscal year 2014 IDA emergency food aid funding be
used for the purchase and transport of U.S. agricultural commodities.
    Food assistance will also be provided through the Food for Progress
program that FAS administers. The 2014 budget includes an estimated
program level of $255 million for this CCC-funded program, which
supports the adoption of free enterprise reforms in the agricultural
economies of developing countries.
Export Promotion and Market Development Activities
    The CCC export credit guarantee programs (GSM-102 and Facilities
Guarantee) provide payment guarantees for the commercial financing of
U.S. agricultural exports. The guarantees facilitate sales to buyers in
countries where credit is necessary to maintain or increase U.S. sales.
For 2014, the budget includes a program level of $5.5 billion for the
CCC export credit guarantee programs.
    For the foreign market development programs, the budget includes a
program level of $200 million for the Market Access Program. The
remaining programs, including the Emerging Markets Program, Foreign
Market Development Program, and Technical Assistance for Specialty
Crops Program are subject to reauthorization and funding levels are
expected to be established in the next farm bill.
    Mr. Chairman, this concludes my statement. Thank you for the
opportunity to present our 2014 budget and program proposals. I would
be pleased to answer any questions you and other members of the
subcommittee may have.

    Senator Pryor. Thank you.
    Let me, if I may, start with you, Ms. Vetter.
    Senator Blunt. Does Mr. Young have a statement?
    Senator Pryor. Mr. Young, you don't have a statement,
right?
    Mr. Young. Right.
    Senator Pryor. Senator Blunt just wanted to make sure you
didn't want to speak your piece before we got under way here.

                             TRADE BARRIERS

    Ms. Vetter, let me ask you, if I may. As you know, you're
well aware U.S. agricultural exports are at record levels, and
that's great news. That's great news for the country, it's
great news for rural America, great news for our farmers. The
question is, what are the biggest challenges we face to ensure
the competitiveness of U.S. agricultural products as we go
forward?
    Ms. Vetter. Thank you, Mr. Chairman. We face, frankly, a
variety of trade barriers, but as global trade liberalization
has advanced those tend to be less on the tariff side and
instead tend to be more on sanitary and phytosanitary, or SPS,
barriers to our products. In particular, we've seen a number of
challenges to the export of our meat and poultry products over
the years and are particularly focused now on key barriers with
Russia and China, two of our largest markets and with great
expansion potential.
    Specifically, we're looking at barriers that have been
imposed on the use of the veterinary drug ractopamine. We
continue to push other governments to adopt the international
standard for that and we'll continue to do so and to work
closely with industry on ways that we may reopen the Russian
market in particular.
    We have seen some real progress on the bovine spongiform
encephalopathy (BSE) front, where a number of markets have
remained closed or partially closed to U.S. beef and beef
products. Hong Kong did significant market opening earlier this
year. Japan is now accepting our beef products under 30 months
of age, and we continue discussions with Mexico as well, who
has opened to all of our products under 30 months at this time.
    Senator Pryor. Thank you.

                             ELECTRIC LOANS

    Mr. O'Brien, let me move to you if I can. Your budget
proposes significant restrictions on the ability for rural
electric cooperatives to use the electric loan program for
fossil fuel-related activities. I hear a lot of concern from
the Arkansas electric coops, and my guess is you hear that from
around the various States, because as it turns out the
cooperatives tend to use a lot of fossil fuels in electricity
generation.
    So approximately--tell us how your proposal would change
things and give us a sense of how much of your loan program
this year will be used to support renewable fuel activities
versus more traditional activities?
    Mr. O'Brien. Thank you for that question, chairman. You're
right, this is certainly something we've heard from a number of
cooperatives across the country. The proposal I think
recognizes the need to incentivize a change within the energy
mix for rural America. We have seen this year--we're working on
an 80-megawatt loan right now that does envision using
renewable energy, and we're working with industry and with the
coops on cultivating some other loans.
    The proposal itself would utilize a $3 billion program
level for projects that would utilize renewable energy. The
proposal also envisions up to $1 billion of financing for
environmental upgrades for fossil fuel, fossil fuel plants.
    Senator Pryor. So give me those numbers again?
    Mr. O'Brien. It's $3 billion for projects that utilize
renewable energy, program level of course, and then $1
billion--and that's a floor. I should make that clear. It is a
little bit confusing. The $3 billion is a floor. If we have
greater demand than that, we can utilize the total $4 billion
program level.
    The $1 billion is a cap and that cap would relate to
improvements, environmental improvements for existing plants.

                        PLANT MATERIALS CENTERS

    Senator Pryor. Ms. Mills, let me follow up. Let me ask you
a question and then I want to turn it over to Senator Blunt. As
you know, there are 27 Plant Materials Centers (PMCs) around
the country. They do all kinds of different things. Of course,
we have one in Booneville, Arkansas, which I'm kind of partial
to, and I'm sure other members have them in their States.
There's actually broad support for these in Congress.
    The budget request, though, has a decrease of nearly $1
million for these PMCs. Is USDA planning to close or
consolidate any of those centers?
    Ms. Mills. Thank you, Mr. Chair. I agree with you that
these Plant Materials Centers are really important to helping
support the mission of NRCS in testing and providing important
vegetative and other plants to adapt to changing climate. What
has happened since 2011 is we've seen a 22-percent cut in the
Plant Materials Center budgets. So right now we are going
through a process of considering how we're going to absorb
those cuts. We are doing that very carefully, with an
underlying commitment to making certain that we can continue to
service all regions of the country as we go forward.
    We're in those beginning stages of making those
determinations, but we'd be very happy to work with you and
other members of the subcommittee as those decisions are being
made.
    Senator Pryor. That would be great. But right now, are you
saying there's no plans to close those or you don't know yet?
    Ms. Mills. We don't know yet. We're still going through a
deliberative process at this point. But we are committed to
ensuring that, whatever path we go down, we are going to
continue to ensure that our plant material service centers are
going to be able to service those regions and those communities
that depend on them.
    Senator Pryor. Senator Blunt.

                           WATERSHED PROJECTS

    Senator Blunt. Thank you, chairman.
    Secretary Mills, on the Watershed Protection and Flood
Prevention Act there's a program, Public Law 566, that we
haven't funded in 3 years and there's no funding here for that
program, though I know there are at least two Missouri projects
and I assume a few others that are in the middle of getting
done what they wanted to get done and had anticipated that this
would be available.
    Do you see any future for this program?
    Ms. Mills. Ranking Member Blunt, yes, actually I'm familiar
with those two projects and some of the other projects that
have been in the process of being developed. I know that NRCS
helped in the early stages to develop plans for the two
projects.
    Unfortunately, as you mentioned, the program has not been
funded. So that creates one of those challenges that we're
facing with this program and other programs--very tough budget
challenges we're facing in the tough decisions we have to make.
That said, we would be happy to come up and visit with you to
talk about these projects if you would like.
    Senator Blunt. Well, that would be helpful. I think--and
Mr. Young, you might know this, or Ms. Mills, you might. Did we
put money in the Senate bill last year for these programs and
then you had to use it because of the overall cut? I think it
was in the Senate bill. I don't know if it was in the final
bill.
    Ms. Mills. Mr. Young may be aware of that. I would defer to
him, or we could certainly get back to you.
    Senator Blunt. There was a little money in the conference
report that we approved, but I think that account has been
decided you needed that money worse in other places.
    Mr. Young. Well, yes, sir. Actually, Mr. Blunt, it was
included within the rural development area.
    Senator Blunt. Right.
    Mr. Young. And I believe that the funding level, the
program level, was $40 million.
    Senator Blunt. $40 million. But it's no longer--it had to
be used for some other purpose, or is it still there?
    Mr. Young. It's still there.
    Mr. O'Brien. Actually, it is still there and we are working
with some applicants right now, and we'd be happy to discuss
sort of where we are in the process and discuss with your staff
or with you.
    Senator Blunt. That would be great, and I'd be very
interested about whether those applicants would be people that
already you've worked with before, that are well on the way.
Approving a new project here, a brand new project, I don't
think would be the right thing to do, and that's not just--
because there are a handful of these that really, some of them
have had local levies, local votes to provide the local money.
Really, I'd like to talk about that.

                          CENTER OF EXCELLENCE

    Mr. O'Brien, the big service center for your system is in
St. Louis. I think I was out there with the Secretary not too--
a couple of years ago when that was expanded. You're working to
make that a center for excellence, as I understand it?
    Mr. O'Brien. The centralized service center in St. Louis,
as you say, it's basically our back office. It's our operation
that maintains the integrity primarily of that $185 billion
portfolio that you mentioned. We do see that as a great asset
for the Federal Government and we do envision that it could do
more for the Federal Government.
    In this year, because of the reduction in staff we've
really focused on making sure that the operations at CSC are
responding to our burgeoning portfolio and particularly the
single family guaranteed loan program, and we do look forward
to continuing to examine the possibilities. It is a resource
question where we feel like we really need to make sure that we
have a very good handle on the current responsibilities we have
to protect the integrity of the portfolio and look from there.
    Senator Blunt. And your view is that you could use that
facility and the structure you have in place there for other
loan service in the Federal Government beyond Rural
Development?
    Mr. O'Brien. We think that there's some opportunity there.
As you very well know, there are different operations in
locations that the Federal Government, that USDA uses. For
instance, in New Orleans there's a group that does a lot of
back office work for different agencies even outside of USDA.
We think that we could, with the right resources, we could have
the expertise and capacity to service other parts of the
Federal Government. But at this point we're really focused on
sort of making sure that we can take care of the big portfolio
that's coming through.

                           TRADE DISCUSSIONS

    Senator Blunt. Ms. Vetter, in the trade discussions that
are out there, what do you think are going to be the biggest
challenges for agriculture in those discussions? What you
mentioned earlier, the nontariff barriers or the standards?
    Ms. Vetter. Those of course will be at the top of the list,
although the market access discussion and making sure that we
get good access for the full range of U.S. agriculture products
will be challenging. But we note that both in the Trans-Pacific
Partnership negotiations and in our negotiations that we are
launching with the European Union (EU) there is a commitment to
making these a comprehensive agreement.
    I think for the Trans-Pacific Partnership we are in fact
putting more emphasis on regulatory matters and making sure
that our partners in that agreement maintain a high degree of
transparency and meet their international commitments in
acceptance of our products on that level. I would note that in
this agreement, the countries that have signed on have again
committed themselves to a comprehensive structure. Part of the
reason it's so important that we engage in the Trans-Pacific
Partnership is that there are a number of other sort of trade
agreements of convenience throughout that region where
countries have sort of left out hard areas like agriculture. So
getting a number of the countries in that very dynamic region
to sign onto comprehensive talks, I think, is important in and
of itself.
    In the European Union (EU), I know you're aware that we
face a number of nontariff barriers, particularly in
biotechnology and in beef hormones, other areas, that really
restrict or have restricted our growth in trade. We're going to
have to find a way to look at how we normalize trade in those
areas under this agreement. Frankly, I don't expect that we
will change the EU's whole approach to regulation, but I think
we can take a hard look at how they apply those measures and
find a way that makes their trading environment a lot more
predictable and open to U.S. products.

                       RACTOPAMINE TRADE BARRIER

    Senator Blunt. You mentioned with ractopamine that our view
is that both China and Russia are not looking at the
international standard, which we meet?
    Ms. Vetter. That's right. Russia has in fact restricted our
trade or stopped our trade in our meat and turkey products
based on ractopamine. We continue to push at the Government
level and note with them that we think in fact those measures
are inconsistent with their international trade obligations. We
are also working with our beef and pork industries to look at a
ractopamine-free program that those in the industry who could
meet--that could use to access the Russian market. But we will
not stop pushing them for a removal of the barrier.
    China on March 1 imposed new restrictions that require a
testing result to be sent to China showing the lack of
ractopamine in product. But they have not asked for U.S.
Government assistance or assurance in this product and we don't
actually see it affecting trade at this time. But we continue
to consult with China about the safety of ractopamine and
encourage them to apply the international standard.
    Senator Blunt. I know you're very familiar with it. Am I
right in remembering that, Taiwan, have they decided that
ractopamine in beef products is acceptable, but not yet in pork
products? And what could the rationale for that be?
    Ms. Vetter. Well, you are correct that we're pleased that,
after the Codex adopted that international standard for
ractopamine this summer, Taiwan did move forward and implement
that standard for beef, but not for pork. Frankly, that's
largely due to political difficulties with their own pork
industry. We continue to push them to adopt that standard for
pork as well and provide them with a lot of safety information
to provide greater assurance about the safety of our products.
But it's a difficult issue for them, and we will continue
pushing them to resolve it.
    At the Trade and Investment Framework Agreement, the TIFA
agreement we have with Taiwan, this was a key agenda item for
the United States that we raised with them, and we'll continue
to do so.

              CHINA POLICY ON DEHYDRATED POULTRY PRODUCTS

    Senator Blunt. On one specific instance that I think we
told you yesterday I was going to ask about, there's a company
in Springfield, Missouri, International Dehydrated Foods, that
we tried to help, because last year China changed its policy on
importing dehydrated poultry products, in the case of this
company after they already had product en route, and it just
sat there for quite a while.
    Particularly in the poultry industry, where Senator Pryor
and I live, the ability to send some of that product out of the
country and even in a dehydrated fashion really matters. I
think we wrote you a letter, we wrote a letter, or you wrote a
letter to Ambassador Locke about this issue in October 2012. I
haven't seen a response to that letter from the Ambassador to
you, and I hope you're continuing to try to resolve this
favorably.
    My guess is that the product went somewhere and may or may
not have been destroyed, but I do know that the company lost
the value and the control of the product. Do you have any new
information on that?
    Ms. Vetter. At this point I do not. I was in China in March
and our Minister-Counselor in Beijing, Scott Sindelar, briefed
me on this problem. He had had some recent discussions and had
raised this issue with Chinese officials. I think we are
frankly trying to ascertain why the change in policy occurred
with China and to try to figure out exactly what their food
safety concerns might be with that product and provide them
with the information to resolve that.
    That has been a bit more difficult than I think we thought
might be the case, but we continue to work on it. It is a
priority and we will keep you and your team updated on our
progress on this issue.
    Senator Blunt. I think where you have trading partners that
change the rules after things have been shipped and then
wouldn't even let this be shipped back--it was there and it sat
there until it lost value--is a problem.
    Chairman, I have a couple of other questions, but go ahead
if you have some more.
    Senator Pryor. Thank you.

                 RURAL BUSINESS AND COOPERATIVE GRANTS

    Mr. O'Brien, let me start with you if I may. In the world
of economic development, your budget proposes consolidating
five programs into one. Let me say I have some concerns about
that. So let me ask kind of a two-part question. First, this is
a new program, new approach, and wouldn't it be better to have
that authorized in the farm bill? That would be my first
question. Since that's on the floor this week, it makes sense
to do that.
    My second question would be: If this does occur, how do you
ensure that these disparate needs, because these five existing
programs are pretty different and serve different needs out
there, how do you ensure that all those needs get met in this
one big program?
    Mr. O'Brien. Mr. Chairman, thank you for that question.
Certainly there are a number of very important considerations
and needs that these grant programs serve. In fact, just
earlier this week I had an opportunity to spend a couple days
in northwest Arkansas, and I saw some of the fruits of these
grants. We utilize a number of these grants within the Strike
Force arena in Arkansas in partnership with Heifer in a great
farmers market project in Newport.
    To get right to your questions, certainly the authorizers
are considering some similar strategies to consolidate and
streamline the grant programs. Actually, it is in the
underlying bill that's being considered right now, some of
these ideas.
    I think the reason why we thought it was appropriate within
the fiscal year 2014 budget is that the way we envisioned this
approach is that it would utilize current authorities. There's
no new authorities. We'd simply consolidate and streamline the
authorities into one grant program, for two very simple
reasons. One is to streamline. We have five different grants,
five different application periods, five different basically
work flows that our State and national staff need to work
through.
    I think to your most important question, how do we assure
that the different areas and the different needs are met, we
think that with the proper discretion that we'd be able to
craft a program that could continue to focus the grants on
those in most need, to make sure to serve the cooperative
community, and we'd be able to do that through prioritization
and making sure we make clear that the different entities are
eligible for the program.
    Senator Pryor. I'd like to just follow up on that after the
hearing at some point, because all that's important. I just
have concerns there.

                        WATER AND WASTE PROGRAM

    Let me also stay with you, Mr. O'Brien, if I can. I want to
talk to you about the USDA's water and waste loan/grant
programs. As you know, these are very popular, heavily utilized
programs. To me, what I'm seeing in the administration's
proposal, it kind of falls into the category of those who need
it the most can afford it the least.
    So when I look at your numbers I see that the budget cuts
the grant level by about $110 million, while the loan level is
increased by about $275 million.
    Mr. O'Brien. Right.
    Senator Pryor. So I guess again a two-part question here.
What caused the administration to do such a big change in this
popular program and what's the administration's analysis about
how that will change the effectiveness of the program?
    Mr. O'Brien. Thank you for that question. It's a
terrifically important program for small communities dealing
with their water and waste water issues. To your first
question, what caused the change, three things. One, simply the
tough budget environment that we all find ourselves in.
    Number two, historically low interest rates make it
possible for some small communities that otherwise with more
traditional interest rates wouldn't be able to access some
dollars and have a sustainable financing, that we think they'll
be able to do it. In fact, the cohort, the lowest interest
rates for the poorest communities, is down to about 2\1/8\
percent right now, so it's some nice low interest rates.
    The third thing is the subsidy score for the direct loan
component of the water program went to zero this year, which
means that we could grow that program level with no budget
authority. So we grew that significantly, as you mentioned. We
think that, given the fiscal situation we have, it is the right
mix.
    You asked about what type of analysis. What we do know is
that in fiscal year 2012 over 74 percent of the dollars were
loan dollars. So the primary financing mechanism currently is
already loan dollars. In that year 80 percent of those dollars
went to communities of 5,000 or fewer and 55 percent went to
communities of 1,500 or fewer. So we know from the past that
we'll be able to continue to serve communities in the future.
    I think again it's these historically low interest rates
that make this possible to work in 2014. In another year there
might have to be another mix. So thank you for that question.
    Senator Pryor. Senator Blunt.

                       RENTAL ASSISTANCE PROGRAM

    Senator Blunt. Mr. O'Brien, on the rural housing rental
assistance, what are you doing with that under the current
budget and will there be any impact to people in that program
between now and September 30? If you want to go beyond that,
what impact then do we have based on what we do this year on
next year?
    Mr. O'Brien. Right. As you know, Senator, it's an issue
that's been highlighted by the Secretary when he was here
before you recently. It is an area where we're very concerned
on the impact of sequester and the rescission from the final
fiscal year 2013 appropriations bill. There is an impact, but I
think what I can assure you is that, to the tenants who live in
those multifamily properties, we do not envision a negative
impact on the tenants in the near term.
    There will be some--what we need to do with the owners of
those properties is--and we've begun to alert people. We sent a
letter out over 1 month ago to all the owners to let them know
that as we work through the funds, which frankly the funds are
not sufficient to meet all the renewals that we project this
year--we're short maybe around $65 million--that we will work
with those owners that we do not have the resources to do the
renewal in a number of workout authorities that we have, such
as deferring loan payments, extending the loan, allowing them
to use their reserve account.
    Come about in June next month, certainly in July, we're
going to know exactly which owners are going to be affected and
we're going to start working with each of those to make sure
that they can get through this fiscal year and be able to renew
their contract and keep their properties up.
    Fiscal year 2014, the proposed number that we provided you
in the budget was based on basically a situation before
sequester and before the rescission. So in 2014 some of the
numbers, basically that backlog, if you will----
    Senator Blunt. Things that don't get paid in September,
that get paid in October?
    Mr. O'Brien. Precisely. We plan to--very early in October,
we're going to renew those contracts, and it will cause sort of
a cascading effect into the next fiscal year. We're working
through exactly what that number is. We've implemented a number
of cost-saving strategies this year, so I don't think--in fact,
I'm sure it's not going to be that $65 million. We didn't push
the whole $65 million into next year. It's a number somewhat
smaller than that. And we'd be happy to work with your staff on
exactly kind of what we know and what our best estimate is
right now.

                             ELECTRIC LOANS

    Senator Blunt. On the rural electric coop effort that
Senator Pryor talked to you about, can electric cooperatives
under the proposal that the President made in this budget,
would they be able to finance distribution or transmission
projects?
    Mr. O'Brien. They would for those distribution projects
that are related to a renewable energy effort. So it's a
qualified yes, I think.
    Senator Blunt. Since 100 percent of the $4 billion could go
to renewables, there'd be nothing for anything but renewables
in that $4 billion?
    Mr. O'Brien. There's up to $1 billion for environmental
upgrades.
    Senator Blunt. You said unless there was more than $3
billion in requests on the other column.
    Mr. O'Brien. Yes. I think exactly it probably would be a
timing question. But there is up to $1 billion allowed for
environmental improvements, and then at least $3 billion
allowed for projects related to renewable energy.
    Senator Blunt. Well, I don't agree with that, but we'll
talk about that more. I think this is a big mistake for these
cooperatives. I assume if it's a one-time mistake that they'll
all survive and continue to do the best they can to provide
electricity at the level that they can provide it, at the cost
that people can afford to pay for it.
    But every time we make rules and regulations that are
either impossible to comply with or you do have to comply and
it's too expensive, the poorest customers are the customers
that are most dramatically impacted by this. The people that
get the last better windows, the last people to get the better
windows, the last people to get the energy efficient
refrigerator, the last person to get more insulation in the
ceiling, they're the people impacted the most.
    When you take a program like this that's been well used--I
mean, these cooperatives--72 percent of the geography of the
country is served by rural electric coops. I think it's a
mistaken policy, but we can talk about it more and look at it
more. Putting all the eggs in a renewable basket I believe is a
mistake.

                 EMERGENCY WATERSHED PROTECTION PROGRAM

    I had one question, Ms. Mills, on water. We use a lot of it
in the Mississippi River. I think of the 13 States that use one
of those projects, we would be 2 of them. Was there money
available in any of the disaster relief that let's you use that
program more effectively?
    Ms. Mills. Sir, we've got--certainly we've got dollars that
are allocated for Hurricane Sandy, I believe it's $171 million
after the rescission. We have to work our way through that
process. In terms of whether or not there's a balance left over
after that to repurpose, we will certainly take a hard look at
that later.
    We have prepositioned money for EWP funds in the Upper
Midwest and the Mississippi River Basin in the event that
communities need relief assistance there.
    Senator Blunt. Okay.
    Ms. Mills. I'd be happy to follow up with your staff on
this question.

                   MISSISSIPPI RIVER BASIN INITIATIVE

    Senator Blunt. Well, what about the Healthy Watershed
Initiatives in the Mississippi River?
    Ms. Mills. Yes. The Mississippi River Basin Healthy
Watershed Initiative (MRBI) is one of our most significant and
very successful initiatives. The 13 States you mentioned, where
we are using our science and our partnerships--we have roughly
an average of nine partners per priority watershed there. In
States like yours and Arkansas--in fact, Arkansas and Missouri
are the two highest receiving States of MRBI dollars, and
that's a testament to, frankly, the quality of the projects
that are being submitted and the interest in both farmers and
ranchers and the strong partner base there.
    So we're very excited. We're in our fourth year in the
Mississippi River Basin Initiative and it's been extremely
effective at putting conservation dollars on the ground in
those watersheds, where we're going to see significant water
quality improvement.
    Senator Blunt. Okay.
    Chairman, I may have some other questions to submit later,
but that's what I have today.
    Senator Pryor. Thank you, Senator Blunt.
    I too have--actually, I have a long question. I'm just
going to submit it for the record, but I'll just tell you about
it. Basically, I know what you've gone through with
sequestration so far and my guess is you've hit a lot of low-
hanging fruit. I mean, it hasn't been easy, but it's going to
be easier this year than going forward.
    The question is really for each one of you, kind of in your
subject areas, what sequestration looks like in the future
years. So I'll ask that question in writing because that's a
long, detailed answer. But I'd appreciate that.
    So let me just say thank you all for being here. I'm sorry
for the hurried-up nature of the hearing today. They've called
the vote and we're about to walk over and do that.

                     ADDITIONAL COMMITTEE QUESTIONS

    For the members of the subcommittee, any questions that
you'd like to submit for that hearing record should be
submitted within 1 week, which is Thursday, May 30. We would
appreciate USDA's responses within--I'd love to say within 2 to
3 weeks after that, but certainly within 4 weeks of that time.
    [The following questions were not asked at the hearing, but
were submitted to the Departments for response subsequent to
the hearing:]
                  Questions Submitted to Doug O'Brien
              Questions Submitted by Senator Mark L. Pryor
                  changes to the electric loan program
    Question. Mr. O'Brien, this budget proposes significant
restrictions on the ability of rural electric cooperatives to use the
electric loan program for fossil fuel-related activities. Electric
cooperatives in Arkansas are concerned that they would not be able to
build electric generation with Rural Utilities Service (RUS) loan funds
unless it is in conjunction with an intermittent renewable project.
    Will you please summarize the restrictions this proposed language
would place on eligible program activities?
    Answer. The President's budget for fiscal year 2014 proposes a
total of $4 billion for the principal amount of new guaranteed rural
electric loans under section 306 of the Rural Electrification Act of
1936 (7 U.S.C. 936). The proposal would provide $3 billion to be used
for: (1) renewable energy projects; (2) new or existing fossil-fueled
electric generating plants with carbon sequestration systems; or (3)
new or existing fossil-fuel electric peaking units that operate in
conjunction with generating plants that produce electricity from solar,
wind, or other intermittent sources of energy. The proposal also would
make available up to $1 billion for environmental improvements to
fossil-fuel electric generating plants to reduce emission of air
pollutants including greenhouse gases.
    This proposal recognizes the need to incentivize a changing energy
mix in rural America and supports the administration's energy policy.
The proposal would allow lending for transmission and distribution
system investments associated with renewable generation, environmental
improvements and eligible fossil-fuel generation projects.
    Question. Approximately how much of your loan program this year
will be used to support renewable fuel activities? Do you expect to see
$4 billion in demand for renewables in fiscal year 2014?
    Answer. At present we are reviewing about 100 megawatts of proposed
new renewable electric generation projects that may go to the loan
committee next year. We are continuing to work with electric
cooperatives, the industry, and potential new borrowers to cultivate
additional renewable generation loan applications for fiscal year 2014.
    Question. Isn't it true that rural electric systems rely more
heavily on fossil fuels than urban systems do?
    Answer. Rural electric systems serve almost 75 percent of the
Nation's land mass and are concentrated in regions that are more
dependent on fossil-fired generation than more urbanized areas. Like
all prudent utility systems, rural cooperative borrowers strive to
maintain a balanced and diverse portfolio of fossil and non-fossil
generation resources and demand side resources to meet the needs of
their customers for safe, reliable, and affordable electricity.
    Question. This proposal concerns me, because it seems like it may
create a regional bias against financing electricity improvements in
States like Arkansas, where wind and solar development are not as
feasible. I also have concerns about loans to distribution co-ops under
this proposal. Rural Utilities Service (RUS) has a 75-year partnership
with the co-ops and I hope that partnership continues. Without this
partnership I expect to see the costs for these projects to rise which
may result in higher electricity costs.
    Will you work with me and my staff to find a solution to this so we
can hopefully avoid increased electricity costs?
    Answer. We look forward to working with you to continue to provide
the benefits of our rural electrification loan program and other Rural
Development programs to help keep energy affordable for rural homes and
businesses.
                               broadband
    Question. Mr. O'Brien, rural broadband providers have relied on
access to the Universal Services Fund to be able to extend broadband
services to remote rural areas.
    Please bring us up to date on the status of Federal Communications
Commission changes in rural providers' access to the Universal Services
Fund.
    Answer. We remain committed to working with the Federal
Communications Commission (FCC) to ensure that the promise of section
254 of the Telecommunications Act of 1996 be fully realized.
Sufficient, predictable, and specific Universal Services Fund (USF) and
Inter-Carrier Compensation (ICC) mechanisms can drive investment,
improve the quality of life, create jobs, and increase economic
opportunities in rural America. According to the FCC's Eighth Broadband
Progress Report, nearly one-fourth of the rural population lacks access
to high-speed broadband. Yet, demand for RUS telecommunication loan
funds dropped to roughly 37 percent of the total amount of loan funds
appropriated by Congress in fiscal year 2012. Current and prospective
RUS borrowers have communicated their hesitation to increase their
outstanding debt and move forward with planned construction due to the
recently implemented reductions in USF support and ICC payments.
    Question. What do these changes mean in terms of the credit quality
of your existing broadband loan portfolio and the demand for new
broadband loans in the future?
    Answer. While the USF reforms continue to unfold, RUS is open for
business. We want to press forward and continue the momentum of the
American Recovery and Reinvestment Act of 2009. As a lender we will
have to make conservative assumptions about revenue streams until the
USF environment becomes more certain. We continue to focus our
attention on addressing the challenges, namely cost, density, distance
and economic hardship in delivering affordable, high-capacity bandwidth
to the most rural and remote portions of our Nation. Expanding
broadband connectivity, increasing capacity, and extending service to
the millions of rural communities still lacking affordable access
remain our primary objectives.
               water and waste disposal loans and grants
    Question. Mr. O'Brien, you are aware that USDA's water and waste
loan/grant program is one of the most popular programs in your
portfolio. This program has a long history of successfully bringing
clean water and sanitary waste disposal systems to remote rural
communities. Projects are generally financed by a combination of loans
and grants, with poorer rural communities receiving a larger grant
share.
    However, this budget cuts the grant level by about $110 million,
while increasing the loan level by about $275 million. As a result,
rural communities will be forced to take on more loans to finance
needed clean water and sanitary waste disposal projects.
    Question. Mr. O'Brien, what caused the administration to propose
such a large change to this successful program?
    Answer. As a result of low interest rate and historically low
levels of defaults, the direct loans can be provided at a negative
subsidy rate and do not require a request for budget authority. The
current low interest rates also mean that more communities can afford
to service higher levels of debt than before, reducing the need for
grant funds. Accordingly, grant funding is reduced by about $131
million. Collectively, the 2014 budget provides a total program level
of $1.5 billion. Rural Development is confident that this level of
funding in the current interest rate environment will allow us to
continue to serve small and economically challenged rural communities
near historical levels.
    Question. Can you describe the analysis used by the Department in
determining that this change would not harm the program?
    Answer. The 2014 budget includes over $1.2 billion in direct loans
and $304 million in grants for water and waste disposal projects, for a
total program level of $1.5 billion. The majority of the funds issued
through the Water and Waste Disposal Loan and Grant program are loans.
In most years, the program maintains a 70-percent loan to 30-percent
grant ratio, but as noted before, current low interest rates mean that
more communities can afford to service higher levels of debt than
before, reducing the need for grant funds. So we expect to provide a
similar amount of assistance with more loans and less grants. In
addition, through a scoring system and strict underwriting the program
has been successful in ensuring that small rural communities have
access to funding. In 2012, 55 percent of the projects funded served
populations of 1,500 or more and 70 percent of the projects funded were
to serve populations of 2,500 or fewer.
    Question. What assurances can you provide that remote rural
communities will continue to receive the assistance necessary to obtain
safe, clean water, and sanitary waste disposal?
    Answer. The low interest rates will make loans more affordable for
many communities. This will allow Rural Development to ensure that
grants are reserved for the smallest, most economically challenged
communities. We will also make use of our Special Evaluation Assistance
for Rural Communities and Households (SEARCH) program, to provide
grants for predevelopment, planning, design assistance and technical
assistance for financially distressed communities with 2,500 or fewer
residents. In addition, we will continue to partner with other State
and local programs to fund projects requiring grants. In cases where
sufficient grant funding for a project is not available, we will work
with communities to consider other alternatives, such as phasing of
projects. About 2.2 million rural residents would benefit from new or
improved water facilities alone in 2014.
            rural jobs and innovation accelerator challenge
    Question. In August, the President announced $9 million for winners
of the Rural Jobs and Innovation Accelerator Challenge. The goal of the
initiative is to promote job creation and community and economic
development in rural regions. The Department of Commerce, USDA, the
Appalachian Regional Commission, and the Delta Regional Authority all
contributed funding to this initiative.
    Will you please explain exactly what this initiative does?
    Answer. The Rural Jobs and Innovation Accelerator Challenge is a
national multi-agency initiative to support rural partnerships that are
critical in attracting new businesses, quality jobs and improving the
economic climate and sustainability of rural communities. By leveraging
local assets, the selected industry clusters and partnerships can do
even more to help entrepreneurs and small businesses foster innovation,
increase competitiveness, and employ highly skilled workers, all of
which are critical to long-term economic growth in their regions. The
Rural Jobs and Innovation Accelerator Challenge is a project of the
Taskforce for the Advancement of Regional Innovation Clusters (TARIC)
and the White House Rural Council, in partnership with many other
Federal partners.
    Question. What will be the total amount of Challenge awards made in
2013 and 2014?
    Answer. There will not be any awards in 2013 and 2014. The Rural
Jobs and Innovation Accelerator Challenge was a one-time multi-agency
initiative for fiscal year 2012.
    Question. How much will be contributed by USDA in 2013 and 2014,
and from what programs?
    Answer. The Rural Jobs and Innovation Accelerator Challenge was a
one-time multi-agency initiative in fiscal year 2012. As a result, USDA
is not contributing to this initiative in 2013 or 2014.
    Question. What metrics are you using to measure success?
    Answer. The metrics included: (1) jobs created during the project
period; (2) jobs retained during the project period; (3) private
investment leverage during the project period; (4) businesses assisted
during the project period; and (5) engagement and collaboration of
regional organizations.
             single family housing guaranteed loan program
    Question. Mr. O'Brien, in this budget you are requesting ``direct
endorsement'' authority in the guaranteed single family housing loan
program.
    Under direct endorsement, will the agency turn over the entire
responsibility for loan underwriting to private bank participants?
    Answer. No. Direct endorsement loans will require electronic
submission to the Guaranteed Underwriting System (GUS). GUS is an
automated underwriting system currently utilized by approved agency
lenders to evaluate proposed loan applications. GUS utilizes a modified
version of FHA's Technology Open to Approved Lenders (TOTAL) mortgage
scorecard to evaluate the likelihood of loan success based upon
measurable underwriting criteria such as credit score. The modified
TOTAL scorecard has been validated for agency use based upon thousands
of performing and non-performing agency loans. All direct endorsement
lenders will be required to receive an acceptable underwriting
recommendation from GUS prior to issuing an individual loan note
guarantee on behalf of the agency. This will help ensure all
eligibility parameters associated with the program are successfully
met. It will also indicate the loan exhibits positive characteristics
closely associated with performing loans in the agency's portfolio. The
agency has continued to strengthen GUS acceptance standards and
portfolio delinquency rates are declining for the fourth consecutive
fiscal year. As of March 31, 2013, the portfolio was outperforming its
FHA benchmark by 131 basis points.
    For the majority of lenders, direct endorsement will not replace
the current agency process. It is intended to allow the agency to
streamline the issuance of loan note guarantees for high-quality loans
underwritten solely by high-performing, low-delinquency approved
lenders. Following year 3 of a controlled rollout, it is expected that
40 percent of all loan note guarantees will be issued by direct
endorsement lenders (i.e., 10 percent of all loans in year 1, 25
percent of all loans in year 2, and 40 percent of all loans in year 3
and beyond).
    Question. Under direct endorsement, how would you maintain
underwriting standards and your current (good) loan portfolio quality?
    Answer. The agency will reserve direct endorsement authority for
select lenders meeting established criteria. Lenders will not qualify
for consideration unless they have strong loan performance
characteristics as an approved program lender for a period of 2 years
or more. Additional prerequisites will be established by the Secretary
to further determine a lender's eligibility for direct endorsement
authority. For example, the lender would need to demonstrate a proven
history of delinquency rates below the national average for all
approved lenders. Lenders granted direct endorsement authority will be
required to maintain certain credentials and training requirements to
retain such status.
    The inherent risks associated with direct endorsement authority for
lenders will be managed with the establishment of a robust post-closing
lender monitoring effort to maintain the integrity of the portfolio. A
portion of the single family housing staff previously engaged in the
origination function of guaranteeing loans will be reassigned to lender
oversight and post-closing compliance reviews. Ten percent of all loans
approved by direct endorsement lenders will be reviewed post-closing
for compliance to ensure a sufficient population of loans are evaluated
for potential weaknesses. The audit sample size can be increased in the
event of perceived need.
    Current underwriting standards and portfolio performance will be
maintained by a four-pronged approach as follows: (1) loans must pass
automated underwriting scorecard requirements; (2) direct endorsement
authority is reserved for the agency's top lenders with a proven track
record of below average delinquency rates; (3) a post-closing lender
monitoring effort, which includes a sampling of all loans closed by
each direct endorsement lender and the discretion to perform more
rigorous investigations as needed; and (4) a controlled rollout to
enable the post-closing review team adequate time to acclimate to new
processes, streamline review procedures, develop analytical tools, and
effectively measure performance.
    Question. How much will this save in agency administrative costs?
    Answer. When looking at the program by itself, there will be
measurable savings in the cost of carrying out the 502 guarantee
program. Rural Development (RD) will be able to originate guaranteed
loans with fewer full-time equivalents (FTEs). All lenders meeting
eligibility requirements for direct endorsement authority will be
approved by the agency over a 3-year period (controlled rollout). In
addition, there will be a 2-year phase-in period where we will be
making IT enhancements. However, it is expected that the FTEs freed up
by the efficiencies gained by moving to a direct endorsement structure
will address the tremendous number of unmet needs within the RHS field
office. Ultimately, this proposal will help RD live within the current
constrained S&E budget environment more effectively and efficiently.
    Question. Does your current information technology (IT) system have
the capacity to handle this process, and if not, how much will IT
enhancements costs and how long would that take?
    Answer. Modifications to existing IT systems, as well as new system
development, will require significant upfront funding for direct
endorsement implementation. The projected cost for implementing
necessary system enhancements is $5.2 million and this cost will be
absorbed within base funding. The cost will be spread out over 2 years
for system development and user acceptance testing. An additional cost
would be necessary to ensure minor changes to the system can be made
following the initial implementation, as is customary with any major
system enhancement.
    The agency will not realize any cost benefit during the first 2
years of the project. This time period will be dedicated to readying
systems for implementation and no delegated authority will be extended
to preferred lenders during this time.
             effects of sequestration on rental assistance
    Question. Mr. O'Brien, the Department provides rental assistance
(RA) for very low- and low-income occupants of about 260,000 affordable
rural rental housing units. These occupants are mainly female-headed
households, the elderly, or disabled, with annual household incomes
under $10,000. Agreements are renewed annually. It has been estimated
that over 10,000 poor households will not receive rental assistance
this year due to sequestration.
    If rental assistance is not available, will these low-income
households face rent increases and possible eviction?
    Answer. No households will face rent increases due to the 2013
sequestration cuts. We are anticipating that the loss of rental
assistance will impact the borrowers only in September of fiscal year
2013. Therefore, no rent increases or evictions will be necessary, as
we will be working with affected owners to mitigate the loss of rental
assistance through a rental assistance relief plan.
    Question. How do you plan to manage the situation to minimize
disruptive impacts?
    Answer. Rural Development (RD) has developed a relief plan through
which we will work with affected borrowers to agree on a plan to cover
the anticipated 1-month loss of rental assistance. Participation by
property owners is voluntary, but RD is encouraging each affected
borrower to work with their loan specialist to develop a plan that
works for that property. Relief measures to cover the rental assistance
shortfall consist of: (1) allowing the use of funds in the General
Operating account; (2) permitting borrower loans to the project with
payback at 1 percent interest; (3) allowing authorized Reserve account
withdrawals; (4) deferring the return to owner (or asset management
fee, if nonprofit); (5) deferring the section 515/514 1st position debt
service payments, with no interest charge; and/or (6) suspension of
monthly reserve account deposits.
    Question. Do you plan to ask building owners to extend forbearance
to these households?
    Answer. Due to the short-term impact of the rental assistance
shortfall, RD does not anticipate that any of the residents of the
involved properties will be affected adversely.
    Question. What will the loss of rental assistance do to the credit
quality of the Government loans securing these multi-family housing
projects?
    Answer. Since the loss of RA will only be for a 1-month period, RD
does not anticipate that there will be any effect to the credit quality
of the section 515 direct loans.
               direct single family housing loan program
    Question. Mr. O'Brien, the Single Family Housing Direct loan
program has been the flagship housing program in this Department for
years. very low- and low-income rural households are provided
homeownership opportunities with no down payment and low interest
rates. This is the most efficient Federal homeownership program of its
type, with its portfolio credit quality exceeding FHA and VA, and far
exceeding the commercial subprime market. Furthermore, this year the
cost of the program fell by 54 percent.
    This budget cuts this program by 60 percent from the fiscal year
2012 level, from $900 million to $360 million in loans. Is there any
other Federal homeownership program that can help families the way that
this program does? If not, where will these families go to get housing
assistance?
    Answer. The Department acknowledges that the Single Family Housing
Direct Loan program plays an important role in meeting USDA's
commitment to improving the economic vitality and quality of life in
rural America, but also acknowledges that difficult choices have to be
made, including cuts to the section 502 direct loan program. It is
anticipated that at the fiscal year 2014 proposed funding level of $360
million for section 502 direct over 3,100 low- and very low-income
families will achieve homeownership.
    USDA also intends to continue developing partnerships with
qualified nonprofit organizations in rural areas to deliver program
funds where it is needed most. We recognize that families living in
more rural, poorer communities have difficulties accessing programs and
services that promote long-term wealth. The Department anticipates that
the assistance from nonprofit groups will provide targeted delivery of
program funds to the most economically distressed and lower income
communities.
    Finally, the section 502 guarantee loan program will provide a
source of financing for low-income families. Since 2008, about 32
percent of our guarantees have been to low- and very low-income
families. We project that more than 33,000 lower income families will
meet their housing needs with a loan guarantee through USDA. This is
roughly the same total as all direct loans we obligated in the previous
4 years (2009-2012). The section 502 guarantee program will soon be
publishing a final rule which will enable local community-based
lenders, such as credit unions and small community banks, to
participate in the program with the purpose of reaching the smaller,
poorer and more remote rural communities.
    Question. What is the current backlog of applications?
    Answer. As of May 23, 2013, there are 8,851 section 502 direct loan
applications on hand totaling $1,118,047,513.
    Question. Why are you proposing to slash this program, in the face
of its long history of documented success in making low-income families
successful homeowners?
    Answer. The Department acknowledges the importance of the section
502 direct loan program in providing low- and very low-income families
an opportunity to attain homeownership in rural America. However, with
budgetary constraints the Department has had to make difficult choices
which include reductions in the section 502 direct program. Current low
interest rates and the great success of our guaranteed program assure
that rural families in need of mortgage financing will not be unserved.
The 2014 request will still provide families in self-help and those
with greater needs access to credit.
    Question. A $360 million program level would only fund 60 loans in
each State. How would you allocate such a small program in the face of
huge demand in rural areas?
    Answer. At this time, we expect to allocate available funding as
required in regulations of 7 CFR, the 1940-L. Under these regulations,
funds are distributed according to formula that takes in to account
rural population, area income, substandard housing, and those in areas
with populations below 2,500.
    Depending on the amount of the final allocation, consideration will
also be given to targeting funding to isolated groups most in need of
housing financing or obligated by participation in other Rural
Development programs. This includes Mutual Self-Help Housing Loan
participants, those in areas such as colonias and Native American
reservations, and those underserved.
    The national office also will have an option to reserve funds for
those in greatest need, such as homeless, veterans and those needing
additional funding to assume a current loan.
    Question. The only other USDA rural homeownership program available
is the guaranteed loan program, which does not provide subsidized
interest rates, and charges origination and annual fees. Do you believe
the guaranteed program can adequately offer the homeownership
opportunities that the direct program provides?
    Answer. The fiscal year 2014 budget request continues the
administration's commitment to rural areas by targeting resources to
citizens in greatest need and where there are economic opportunities.
We capitalize on beneficial subsidy rates in a number of our programs,
including the Guaranteed Single Family Housing Loan program, to provide
historic program levels. For the seventh consecutive year, the total
amount of rural guaranteed home loans has increased from $2.9 billion
in 2006 to $19.2 billion last year. The 2014 budget request proposes a
program level of $24 billion for the Single Family Housing Guaranteed
program, which could provide more than 171,000 homeownership
opportunities.
    Since 2008, about 32 percent of our guarantees have been to low-
and very low- income families. We project that more than 33,000 lower
income families will meet their housing needs with a loan guarantee
through USDA. This is roughly the same total as all direct loans we
obligated in the previous 4 years (2009-2012). In addition, the section
502 guarantee program will soon be publishing a final rule which will
enable local community-based lenders, such as credit unions and small
community banks, to participate in the program with the purpose of
reaching the smaller, poorer and more remote rural communities.
    Question. The success of the Mutual Self-Help Housing Loan program,
in which families can reduce their housing costs through their sweat
equity, relies on sufficient direct single family housing loan funds.
This budget cuts the Mutual Self-Help Housing Loan program by 67
percent.
    Does the administration now believe that the direct single family
housing program, and the Mutual Self-Help Housing Loan program are no
longer effective and efficient programs to support homeownership
opportunities for rural households?
    Answer. The Department continues to believe both the section 502
direct loan program and the self-help program are viable programs that
meet the needs of many low- and very low-income families. The
Department does not expect the 2014 budget request reduction to
adversely affect the overall viability or productivity of the section
523 Mutual Self-Help Housing Loan program. The proposed $10 million for
the fiscal year 2014 funding along with the proposed $360 million for
the section 502 direct single family housing will ensure continued
success of the program. The mutual self-help housing program has a high
level of dedicated supporters from community and faith-based
organizations who offer in-kind services to participating families. The
self-help grantees and regional technical assistant providers have
assisted in maintaining the integrity of the program by soliciting and
securing other funding resources. Based on the positive response and
support for the self-help program, we believe both the direct loan and
self-help programs will continue to provide the opportunities for low-
income families to secure homeownership and develop strong communities.
                                 ______

                Questions Submitted by Senator Tom Udall
                rural development programs in new mexico
    Question. Mr. Doug O'Brien, in New Mexico, the Rural Development
(RD) office is down to 39 employees, 6 months ago the New Mexico office
had 44 employees, and in 2011 the office had 53 employees. This decline
in employees is resulting in programs being shut down as the 2-year
hiring freeze continues. I understand that these are difficult times,
and that the sequestration is making budgets even tighter. My concern,
however, is about the disparity between the number of employees in
western States compared to those east, and whether or not the resources
we do have are reaching the rural and poor communities that they are
intended for.
    According to your staff, in May 2012 about 12 States each had over
100 Rural Development employees, while States like Nevada, Alaska,
Colorado, Utah, Wyoming, and New Mexico had well under 50. These are
some of our country's most rural States.
    Could you help the subcommittee understand how this disparity in
Rural Development efforts has come to be, and what the agency is doing
or can do to ensure a more equitable distribution of resources?
    Answer. When faced with sequestration of funds, Rural Development
considered several options when looking for ways to meet the funding
levels. One of those options was offering RD employees early retirement
and not filling many positions. As a result of these retirements and
the freeze on hiring, Rural Development lost approximately 18 percent
of its workforce. Unfortunately, these losses were not equally divided
by program or geography. We recognize that many States are struggling
to provide services and or looking at ways to correct these inequities.
    Among the options being considered is a regional sharing of
employees which would allow States to work together to provide
services. Also, now that the first round of sequestration has passed
and RD has been given the opportunity to move funds between programs,
we are looking at making strategic hires in those areas where the need
is greatest.
    In the last year, RD has also reexamined its full-time equivalent
(FTE) allocation formula and adjusted it to provide greater weight to
States with deeper poverty. We continue to examine this formula.
    Question. Mr. Doug O'Brien, I am concerned about whether or not
Rural Development resources are reaching the rural and poor communities
that they are intended for. In New Mexico there are many very small and
very rural communities that have a hard time accessing grants and loans
through Rural Development because they do not have the personnel and
even infrastructure, like Internet service, to successfully apply for
and manage grants and loans.
    Could you share with the subcommittee how the President's budget
would ensure that Rural Development funds in fiscal year 2014 make it
to the small and very rural communities who need it most?
    Answer. Rural Development is working closely with the USDA Office
of Advocacy and Outreach to make sure that the citizens and communities
who need assistance the most are aware of what our programs can do and
how to apply. Also, in 2010, the Department implemented the StrikeForce
Initiative to increase participation in USDA programs in high poverty
counties. Many of the RD programs provide additional points to the
smaller communities competing for funding.
    Question. What kind of technical assistance is available for
communities who may not have a full-time employee to write a grant
application or manage a loan?
    Answer. Most Rural Development programs are administered through
our State and area offices, and the majority of direct support and
assistance in preparing a grant application will come from these
offices. However, while RD staff can provide support and guidance in
developing and application, they do not participate in the actual
writing of the grant or loan proposal.
    Through existing programs, Rural Development supports a number of
University and nonprofit organizations who provide direct technical
assistance to prospective program applicants. Through a variety of
methods (e.g., business incubators, cooperative development centers),
recipients of funding from this program have delivered technical
assistance and other services to individuals and communities seeking to
apply to RD programs.
    Further, several existing programs contain components that can
provide application development assistance. For example, the
Agricultural Marketing Resource Center (AgMRC) which is funded out of
the Value Added Producer Grant (VAPG) program is a free, virtual
resource for producers looking to get into a value added agricultural
business. The AgMRC Web site provides an array of resources, including
business planning tools, budget templates, and marketing plans that can
be used to address requirements in a grant application.
                                 ______

                    Questions Submitted to Ann Mills
              Questions Submitted by Senator Mark L. Pryor
             conservation delivery streamlining initiative
    Question. Ms. Mills, NRCS's budget proposes an increase of nearly
$9 million for the Conservation Delivery Streamlining Initiative. When
fully implemented, some of the goals of CDSI are to allow NRCS staff to
spend 75 percent of their time with customers in the field; eliminate
over 80 percent of time that field staff devotes to clerical tasks; and
shorten the time between when customers apply for a program and when
they are awarded contracts to less than 2 weeks.
    Can you talk a little more about CDSI?
    Answer. In fiscal year 2010, NRCS leadership formally initiated an
agency-wide effort called the Conservation Delivery Streamlining
Initiative (CDSI). The initiative's goal is to define and implement a
more effective, efficient, and sustainable business model for
delivering conservation technical and financial assistance. Three
overarching objectives were identified:
  --Simplify Conservation Delivery.--Conservation delivery must be
        easier for both customers and employees.
  --Streamline Business Processes.--The new business model and
        processes must increase efficiency and be integrated across
        agency business lines.
  --Ensure Science-Based Assistance.--The new business model must
        reinforce the continued delivery of science-based products and
        services.
    CDSI is currently implementing five broad strategies under this
effort. These include: (1) redesigning NRCS's business processes; (2)
aligning its information technology with these redesigned processes;
(3) integrating science technologies to enhance the quality and
effectiveness of NRCS programs; (4) simplifying and standardizing the
delivery of financial assistance; and (5) providing ways for clients to
work with NRCS that are more convenient and efficient.
    Question. I understand it is now being tested in four States, and
your new estimates are that it will be implemented nationally by
November 2014. How is the current testing going? Is your timeline still
achievable?
    Answer. In October 2012, NRCS began testing the Conservation
Desktop application-version 1. NRCS deployed version 1 as a beta
release to four States in March 2013. Upon completion of the four-State
beta test, additional assessments were performed that included agency
quality assurance tests and an independent assessment from a leading
information technology research and advisory firm. Based on these tests
and assessments NRCS decided to revise its deployment timeline and path
forward.
    NRCS is working closely with USDA and the Office of Management and
Budget to finalize these revisions. The updates include a more modular
development approach that focuses on smaller and more frequent
releases. This approach splits the functionality of the Conservation
Desktop into three separate releases that focus on: (1) financial
assistance; (2) replacement of the current conservation planning
software; and (3) providing enhanced conservation planning support. The
first nationwide release of the Conservation Desktop is now tentatively
planned for the first half of calendar year 2015.
    Question. What are the total cost estimates for the program?
    Answer. The overall lifecycle cost for the entire CDSI investment,
spanning fiscal years 2012 through 2021, is estimated at $187,883,300.
The lifecycle cost includes business process reengineering, business
requirements development and the development, enhancement, and
maintenance of the three main CDSI applications, their supporting
databases and computer services: (1) Conservation Desktop, (2) Mobile
Planning Tool, and (3) Client Gateway.
    Question. What is the current wait time for customers from the time
they apply for a contract to when it's awarded? How will this be sped
up?
    Answer. The average amount of time from when a customer applies for
a financial assistance program and when they sign a contract is 2 to 6
months. NRCS plans to decrease this time by standardizing its financial
assistance business processes, providing centralized program support
staff, and implementing alternative technologies such as:
  --Electronic signatures for customers;
  --Automated geospatial application scoring and ranking;
  --Automated workflows and electronic tasking;
  --Electronic document storage;
  --Streamlined funding selection using a threshold concept; and
  --A customer-facing Web site to provide access to USDA-NRCS programs
        and services.
                        plant materials centers
    Question. Ms. Mills, as you know, there is broad support in
Congress for the work of the Plant Materials Centers (PMCs). I have a
special fondness for the one in Booneville, Arkansas.
    The budget request proposes to decrease funding for the PMCs by
nearly $1 million.
    Is USDA planning to close or consolidate any of those centers?
    Answer. USDA plans to restructure its Plant Materials Centers
(PMCs) operated by the Natural Resources Conservation Service (NRCS)
this calendar year consistent with USDA's Blueprint for Stronger
Service. Reorganization is necessary considering PMC funding has
declined by over 22 percent since 2010. This, coupled with years of
rising costs, has necessitated decreases in staffing and increases in
facility and equipment maintenance and replacement, thus reducing
efficiency. However, final decisions as to which, if any, locations
will be closed or consolidated have not been made at this time.
                               staff cuts
    Question. Ms. Mills, the budget for Conservation Operations assumes
a cut of 273 staff. This is spread across all of your activities, but
the largest decrease is in the Conservation Technical Assistance
account.
    In an operation where face time with your customers is an important
part of what you do, how will you absorb this FTE reduction?
    Answer. NRCS certainly recognizes that time spent in the field
working with producers and landowners on conservation plans are central
to the mission of the agency. As we have stated before, getting more
boots on the ground for conservation is vital for that mission. At the
same time, the agency must manage its resources during a period when
the funding available for our programs may be constrained. Therefore,
NRCS is also committed to becoming more efficient and to maximizing
conservation assistance in the field by streamlining the agency's
structure and processes, and by looking for ways to increase the
agency's flexibility in providing technical assistance.
    For example, the agency has already started to update and
streamline its administrative processes, which should remove some of
the administrative burdens from the State offices and free up more
staff resources to deliver conservation. The agency is also looking for
ways to simplify and efficiently deliver conservation assistance to
customers, which should ultimately increase the amount of staff time
devoted to direct conservation efforts.
    The agency will also explore opportunities to provide greater
flexibility in its ability to deliver conservation technical assistance
through partnerships and agreements with technical service providers.
These partnerships provide the agency the flexibility to increase or
decrease technical service capacity as demand for those services
changes, helping to ensure the agency is able to provide assistance
where and when it is needed.
    The reduction in FTEs represents approximately 4.6 percent of the
staff funding through the Conservation Operations account. This is not
an insignificant reduction, but the agency will work to maximize the
amount of conservation technical assistance that is available to our
customers by becoming more efficient and by increasing capacity without
increasing staff.
                                 ______

                 Questions Submitted to Darci L. Vetter
              Questions Submitted by Senator Mark L. Pryor
                      foreign agricultural service
    Question. As you know, U.S. agricultural exports are at record
levels. In fiscal year 2012 exports reached $136 billion.
    Can you briefly discuss some of the things Foreign Agricultural
Service (FAS) is doing to develop new foreign markets as well as making
sure our agriculture products remain competitive in the world
marketplace?
    Answer. FAS deploys a global market development strategy that
integrates trade policy, monitoring and enforcement, trade promotion,
and trade capacity building/food security. FAS resources and tactics
are tailored to country markets that range from fragile market
economies, to high-growth markets with a rapidly expanding middle
class, to mature maintenance markets to achieve our overarching goals
of enhancing U.S. market access and expanding U.S. agricultural exports
while improving global food security and food safety. FAS trade policy
work is aimed at negotiating and enforcing market-expanding trade
agreements for U.S. exports of food and agricultural products, and
preventing or resolving foreign measures that hinder U.S. food and
agricultural exports.
    The United States continues to negotiate the Trans-Pacific
Partnership (TPP) with Australia, Brunei, Canada, Chile, Japan,
Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam. From the
beginning of TPP negotiations, USDA negotiators have been actively
involved in aspects of the negotiations related to agriculture
including market access, rules of origin, sanitary and phytosanitary
measures, technical barriers to trade, regulatory coherence,
competition, and trade capacity building. USDA's goal, with guidance
from the U.S. industry, Congress, and other stakeholders, is to create
a TPP agreement that increases U.S. agricultural exports and supports
U.S. jobs by addressing tariff and non-tariff barriers.
    On March 20, 2013, the administration notified Congress of our
intent to enter into negotiations with the European Union (EU) on a
Transatlantic Trade and Investment Partnership (TTIP). We are currently
conducting consultations with Congress and the public to help refine
our objectives and priorities for these negotiations. A public comment
period on priorities and issues for the negotiations was open from
April 1-May 10, 2013. The first round of negotiations took place in
July in Washington, DC. USDA was, and continues to be, very active in
the preparatory work for the initial and subsequent rounds of
negotiations. The European Union is our 5th largest agricultural export
market, valued at $10.1 billion in calendar year 2012. Key export
products include soybeans, tree nuts (especially almonds) and alcoholic
beverages. We will continue pressing for full elimination of tariffs
and substantial progress on reducing non-tariff barriers.
    FAS continues to monitor and enforce trade agreements with 20
countries, with particular attention to agreements with South Korea,
Colombia, and Panama that were implemented in 2012. FAS participates
with the U.S. Trade Representative in regular meetings with all three
trading partners. For example, a Korean Free Trade Agreement (KORUS)
Sanitary and Phytosanitary (SPS) meeting occurred in Washington on
February 19, 2013. FAS staff regularly provide technical assistance to
Colombian and Panamanian Government officials in tariff rate quota
(TRQ) administration which has resulted in smooth TRQ implementation.
U.S. agricultural exports to Korea exceeded $6 billion in fiscal year
2012, making it our sixth largest market. U.S. agricultural exports to
Colombia topped $1 billion in fiscal year 2012, and are expected to be
46 percent higher in March-May 2013 after the Colombia Trade Promotion
Agreement goes into force than for the same time period a year earlier,
totaling over $1.2 billion. U.S. agricultural exports to Panama reached
almost $490 million in 2012. Products that have increased export
markets include corn, rice, and chicken leg quarters.
    FAS market development programs focus on cooperation with program
participants to help U.S. producers, exporters, private companies, and
trade organizations promote U.S. agricultural products in priority
countries. These partnerships are supported by FAS staff facilitating
in-country relationships, providing market analysis, and approving use
of program funds for activities to maintain and expand market share and
target new opportunities in foreign markets. Market development
programs are administered on a cost-share basis with participating
industry partners using Market Access Program (MAP), Foreign Market
Development (FMD) program, Technical Assistance for Specialty Crops
(TASC) program, Emerging Markets Program (EMP), and Quality Samples
Program (QSP) funds to help U.S. food and agricultural exporters
maintain a competitive edge. For example, FAS overseas offices in China
provide information on opportunities in secondary and tertiary cities
and encourage U.S. agriculture, fish and forest products industries to
develop relationships and activities with a broader spectrum of
potential customers. Nearly all of our MAP and FMD partners conduct
activities in China. The programs also are used to conduct critically
important outreach activities to small- and medium-sized enterprises
(SMEs) and new-to-export food and agricultural businesses, to broaden
and expand the base of U.S. agribusinesses exporting for the first time
or to more markets. FAS has provided additional MAP funding to expand
export readiness training of SMEs across the country. An upcoming FAS
initiative is leveraging resources to organize a regional African
market development conference, in conjunction with a U.S. trade mission
to South Africa this September, to highlight market opportunities in
the rapidly growing economies of South Africa, Kenya, and Ghana. A
recent study found that other countries are increasing their use of
market development funds, increasing the need for U.S. producers to
remain active in overseas markets.
    FAS trade capacity building efforts focus on less-developed
countries that have good governance, economically enabling
environments, and high potential as full trading partners with the
United States. FAS-led technical assistance programs, with substantial
funding from USAID and State Department, strengthen SPS systems and
reduce technical barriers to trade (TBTs) for current and potential
trading partners, while building regulatory capacity. The aim is to
eliminate import-restrictive policies and regulations, and create a
policy environment that values transparent and science-based food
regulations and agricultural policies consistent with international
standards and favorable to U.S. food and agricultural interests.
    Question. What are some of your biggest challenges to ensure the
competitiveness of U.S. agriculture products?
    Answer. The USTR's Report on Sanitary and Phytosanitary Measures
(SPS Report) and the Report on TBT highlight challenges that have the
potential to negatively affect trade and pose significant market losses
for the United States.
    The leading cross-cutting SPS barriers arise in connection with
export certification requirements, agricultural biotechnology, bovine
spongiform encephalopathy (BSE), avian influenza (AI), and maximum
residue levels (MRLs) for pesticides. USDA diligently attacks each of
these barriers. For example, USDA efforts have contributed to the
reopening of export markets for U.S. beef and beef products closed as a
result of the BSE-related trade bans. As a result, U.S. beef and beef
products exports recovered to a record $5.5 billion in fiscal year
2012.
    USDA worked hard to lead the Codex Alimentarius Commission to
finally adopt an international MRL for ractopamine in beef and pork in
2012. This was the culmination of more than 9 years of work by USDA.
Adoption of the standard for beef by Taiwan has provided significantly
improved market access for U.S. exports. The international standard is
important in our continuing efforts to reduce barriers to U.S. pork in
Taiwan and barriers to meat and poultry in China and Russia.
    Similarly, the TBT Report provides illustrations of technical
barriers with the potential to negatively affect trade and pose
significant market loss for the United States. For example, Chile and
Peru are important in this regard because of their stringent
nutritional labeling requirements for processed foods high in fats,
sugar, sodium, and trans-fats content. Additionally, Peru maintains
mandatory labeling and a moratorium on foods derived from genetic
engineering. Turkey and India are also highlighted in the TBT Report
for their trade restrictive measures on genetically engineered
products.
    Slow acceptance of biotechnology-developed crops and products is
one of the biggest challenges to U.S. agricultural exports. The United
States is the world's largest producer of biotechnology crops, and the
bulk of our biotechnology exports enter commodity streams alongside
conventional varieties. Many new crops and products derived through
modern technologies are likely to enter the market in the next few
years. However, concern about these products persists in some regions
and has led to long approval processes overseas and the proliferation
of regulatory barriers to U.S. trade in biotechnology derived products.
For example, China's asynchronous approval for biotech products
continues to delay the commercialization of new products globally. In
order to improve our bilateral agricultural relationship with China and
to deepen our cooperation on tackling global challenges, USDA hosted
the first United States-China High Level Agricultural Symposium
(symposium) in February 2012. The first symposium facilitated many
agricultural trade successes in 2012, including China's agreement to
participate in a pilot program to address its asynchronous
biotechnology approvals.
                           farm loan programs
    Question. Can you discuss how your budget request benefits
beginning farmers and ranchers?
    Answer. The 2014 budget request for Farm Service Agency (FSA) farm
loan programs will support funding for loans that will allow several
thousand beginning farmers and ranchers to begin or continue farming or
ranching. Many beginning farmers and ranchers have difficulty obtaining
credit due to limited equity, collateral, or experience. FSA farm loan
programs are required by statute to reserve a portion of the direct and
guaranteed loan funds for beginning farmers and ranchers. Under the
targets, 75 percent of direct ownership funds, 50 percent of direct
operating funds, and 40 percent of guaranteed operating and ownership
funds are reserved for beginning farmers for at least the first two
quarters of the fiscal year. Based on these targets, the fiscal year
2014 budget request will provide funding for over 2,600 direct and
2,000 guaranteed farm ownership loans to beginning farmers,
facilitating in most cases a first-time farm purchase. The 2014 request
will also provide funding for over 11,300 direct and 3,400 guaranteed
operating loans for beginning farmers. These loans provide critical
operating capital to beginners who cannot obtain credit from other
sources.
    Question. In your testimony you discuss a recently implemented
microloan program. Can you go into further detail about that program?
What farming population is this program targeting?
    Answer. The microloan program is administered under FSA's existing
Operating Loan (OL) program. The program streamlines the process for
producers obtaining loans under $35,000 by reducing the paperwork and
simplifying the loan application process. The program includes
additional flexibility in certain loan eligibility requirements,
reduces documentation requirements, and provides for simplified
financial planning to align with the less complex structure of small
farms. Producers can use microloan funds to pay for initial start-up
expenses such as land rent, essential tools, livestock and farm
equipment, and annual expenses such as seed, fertilizer, utilities,
marketing, and distribution expenses.
  --Microloan repayment terms may vary, but typically will not exceed 7
        years for intermediate-term purposes. Interest rates are based
        on the regular OL rates that are in effect at the time of loan
        approval or loan closing.
  --The program is designed to increase credit opportunities for
        smaller and beginning farmers, particularly producers who sell
        through farmers markets, roadside stands, and community-
        supported agriculture (CSA) programs, although almost any type
        of farm production is eligible. The limited documentation
        requirements and less rigorous farm managerial experience
        requirements are intended to make microloans more accessible
        for first-time farmers.
                         mc govern-dole program
    Question. For a relatively small amount of money, this program has
a huge impact on the lives of some of the world's poorest children.
    Ms. Vetter, can you briefly discuss some of the ways the McGovern-
Dole program has positively affected children around the world?
    Answer. The McGovern-Dole program focuses on improving literacy and
improving dietary and health practices in recipient countries. The
program encourages parents to send their children to obtain a primary
school education, when they might not have otherwise done so, and to
utilize these skills as they progress in life to become productive
members of society. USDA regularly sees between a 3- and 10-percent
increase in attendance rates per school year, teachers regularly
comment that children have more energy, and the promotion rates of
children to the next grade are often over 80 percent in USDA assisted
schools. A key focus of the program is improving literacy outcomes and
the quality of education provided to the children. This involves more
consistent teacher attendance, better access to school supplies,
improved instructional materials, increased skills and knowledge of
school administrators, and improved awareness of educational value and
attainment by parents (who may themselves be illiterate). For example,
USDA's project in Mali with Catholic Relief Services (CRS) is focused
on education in collaboration with USAID in the area of education
quality and literacy. Program activities include working with the PTAs,
local school management committees, and locally elected officials to
inform parents and communities about the support that is available and
to ensure that teachers in the targeted areas are able to access
trainings and resources to promote improved educational outcomes and
literacy in the classroom.
    McGovern-Dole projects also build the capacity of recipient country
governments and civil society with the ultimate goal of transitioning
the management of school feeding programs to recipient governments and
local communities. In Bolivia, for example, 12 more municipalities
graduated from McGovern-Dole funding in 2012. These municipalities
started to manage their own programs and continued to feed over 21,000
school children ensuring these children receive a nutritious meal so
their hunger does not detract from their learning. In Nepal, USDA is
working with the Government of Nepal to develop a national school
feeding framework. In February 2013, USDA hosted a delegation of
government representatives from the Nepalese Ministry of Agriculture
and Department of Education to learn about the U.S. school feeding
experience. FAS and FNS worked together to arrange visits to U.S.
schools, and the delegation left the United States with a better
understanding of school feeding programs, the need for clear budget
allocations, and the importance of good program monitoring.
    We are field testing new and improved micronutrient-fortified food
aid products developed in the United States to best meet nutritional
needs of populations served by McGovern-Dole. In Guinea-Bissau, we are
field testing a dairy paste containing iron, vitamin A, vitamin D, and
zinc that are critical for child growth and mental development. In
Cambodia, the effectiveness of a rice product fortified with Vitamin A
and iron is being evaluated. We are working with Kansas State
University on new formulations of three, fortified blended foods
(FBFs). These FBFs (sorghum-soybean, sorghum-cowpea, and corn-soy
blends) will be made into porridge mixes for McGovern-Dole
beneficiaries in Tanzania.
    Question. Do you see a correlation between a higher standard of
living for girls who participate in the program and girls that do not?
    Answer. Studies by the World Bank, World Economic Forum, and the
Organization for Economic Cooperation and Development have found a
correlation between educating girls and the rate of economic
improvement of countries. Educating girls has been found to help break
the cycle of poverty because girls who attend school tend to delay
having babies, and are healthier and better prepared as mothers when
they do have children, and are better able to be productive members of
society. This increases a country's overall productivity and income
level. Educating girls has also been found to improve the health of
populations, help reduce disease incidence, and reduce the incidence of
violence against women. The McGovern-Dole program targets girls and
provides many health interventions aimed at teaching them the
importance of good hygiene, nutrition, and sanitation. Girls
incorporate these lessons into their future families and pass these
teachings on to their own children. This results in stronger family
units. The McGovern-Dole program also targets girls for education
interventions, tailoring activities to reduce or eliminate gender
disparities in school attendance and achievements. Additionally, USDA
often works with the mothers of school children, teaching them lessons
in nutrition, hygiene, and the importance of education.
    During the fiscal year 2012 solicitation cycle, FAS began a
comprehensive results-oriented management (ROM) system to strengthen
the delivery of more efficient and effective food assistance programs
through a greater focus on results and accountability of taxpayer
resources. This approach also provides a platform for more meaningful
program evaluations and opportunities to learn which interventions work
well and which ones do not. Through this ROM system and associated
initiatives, USDA expects to improve its ability to measure the impact
of the McGovern-Dole Program by: (1) clarifying program strategy; (2)
identifying expected results; (3) linking measurable indicators to
results; and (4) mapping program objectives and results back to the
agency's strategic plan. In turn, implementing partners are expected to
identify project results and report achievements of the identified
results. These organizations must report twice a year as well as have a
midterm and final evaluation performed.
                       farm service agency--midas
    Question. I was pleased to learn that you recently launched MIDAS.
Can you give us an update on how things are going?
    Answer. The MIDAS Program is the largest automated system ever
implemented by the Farm Service Agency. It is a complete re-engineering
of business processes and information technology (IT) systems and
software that will replace outdated technology used in FSA county
offices since the 1980s. MIDAS is in week 15 of system stabilizing and
these new systems phasing in nationwide. During this deployment, the
challenges such as availability, reliability and responsiveness of the
systems are closely monitored and addressed so that the performance can
be improved and ensured. MIDAS operates with many complex
interdependencies, with attributes in commercial-off-the-shelf
software, custom-developed Web farm applications, and geospatial
imagery. Components of MIDAS are hosted in three separate data centers
across USDA's network. As this comprehensive new system is implemented,
any reports of performance dips or needed improvements are closely
examined and addressed to ensure the continuation of customer service
as effectively as possible during this transition period.
    The number of issues has stabilized over the last few weeks
indicating the system is improving, and in the past 5 weeks, the rate
of resolved issues has exceeded the number of issues reported.
    Through these and related actions, MIDAS is moving forward towards
full stabilization and integration into the everyday business practices
of FSA offices.
    Question. What have you done to educate farmers and ranchers on
using the new system?
    Answer. The initial MIDAS system launched in April 2013 provided
capability for the FSA service center employees to administer Farm
Records information with full geospatial imagery integration, and to
maintain customer profile and product information. At this time there
is no direct access to MIDAS by farmers and ranchers. Robust training
was provided to over 9,000 FSA employees on the new system to maintain
the high level of customer service provided to farmers and ranchers.
Additional functionality planned in fiscal year 2015 will enable
farmers and ranchers to access the new system online and conduct
business with FSA in a self-service fashion.
    Question. The budget requests $65 million for supporting MIDAS. Do
you expect the cost of maintaining the system to decrease over the next
few years?
    Answer. The $65 million budget request submitted for fiscal year
2014 provides operations & maintenance support for the production
system and limited funding for system enhancements. FSA is currently
working on a re-baseline of the MIDAS project to define the final
operating capability, total project cost, and project timeline plan for
the remainder of the project's lifecycle. The costs will increase in
fiscal year 2015 as the final operating capability is delivered and
begin decreasing in the out years as the system moves into full
sustainment.

                         CONCLUSION OF HEARINGS

    Senator Pryor. As I mentioned earlier, this is the final
budget hearing, and I appreciate the work that everyone at USDA
and FDA, because they were the subject of our first hearing, in
preparing their witnesses. The testimony presented during these
hearings was very helpful and that constant flow of information
back and forth has been very good and it will help us write the
fiscal year 2014 bill.
    The subcommittee's next markup--meeting will be a markup of
the fiscal year 2014 bill and that date has not yet been
determined. It's something that I'm waiting to get the okay
from Senator Blunt over here. No, actually we're just trying to
get the room availability and what-not. But we're going to do
that soon and we look forward to it.
    With that, this hearing will be recessed. Thank you.
    [Whereupon, at 10:45 a.m., Thursday, May 23, the hearings
were concluded, and the subcommittee was recessed, to reconvene
subject to the call of the Chair.]

 
   AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION, AND
          RELATED AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2014

                              ----------

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.

                       NONDEPARTMENTAL WITNESSES

    [The following testimonies were received by the
Subcommittee on Agriculture, Rural Development, Food and Drug
Administration, and Related Agencies for inclusion in the
record. The submitted materials relate to the fiscal year 2014
budget request for programs within the subcommittee's
jurisdiction.]
  Prepared Statement of the Agriculture and Food Research Initiative
                            (AFRI) Coalition
    The Agriculture and Food Research Initiative (AFRI) Coalition is
pleased to submit the following testimony on the fiscal year 2014
appropriation for the Department of Agriculture's (USDA) Agriculture
and Food Research Initiative (AFRI). The AFRI Coalition, comprised of
more than 40 scientific societies and science advocacy organizations,
is dedicated to raising awareness of the importance of AFRI and the
research it funds. The AFRI Coalition understands the very difficult
budgetary environment we currently face and urges Congress to fund AFRI
with at least $383 million in fiscal year 2014.
    AFRI, administered by the National Institute of Food and
Agriculture (NIFA), is the premier competitive grants program for
fundamental and applied research, extension and education in support of
our Nation's food and agricultural systems. AFRI grants support
research in areas of critical concern including: food safety and
security, agricultural production and products, plant and animal
health, nutrition and human health and agricultural economics, among
others.
    In December 2012, The President's Council of Advisors on Science
and Technology (PCAST), released a report on the agriculture research
enterprise and concluded that ``our Nation's agricultural research
enterprise is not prepared to meet the challenges that U.S. agriculture
faces in the 21st century.'' In fiscal year 2012, AFRI was funded at
only $264 million but received research proposals in excess of $4
billion.
    The AFRI Coalition urges Congress to fund AFRI with at least $383
million in fiscal year 2014, far less than its authorized level of $700
million. The research supported by AFRI aims to solve critical
scientific, agricultural and societal problems and deserves steady,
predictable and sustainable funding. The future of our food and
agricultural systems, a basis for human health, rely on it.
Additionally, for every Federal dollar spent on publicly funded
agricultural research, $20 or more is generated in the U.S. economy.\1\
A strengthened commitment to investments in science for food and
agriculture, especially during difficult economic times, is essential
to maintain and grow our Nation's food, economic and national security.
---------------------------------------------------------------------------
    \1\ The Economic Returns to U.S. Public Agricultural Research,
Alston, Julian M.; Andersen, Matthew A.; James, Jennifer S.; Pardey,
Philip G., University of Minnesota, Department of Applied Economics,
July 2011, http://purl.umn.edu/95522.
---------------------------------------------------------------------------
    The AFRI Coalition appreciates the opportunity to provide written
testimony and would be pleased to assist the subcommittee as it
considers the fiscal year 2014 appropriation for AFRI. To learn more
about the Coalition or to see a list of members, please visit: http://
africoalition.org.
                                 ______

         Prepared Statement of the Alliance for a Stronger FDA
    Chairman Pryor and Ranking Member Blunt: The Alliance for a
Stronger FDA respectfully requests that the subcommittee recognize the
critical role and expanding public health mission of the U.S. Food and
Drug Administration and provide appropriations funding in fiscal year
2014 that fully restores the agency's base lost in the fiscal year 2013
sequester and adds additional funding above that level. Specifically,
we are requesting budget authority appropriations of $2.60 billion.
    The Alliance is a 200-member coalition of all FDA's stakeholders--
consumers, patients, health professionals, trade groups and industry.
Our sole purpose is to advocate for increased appropriated resources
for the FDA, an agency that oversees 100 percent of drugs, vaccines,
medical devices, and personal care products and 80 percent of our
Nation's food supply. Altogether, the products and industries regulated
by FDA account for nearly 25 percent of all consumer spending in the
United States.
    FDA's pre-sequestration budget authority (BA) appropriation of
$2.53 billion is dramatically less than the amount the agency needs.
The sequestration and FDA's growing public health and safety
responsibilities puts the agency's mission ``at risk.''
  recognizing that fda's public health mission is vital and growing,
               congress continues to pass fda legislation
    New laws take enormous resources to implement. Once implemented,
they permanently increase agency responsibilities. Since 2009, Congress
has identified a number of additional public health needs that fall
within FDA's jurisdiction, resulting in at least six new laws:
  --Family Smoking Prevention and Tobacco Control Act (2009);
  --Biologics Price Competition and Innovation Act (2010);
  --Secure and Responsible Drug Disposal Act (2010);
  --Combat Methamphetamine Enhancement Act (2010);
  --Food Safety Modernization Act (2011); and
  --FDA Safety and Innovation Act (2012), including re-authorization of
        the Best Pharmaceuticals for Children Act and the Pediatric
        Research Equity Act.
    This year's legislative requirement--renewal of two Animal Drug
User Fees--is a possible vehicle for other FDA mandates. Freestanding
legislation is also being considered for: compounding; counterfeit/
track and trace; drug shortages; and incentives for innovation.
    In sum, the current appropriations level is totally inadequate to
make up for decades of underfunding and all of the new laws enacted
since 2009 and also under consideration.
   globalization and scientific complexity require fda to expand its
activities each year to protect and expand public and individual health
    Even were Congress not active in legislating new mandates for FDA,
the agency's mission and responsibilities would grow enormously each
year for reasons unrelated to new laws. Our remarks will concentrate on
two: globalization and increasing scientific complexity.
    One of FDA's highest priorities over the last 6 years has been to
adjust for the accelerating globalization in all product categories
overseen by the agency. For example:
  --Food imports are growing 10 percent annually. Altogether, 10-15
        percent of all food consumed in the United States is imported.
        This includes nearly two-thirds of fruits and vegetables and 80
        percent of seafood.
  --Device imports are also growing about 10 percent annually.
        Currently, about 50 percent of all medical devices used in the
        United States are imported.
  --Drug imports are growing even more quickly, about 13 percent
        annually. About 80 percent of active pharmaceutical ingredients
        (API) are manufactured abroad, as are 40 percent of finished
        drugs.
    Inspections at U.S. ports-of-entry are critical, but ultimately
less than 2 percent of shipments can be inspected. Instead, FDA is
following congressional direction by increasing foreign inspections and
establishing foreign offices to work globally to improve the standards
and quality of products entering the United States.
    The value of this approach cannot really be quantified. The cost of
illness, death and lost markets--from just a single bad actor in a
single food category--can cost as much or more than the entire
investment we put into FDA's food safety activities. Drugs and devices
are harder to track for a variety of reasons, but there is no reason to
doubt a similar effect.
    Greater scientific complexity is diffused into every part of the
agency and its mission. FDA has adopted a number of initiatives,
including creation of a commissioner-level science office, investment
in regulatory science, expanded and more intensive training, changes in
time and manpower allotments for complex assignments, and significant
reworking of the drug and medical device approval pathways.
    Specifically, we have identified five areas in which FDA is
improving product reviews to respond to more complex science. Each
comes at a cost in additional dollars/manpower:
  --sponsors need more meeting time and other feedback from FDA;
  --applications require more patients, study sites and analysis;
  --enhanced timeliness and consistency of product review;
  --expansion of pre-and post-market safety; and
  --enhance innovation, speed approvals.
    Further, safety inspections have also become more complex--
requiring more scientific training, more preparation and, often, more
time during the inspection itself.
    FDA's vital, complex worldwide public health responsibilities
cannot be accomplished with its existing budget, particularly post-
sequestration. The agency's mission is ``at risk.''
    FDA is a staff-intensive organization. More than 80 percent of its
budget is devoted to staff-related costs. If the agency budget fails to
grow over the next few years:
  --food will be less safe and consumers put at risk;
  --drug and device reviews will be slower, conflicting with promises
        made to consumers and companies;
  --problems with imports and globalization will become more numerous;
        and
  --critical efforts to modernize the agency and improve its support
        for innovation will stall.

    [This statement was submitted by Diane E. Dorman, President,
Alliance for a Stronger FDA.]
                                 ______

 Prepared Statement of the American Commodity Distribution Association
                                 (ACDA)
    On behalf of the American Commodity Distribution Association
(ACDA), I respectfully submit this statement regarding the budget
request of the Food and Nutrition Service for inclusion in the
subcommittee's official record. ACDA members appreciate the
subcommittee's support for these vital programs.
    We urge the subcommittee to fully fund administrative expense
funding for the Emergency Food Assistance Program (TEFAP) at $100
million; to make TEFAP food purchase dollars available for 2 fiscal
years; to approve sufficient funding to maintain caseload in the
Commodity Supplemental Food Program (CSFP) and provide an increase of
$5 million to begin operations in six additional States approved by
USDA, and to require an interagency panel at USDA for continuous
evaluation and improvement of the USDA Foods program.
    ACDA is a nonprofit professional trade association, dedicated to
the growth and improvement of USDA's Commodity Food Distribution
Program. ACDA members include: State agencies that distribute USDA-
purchased commodity foods; agricultural organizations; industry;
associate members; recipient agencies, such as schools and soup
kitchens; and allied organizations, such as anti-hunger groups. ACDA
members are responsible for distributing over 1.5 billion pounds of
USDA-purchased commodity foods annually through programs such as
National School Lunch Program, the Emergency Food Assistance Program
(TEFAP), Summer Food Service Program (SFSP), Commodity Supplemental
Food Program (CSFP), Charitable Institution Program, and Food
Distribution Program on Indian Reservations (FDPIR).
         fully fund tefap administrative funds at $100 million
    We urge the subcommittee to fully fund TEFAP Administrative Funds
at $100 million.
    Food banks around the Nation are facing more demands than ever,
while resources available to them have been shrinking. Food prices have
increased, reducing the volume of food that can be acquired. Natural
disasters and changes in agricultural production practices have reduced
available supplies so that USDA has acquired substantially lower
volumes of bonus commodities than had been the case in recent years. At
the same time, the number of Americans who are turning to food banks
for assistance continues to increase. Since the appropriation for TEFAP
Administrative Funds declined to $48 million in fiscal year 2012
following higher amounts provided as a result of the American Recovery
and Reinvestment Act of 2009, food banks have had to increasingly
depend upon converting food dollars to administrative expense funds in
order to maintain their operations.
          make tefap food dollars available for 2 fiscal years
    We continue to urge the subcommittee to make TEFAP food dollars
available for 2 fiscal years, as was done under ARRA.
    While the agencies of the Department of Agriculture work closely
with food banks to provide as much food for distribution as possible,
there are occasions when food dollars are at jeopardy through no fault
of recipient agencies. If food orders are canceled by either USDA or
vendors for any reason near the end of the Federal fiscal year, State
agencies must either purchase whatever items might be available through
USDA, or lose these end-of-year balances.
    As we have done previously, we respectfully point out to the
subcommittee that when ARRA was passed, TEFAP food dollars were allowed
to be carried over from fiscal year 2009 to fiscal year 2010. This
procedure helped food bank operators to make responsible decisions and
to take maximum advantage of available resources.
    We urge the committee to make TEFAP food dollars available for 2
years, and urge the Secretary of Agriculture to allow those States who
made responsible efforts to use their TEFAP Food dollars to roll over
to the next fiscal year balances unexpended through no fault of the
TEFAP operator.
          funding for the commodity supplemental food program
    ACDA supports funding for at least maintain the current caseload
for the Commodity Supplemental Food Program (CSFP), and urges the
committee provide an additional $5 million to begin CSFP operations in
six States that now have USDA-approved State plans--Connecticut,
Hawaii, Idaho, Maryland, Massachusetts and Rhode Island. This
additional funding would make CSFP available in 45 States. We
appreciate the President's request for $202.682 million for CSFP in
fiscal year 2014, but believe that this amount is not sufficient to
allow these new States to begin operation. CSFP overwhelmingly serves
elderly individuals, many of whom are homebound. States currently
operating CSFP requested 116,350 additional caseload slots for the
current program year, clearly showing the need for this program.
  interagency panel for evaluation and improvement of the usda foods
                                program
    ACDA urges the creation of an interagency panel at USDA for
continuous evaluation and improvement of the USDA Foods program. The
USDA Foods program is a shared responsibility of the Food and Nutrition
Service, the Agricultural Marketing Service, Farm Services Agency, and
the Food Safety and Inspection Service. There is currently no formal
oversight structure integrating these agencies' efforts. ACDA believes
that as part of its oversight function the committee should direct the
Secretary to establish an interagency panel to ensure effective
management of the USDA Foods programs including contracting procedures
and product specifications.
    We look forward to continuing to partner with you and USDA in the
delivery of these needed services.

    [This statement was submitted by Wanda Shepherd, President,
American Commodity Distribution Association.]
                                 ______

    Prepared Statement of the American Farm Bureau Federation (AFBF)
    The American Farm Bureau Federation has identified the following
two areas for emphasis and funding in the fiscal year 2014 agriculture
spending bill: Programs that enhance and improve food safety and
protection; and programs that further develop renewable energy.
    Farm Bureau strongly opposes any cuts to funding of the farm safety
net. The farm bill discussion has begun, and the House and Senate
Agriculture Committees should continue to have the primary
responsibility to ensure farmers and ranchers have a viable farm safety
net.
      programs that enhance and improve food safety and protection
    Farm Bureau recommends that adequate funding for food protection at
the FDA and Food Safety Inspection Service (FSIS) be directed to the
following priorities:
  --increased education and training of inspectors;
  --additional science-based inspection, targeted according to risk;
  --effective inspection of imported food and feed products;
  --research and development of scientifically based rapid testing
        procedures and tools;
  --accurate and timely responses to outbreaks that identify
        contaminated products, remove them from the market and minimize
        disruption to producers; and
  --indemnification for producers who suffer marketing losses due to
        inaccurate Government-advised recalls or warnings.
    Farm Bureau supports funding for a National Antimicrobial Residue
Monitoring System (NARMS) to detect trends in antibiotic resistance.
NARMS protects human and animal health through integrated monitoring of
antimicrobial resistance among foodborne bacteria. Farm Bureau requests
that Congress direct that stakeholder involvement and industry input be
a priority in the ongoing Federal review.
    Farm Bureau supports funding for the Food Animal Residue Avoidance
Databank (FARAD) at the authorized level of $2.5 million. FARAD aids
veterinarians in establishing science-based recommendations for drug
withdrawal intervals. No other Government program provides or
duplicates the food safety information FARAD provides to the public.
    Farm Bureau opposes the administration's request for new user fees
for inspection activities. Food safety is for the public good, and as
such, it is a justified use of public funds.
       programs that support the development of renewable energy
    Farm Bureau supports funding for the Renewable Energy for America
Program (REAP). REAP offers grants, guaranteed loans and combination
grant/guaranteed loans for agricultural producers to purchase renewable
energy systems and energy efficiency improvements, in addition to
offering funding for energy audits and feasibility studies.
    Farm Bureau has identified seven other areas of importance for
funding. They are:
  --Programs that promote animal health;
  --Programs that promote conservation;
  --Programs that expand export markets for agriculture;
  --Programs that ensure the availability of crop protection tools;
  --Programs that strengthen rural communities;
  --Programs that support wildlife services; and
  --Research priorities.
                  programs that promote animal health
    Farm Bureau supports a $5.3 million increase for the Animal and
Plant Health Inspection Service (APHIS) to a total of $14 million for
voluntary Animal Disease Traceability (ADT). The ADT program requires
strong Government oversight on the expenditure of funds and is
essential for animal health.
    Farm Bureau supports $4.79 million for the Veterinary Medicine Loan
Repayment Program (VMLRP) administered by the Department of Agriculture
(USDA) National Institute for Food and Agriculture (NIFA). VMLRP
veterinarians ensure animal health and welfare, while protecting the
nation's food supply.
    Farm Bureau supports $123.4 million for the FDA's Center for
Veterinary Medicine (CVM). The CVM oversees the safety of animal drugs,
feeds and biotechnology-derived products.
                   programs that promote conservation
    Farm Bureau supports funding for conservation programs but
prioritizes working lands programs over retirement-type programs.
Farmers and ranchers have made great strides in conserving our natural
resources and these gains can continue through working lands programs.
       programs that expand international markets for agriculture
    Farm Bureau supports funding at authorized levels for:
  --The Foreign Agricultural Service (FAS) to maintain services that
        expand agricultural export markets. Farm Bureau urges continued
        support for the Office of the Secretary for trade negotiations
        and biotechnology resources.
  --Export development and expansion programs such as the Market Access
        Program, Foreign Market Development Program, Emerging Markets
        Program and Technical Assistance for Specialty Crops Program.
        These effective programs have resulted in increased demand for
        U.S. agriculture and food products abroad and should be fully
        funded.
  --Public Law 480 programs which serve as the primary means by which
        the United States provides needed foreign food assistance
        through the purchase of U.S. commodities.
  --APHIS Plant Protection and Quarantine personnel and facilities,
        especially plant inspection stations, which are necessary to
        protect U.S. agriculture from costly pest problems that enter
        from foreign lands.
  --APHIS trade issues resolution and management activities that are
        essential for an effective response when other countries raise
        pest and disease concerns (i.e., sanitary and phytosanitary
        measures) to prohibit the entry of American products.
  --APHIS Biotechnology Regulatory Services (BRS), which oversees the
        permit, notification and deregulation process for plant
        biotechnology products. BRS personnel and activities facilitate
        agriculture innovation, and ensure public confidence and
        international acceptance of biotechnology.
    Farm Bureau supports continued funding for the U.S. Codex Office.
Active U.S. participation in the Codex Alimentarius Commission is
essential to improving the harmonization of international science-based
standards for the safety of food and agriculture products.
               programs that ensure crop protection tools
    Farm Bureau supports maintaining the current funding level, $11.913
million, for the Minor Crop Pest Management (IR-4) within NIFA Research
and Education Activities. Developing pest control tools has high
regulatory costs, and public support has been needed to ensure that
safe and effective agrichemicals and biopesticides are available for
small, specialty crop markets. The IR-4 Project facilitates
Environmental Protection Agency registration of safe and effective pest
management technologies where the private sector is unable to cover
regulatory cost.
    Farm Bureau supports maintaining funding to the National
Agricultural Statistical Service (NASS), specifically for the
continuation of agricultural chemical-use surveys for fruits,
vegetables, floriculture and nursery crops. NASS surveys provide data
about the use of agricultural chemicals involved in the production of
food, fiber and horticultural products.
               programs that strengthen rural communities
    Farm Bureau supports USDA implementing a regional approach to give
its Rural Development (RD) programs greater flexibility and promote
innovation in rural regions.
    Farm Bureau supports maintaining funding at authorized levels for:
  --The Value-Added Agricultural Producer Grants, Rural Innovation
        Initiative, Rural Microentrepreneur Assistance Program, and
        Business and Industry Direct and Guaranteed Loans, which foster
        business development in rural communities.
  --Rural Utilities Service for rural broadband and telecommunications
        services, and the Distance Learning and Telemedicine Program.
  --The Revolving Fund Grant Program for acquiring safe drinking water
        and sanitary waste disposal facilities.
  --The Community Facility Direct and Guaranteed Loans, which funds the
        construction, enlargement or improvement of essential community
        facilities in rural areas and small towns.
  --The Resource Conservation and Development Program, which helps
        local volunteers create new businesses, form cooperatives and
        develop agri-tourism activities.
  --The Beginning Farmer and Rancher Development Program, which
        provides participants with the information and skills needed to
        make informed decisions for their operations.
  --Agriculture in the Classroom, a national grassroots program
        coordinated by USDA, which helps students gain greater
        awareness of the role of agriculture in the economy and
        society.
                programs that support wildlife services
    Farm Bureau supports maintaining the funding level for APHIS
Wildlife Services programs. Wildlife Services works to prevent and
minimize an estimated $1 billion worth of wildlife damage, while
protecting human health and safety from conflicts with wildlife.
                          research priorities
    Agricultural research is vital, particularly research focused on
meeting the growing challenges of production agriculture. The United
Nations' Food and Agriculture Organization predicts that farmers will
have to produce 70 percent more food by 2050 to feed an additional 2.3
billion people around the globe. America's farmers are the most
efficient in the world, but without a commitment to further
agricultural research and technological advancement, even America's
farmers could be hard-pressed to meet these challenges.

    [This statement was submitted by Bob Stallman, President, American
Farm Bureau Federation.]
                                 ______

 Prepared Statement of the American Forest & Paper Association (AF&PA)
                              introduction
    AF&PA supports $5.5 million to provide for implementation of the
declaration requirement of the Lacey Act, as amended by the 2008 Farm
Bill; recommends maintaining funding for the ``Tree and Wood Pests''
category to aid in combating these, and other pests and diseases;
requests $33 million for the McIntire-Stennis Cooperative Forestry
Research Program; and we would like your support and assistance in
ensuring that robust funding is included for the Center for Food Safety
and Applied Nutrition and that Congress expresses its intention to
continue the operation of the Food Contact Notification (FCN) program.
    The American Forest & Paper Association (AF&PA) is the national
trade association of the forest products industry, representing pulp,
paper, packaging and wood products manufacturers, and forest
landowners. Our companies make products essential for everyday life
from renewable and recyclable resources that sustain the environment.
    The forest products industry accounts for approximately 4.5 percent
of the total U.S. manufacturing GDP. Industry companies produce about
$190 billion in products annually and employ nearly 900,000 men and
women, exceeding employment levels in the automotive, chemicals, and
plastics industries. The industry meets a payroll of approximately $50
billion annually and is among the top 10 manufacturing sector employers
in 47 States. Within the jurisdiction of this subcommittee, continued
resources for protecting forest health and providing adequate resources
to enforce existing trade laws are essential. Specific recommendations
follow.
     animal and plant health inspection service (aphis)--lacey act
                              enforcement
    AF&PA supports $5.5 million to provide for implementation of the
declaration requirement of the Lacey Act, as amended by the 2008 Farm
Bill. The 2008 Farm Bill amended the Lacey Act (16 U.S.C. 3371 et seq.)
to make it unlawful to trade wood products or other plants taken in
violation of the laws of either a U.S. State or foreign country. This
ground-breaking legislation already is influencing the way companies
make sourcing decisions and monitor their supply chains. Full and
effective implementation and enforcement of the Lacey Act will enable
American forest product companies to compete fairly in the global
marketplace, help keep jobs in the United States, deter the destructive
impacts of illegal logging on forests and forest-dependent communities
in developing countries, and reinforce initiatives to mitigate climate
change.
    When fully implemented, the law requires U.S. importers of wood and
wood products to file a declaration identifying the genus/species name
and country of harvest--a critical measure intended by the law's
sponsors to increase supply chain transparency and assist Federal
agencies in fair and strong enforcement. The prohibition and the
declaration requirement affect a wide array of American industries, so
it is critical that the declaration process generates data in a
streamlined, cost-effective manner without unduly burdening legitimate
trade. To that end, APHIS--which is responsible for implementing the
declaration provision--needs $5.5 million in funding to fully implement
congressional mandates, including to establish an electronic
declarations database and to add internal capacity to perform data
analysis needed for monitoring and enforcement purposes.
                           aphis--plant pests
    AF&PA recommends maintaining funding for the ``Tree and Wood
Pests'' category to aid in combating these, and other pests and
diseases. As world trade continues to expand, global weather patterns
shift, and an increasingly affluent world population has the ability to
travel to--and demand products from--the far corners of the globe, the
inadvertent, yet inevitable introduction of nonnative pests and
diseases into the United States continues. Additional funding is
vitally needed to aid in combating pests such as the Asian longhorn
beetle, the Emerald Ash borer, and the Sirex woodwasp, as well as
diseases such as Phytopthora ramorum. These are but a sampling of the
diseases that harm commercial timber stands, community parks, and
private forest landowners. American citizens most certainly will bear
the cost of combating these and other emergent threats. We believe a
comprehensive, coordinated response to each is more effective and more
economical.
     national institute of food and agriculture--mc intire-stennis
                     cooperative forestry research
    AF&PA requests $33 million for the McIntire-Stennis Cooperative
Forestry Research Program. Approximately one-third of the United States
is forested and these forests enhance our quality of life and economic
vitality and are an invaluable source of renewable bioproducts, outdoor
recreation, clean water, fish and wildlife habitat, and carbon
sequestration. Sustaining these forests in a healthy and productive
condition requires a strong, continuing commitment to scientific
research and graduate education. Foundational financial support for
university-based forestry research and graduate education comes from
the McIntire-Stennis Cooperative Forestry program, funded through the
USDA's National Institute of Food and Agriculture. Funds are
distributed according to a statutory formula to each of the 50 States,
Puerto Rico, Guam, and the Virgin Islands, with a dollar-for-dollar
match required from the States.
    Additional funding is needed to:
  --provide the additional scientific research needed to address
        critical forest issues such as fires, storms, insects,
        diseases, urbanization, fragmentation, and lost economic
        opportunities.
  --develop new knowledge and innovations to sustain healthy,
        productive forests and address the challenges facing forest
        owners, forest products manufacturers and all Americans who
        benefit from our forest resources.
  --support research capacity within each State to address issues that
        are essential to private forest owners, and develop new
        opportunities for economic benefit from their forests.
    food and drug administration--food contact notification program
    AF&PA supports continued funding of the Food Contact Notification
Program. The Food Contact Notification (FCN) program protects consumer
health, food safety, and quality while providing packaging
manufacturers with an efficient process that is less burdensome than
the food additive approval process. It has allowed packaging
manufacturers to bring new, more environmentally friendly products to
market that have extended product shelf life, thereby increasing
consumer value.
    President Obama's fiscal year 2014 budget includes proposed user
fees to fund the FCN program, which over the last 16 years has been
supported by appropriated funds with no fees for companies filing FCNs.
    As Congress begins work on appropriations legislation for FDA in
the coming weeks, we would like your support and assistance in ensuring
that no user fees will be assessed for the FCN program but that robust
funding is included in the Appropriations bills for the Center for Food
Safety and Applied Nutrition, and that Congress expresses its intention
to continue the operation of the FCN program. AF&PA appreciates that
the subcommittee has previously rejected proposals to eliminate the FCN
program.

    [This statement was submitted by Elizabeth Bartheld, Vice
President, Government Affairs, American Forest & Paper Association.]
                                 ______

       Prepared Statement of the American Forest Foundation (AFF)
    The American Forest Foundation (AFF) urges the subcommittee to
maintain critical funding for USDA forest health, stewardship, and
education programs that are essential to keeping America's 11 million
family forests, some 251 million acres, healthy and intact. Maintenance
of these programs will help family forest owners get ahead of
increasing threats, saving landowners, communities, industries, from
expensive restoration in the future.
    We understand the difficult decisions you need to make. Given the
tight budget climate, we recommend placing the highest priority on two
types of investments; those that avoid larger future costs and those
that protect green infrastructure that provide public benefits. With
this in mind, we urge the subcommittee to maintain funding for the
following priority programs:
  --Animal and Plant Health Inspection Service ``Tree and Wood Pests''
        and ``Specialty Crops'' program;
  --Farm Bill Conservation Programs and Natural Resource Conservation
        Service, Conservation Operations;
  --National Institute for Food and Agriculture, Renewable Resources
        and Extension program; and
  --National Institute for Food and Agriculture, McIntire-Stennis,
        Cooperative Forestry Research.
In addition, we urge the subcommittee to provide leadership in fixing
the USDA Biobased Markets Program to better promote forest products.
    Families and individuals own 35 percent of our Nation's forests,
stewarding more acres than the Federal Government or forest
industry.\1\ These private forests provide myriad public benefits--
clean air and water, recreation, renewable resources that build our
communities, and good-paying rural jobs. But, wildfire, invasive
species and other pests, development pressures, and shrinking forest
products markets make it harder than ever to keep America's forests
healthy and productive. We must ensure these families have financial
tools, technical information, and policy support to keep their forests
as forests, for current and future generations.
---------------------------------------------------------------------------
    \1\ USDA, May 2008, Who Owns America's Forests?
---------------------------------------------------------------------------
    The American Forest Foundation is a nonprofit conservation
organization that works on the ground through a variety of programs
including the American Tree Farm System, helping these 11 million
families be good stewards and keep their forests healthy for future
generations.
                aphis invasive pest and pathogen funding
    With 58 million forested acres at risk from forest pests, we
strongly support maintaining funding levels for the APHIS Tree and Wood
Pests and Specialty Crop programs. These programs fund eradication
efforts for invasive species and work to prevent the further spread of
invasive species like the Asian long-horned beetle and the emerald ash
borer. Close to 500 species of foreign insects and diseases have become
established in the United States, and a new damaging pest is
introduced, every 2 to 3 years. It is APHIS' responsibility to prevent
such introductions and to respond effectively when pests are
introduced. According to the National Woodland Owner Survey, the threat
of forest pests, is the number one concern for family forest owners.
When an invasive species infests a family's forest, it can destroy
their investment, making it difficult to recover since most families
don't generate regular income.
    The APHIS Tree and Wood Pest program's principle effort is
eradication of the Asian longhorned beetle. This pest threatens the
vitality of maples and birches, among other trees species, and could
devastate forests from Maine to Minnesota at a cost of more than $600
billion.
    Similarly, the Specialty Crops program supports efforts to curtail
the spread of the sudden oak death pathogen, among others, which can be
spread through the interstate transfer of infected plants. Without
proper funding, this pathogen could easily spread across the United
States, killing millions of high quality, valuable oak trees.
                    farm bill conservation programs
    Farm Bill Conservation Programs, mainly EQIP, WHIP, CSP, and HRFP,
provide tools to family forest owners, leveraging the family's own
resources to implement hazardous fuels treatments, insect and disease
treatments, or other stand improvement activities in their forests--
treatments that can save future restoration costs to the landowner and
surrounding community. Take for example, the story of Keith and Karen
Abrahamson from Michigan. Their forest was attacked by the emerald ash
borer, an invasive beetle that destroys ash trees. Since the family did
not have adequate resources to remove damaged ash trees and restore
their forest, they enrolled in EQIP, which leveraged their funds to get
their forest healthy again.
    Harry and Joyce Pionke from central Pennsylvania faced a similar
threat. In 2007, a combination of a drought and a gypsy moth
infestation devastated their oak-dominated forest. Having just retired,
Harry and Vickie could not restore the forest on a fixed income, but
through CSP, they leveraged their resources to reestablish and
diversify their woods, ensuring that the forest won't take a century to
re-grow and the next gypsy moth strike won't be as damaging.
                      nrcs conservation operations
    NRCS Conservation Operations funds technical assistance and
outreach to landowners and supports implementation of Farm Bill
Conservation Programs. Without these important resources, landowners
would not have the professional guidance that they need to manage their
land and enroll in conservation programs. These resources are
especially important when considering that very few of the 10 million
family forest owners are actively engaged in the management of their
land, as evidenced by the fact that less than 5 percent of family
forest owners have forest management plans. Without outreach to these
landowners, many assume that leaving their forest alone is the best
solution. However, this is no longer an option for forest owners, given
the many threats impacting their forests. If left unchecked, these
threats will undermine their forests and the benefits that all
American's receive from them.
    AFF can be a strong ally with NRCS in implementing technical
assistance to forest owners by improving the efficiency and cost-
effectiveness of NRCS outreach. In fact, last year in Wisconsin,
because of work AFF and our on-the-ground partners like Aldo Leopold
Foundation were able to do to engage woodland owners to actively manage
their land for conservation outcomes, we provided the NRCS with a
``pre-vetted'' audience of woodland owners who were ready to implement
conservation practices and more apt to do so with the added incentive
of EQIP support. This saved NRCS field agents the time necessary for
identifying landowners with very little land management experience, but
ripe for EQIP stewardship opportunities. AFF's effort also streamlined
the process by initiating conversations to educate and engage these
landowners with the EQIP opportunities. We look forward to working more
closely with NRCS on projects such as this in the future.
               nifa renewable resources extension program
    As mentioned above, there is a significant portion of family forest
owners that are not engaged in the management of their forest. This
means that their forests are not fully providing the public benefits
nor are they able to withstand impending forest health challenges. The
Renewable Resources Extension Program supports outreach and education
to forest owners, so they have the information they need to be good
stewards of their land. The extension foresters that this program
supports are essential to landowners, providing them with a spectrum of
information from dealing with insect infestations to tax advice for new
forest owners. The extension programs leverage significant State and
local dollars and are a key partner to organizations like the American
Forest Foundation.
          nifa mc intire-stennis cooperative forestry research
    The forestry research carried out by the Nation's land grant
universities and funded through the McIntire-Stennis program provides
essential tools and information for family forest owners. This program
also supports critical family forest research, so we can identify
barriers to stewardship and how to reduce these obstacles. Finally, it
helps train the next generation of forestry professionals to give
forest owners the tools and technical assistance they need.
                        biobased markets program
    In addition to these tools and resources, family forest owners also
need healthy markets to ensure the revenue necessary to maintain
healthy, productive forests. The American Forest Foundation encourages
the subcommittee to urge the U.S. Department of Agriculture to fix the
Biobased Markets Program, to remove the disadvantage for forest
products in the program.
    Thank you for your consideration of these important programs. We
urge the committee, when considering its priorities for fiscal year
2014, to maintain funding for these key programs, to ensure family
forests stay healthy and intact, and continue to provide myriad public
benefits that all Americans enjoy. We greatly appreciate the
opportunity to share testimony as the subcommittee prepares a fiscal
year 2014 appropriations bill. We look forward to sharing more specific
recommendations following release of the fiscal year 2014
administration budget.

    [This statement was submitted by Tom Martin, President and CEO,
American Forest Foundation.]
                                 ______

          Prepared Statement of the American Heart Association
    The American Heart Association is pleased to submit this statement
regarding the Food and Drug Administration's (FDA) and U.S. Department
of Agriculture's (USDA) efforts to reduce sodium consumption in the
United States.
    Excess sodium consumption is a significant public health issue.
Diets high in sodium have been linked to high blood pressure and
associated with an increased risk for heart attack, stroke, and kidney
disease. Unfortunately, the average American consumes more than 3,600
mg of sodium per day which far exceeds the American Heart Association's
recommended daily intake of less than 1,500 mg per day. Recent research
has shown that even gradual reductions in sodium consumption to 2,200
mg should result in 280,000 to 500,000 fewer deaths over 10 years.\1\ A
national effort to reduce sodium consumption would also save $10 to $24
billion in healthcare costs annually.\2\
---------------------------------------------------------------------------
    \1\ Coxson PG, et al. Mortality Benefits from U.S. Population-Wide
Reduction in Sodium Consumption. Hypertension 2013; 61(3):564-570.
    \2\ Appel LJ, et al. The Importance of Population-Wide Sodium
Reduction as a Means to Prevent Cardiovascular Disease and Stroke: A
Call to Action From the American Heart Association; Circulation.
2011;123:1138-1143.
---------------------------------------------------------------------------
                  the science behind sodium reduction
    AHA is aware that despite the abundance of studies showing the
benefits of lowering sodium consumption, there are some who still
question the evidence supporting population-wide sodium reduction.
Common arguments include the absence of a major randomized-controlled
trial with hard clinical outcomes. It is well-known, however, that such
trials are not feasible because of logistic, financial, and often
ethical considerations.\3\ In fact, there is no trial of weight
reduction or increased physical activity on hard clinical outcomes, and
only one definitive trial of smoking cessation therapy on lung
cancer.\4\ It also has been argued that sodium reduction might be
harmful.\5\ However, the evidence for harm is unpersuasive, based
largely on inferences from cohort studies with major methodological
limitations, particularly, incomplete assessment of sodium intake and
the potential for reverse causality.\6\ The methodological issues limit
the usefulness of the available cohort studies as a basis for guiding
sodium intake policy, much less reversing recommendations.\7\
---------------------------------------------------------------------------
    \3\ Whelton PK, et al. Sodium, Blood Pressure, and Cardiovascular
Disease: Further Evidence Supporting the American Heart Association
Sodium Reduction Recommendations. Circulation. 2012;126:2880-2889
    \4\ Anthonisen NR, Skeans MA, Wise RA, Manfreda J, Kanner RE,
Connett JE, Lung Health Study Research Group. The effects of a smoking
cessation intervention on 14.5-year mortality: a randomized clinical
trial. Ann Intern Med. 2005;142:233-239.
    \5\ Alderman MH. Reducing dietary sodium: the case for caution.
JAMA.2010;303:448-449.
    \6\ Cook NR, Sacks F, MacGregor G. Public policy and dietary sodium
restriction. JAMA. 2010;303:1917; author reply 1917-1918.
    \7\ Ibid.
---------------------------------------------------------------------------
    On January 13, 2011, the Association published a Presidential
Advisory entitled ``The Importance of Population-Wide Sodium Reduction
as a Means to Prevent Cardiovascular Disease and Stroke: A Call to
Action from the American Heart Association''. The Advisory called for a
renewed and intensive focus on population-wide sodium reduction. In
November 2012, AHA reaffirmed the need to reduce sodium consumption in
a new Presidential Advisory ``Sodium, Blood Pressure, and
Cardiovascular Disease: Further Evidence Supporting the American Heart
Association Sodium Reduction Recommendations''.
    The principal basis for AHA's recommendation is the strength of the
scientific evidence relating excess sodium intake to high blood
pressure, cardiovascular disease and stroke, and the capacity of
reduced intake of sodium to prevent and treat hypertension and reduce
the risk of adverse cardiovascular disease and stroke events. High
blood pressure, both prehypertension and hypertension, is a leading
cause of preventable morbidity and mortality worldwide. It affects more
than 76 million U.S. adults and is a major cause of cardiovascular
disease; 54 percent of strokes and 47 percent of coronary heart disease
events are attributed to elevated blood pressure.\8\ An estimated 9 in
10 Americans will develop high blood pressure during their lifetime.\9\
---------------------------------------------------------------------------
    \8\ Lawes CM. Global Burden of Blood-Pressure-Related Disease,
2001. Lancet 2008;371:1513.
    \9\ Vasn RS. Beiser A., et al. Residual Lifetime Risk for
Developing Hypertension in Middle-Aged Women and Men: The Framingham
Study. JAMA. 2002; 287:1003-1010.
---------------------------------------------------------------------------
             reducing the sodium content of the food supply
    More than 75 percent of consumed sodium is estimated to come from
sodium added to restaurant and processed foods before purchase.\10\
\11\ Even those who read labels are often left without realistic
alternatives to high-sodium foods, and those who eat out, a behavior
that has increased more than 200 percent from 1977 to 1995, are
subjected to excessive sodium intakes from routinely served, processed
foods.\12\
---------------------------------------------------------------------------
    \10\ Mattes RD, Donnelly D. Relative contributions of dietary
sodium sources. J Am Coll Nutr. 1991;10:383-393.
    \11\ CDC. Vital Signs: Food Categories Contributing the Most to
Sodium Consumption--United States, 2007-2008. MMWR 2012; 61.
    \12\ Dietary Guidelines Advisory Committee. 2010 Report of the
Dietary Guidelines Advisory Committee on the Dietary Guidelines for
Americans. Washington, DC: U.S. Department of Agriculture; 2010.
---------------------------------------------------------------------------
    Some food items are extremely high in sodium. However, from a
public health perspective, the problem of excess sodium largely
reflects the cumulative intake of common foods that are only moderately
high in sodium. Hence, any meaningful strategy to reduce sodium intake
population-wide must involve the efforts of food manufacturers, food
processors, and restaurant industries, a strategy that is being
successfully implemented in other countries. For example, the United
Kingdom has a vigorous salt reduction campaign, which has resulted in
an estimated population-wide reduction in sodium intake of 10
percent.\13\ According to the CDC, a 10 percent reduction in dietary
sodium intakes could be achieved by reducing the sodium content of the
top 10 sources of dietary sodium by 25 percent.\14\ This degree of
reduction could prevent an estimated 28,000 deaths and $7 billion in
healthcare expenditures annually.\15\
---------------------------------------------------------------------------
    \13\ Food Standards Agency. Dietary Sodium Levels Surveys.
tna.europarchive.org/20101007132006/http://www.food.gov.uk/news/
newsarchive/2010/mar/saltcommitments.
    \14\ CDC. Vital Signs: Food Categories Contributing the Most to
Sodium Consumption--United States, 2007-2008. MMWR 2012; 61.
    \15\ Bibbins-Domingo K, Chertow GM, Coxson PG, et al. Projected
effect of dietary salt reductions on future cardiovascular disease. N
Engl J Med 2010;362:590-9.
---------------------------------------------------------------------------
    The American Heart Association's Presidential Advisory and Call to
Action follows a 2010 Institute of Medicine (IOM) report that provides
a roadmap for lowering Americans' intake of sodium.\16\ It was noted
that for 40 years, efforts to reduce sodium intake of the U.S.
population have been unsuccessful. This absence of tangible progress
reflects the lack of a substantive, multidimensional, environmentally
focused strategic plan with measurable outcomes, joint-ownership, and
accountability among the many stakeholders. Specifically, given the
ubiquity of sodium in the food supply, the prior focus on encouraging
individuals to select reduced-sodium products has not meaningfully
reduced sodium intake to achieve levels consistent with the U.S.
Dietary Guidelines for Americans.\17\ Such efforts must be accompanied
by an overall reduction of the level of sodium in the food supply. IOM
made a series of recommendations, many of which involved regulatory
actions (e.g., setting mandatory national standards for the sodium
content of processed foods).
---------------------------------------------------------------------------
    \16\ Institute of Medicine. Strategies to Reduce Sodium Intake in
the United States. Washington, DC: National Academy Press; 2010.
    \17\ Supra, n. 7.
---------------------------------------------------------------------------
    In response to these developments, FDA and the USDA's Food Safety
and Inspection Service (FSIS) issued a Federal Register notice
requesting information on methods for reducing sodium consumption.\18\
Upon release of the notice, FDA and FSIS held a public meeting and
accepted comments until January 27, 2012. Since that time, however,
neither FDA nor FSIS has responded to the IOM's recommendations. In the
interim, some manufacturers and retailers have reduced the sodium
content of some of their products,\19\ \20\ but many have not. Further
reductions are clearly necessary in order to achieve meaningful
reductions in Americans' sodium intakes.
---------------------------------------------------------------------------
    \18\ On September 15, 2011, the FDA and FSIS established a docket
(FDA-2011-N-0400 and FSIS-2011-0014) to obtain comments, data, and
evidence related to the dietary intake of sodium as well as current and
emerging approaches designed to reduce sodium consumption. Comments
were accepted until January 27, 2012.
    \19\ For example, Walmart, the Nation's largest grocer, pledged to
work with manufacturers to reduce the sodium content of the foods its
sells by 25 percent by 2015. http://news.walmart.com/news-archive/2011/
01/20/walmart-launches-major-initiative-to-make-food-healthier-
healthier-food-more-affordable.
    \20\ Recently, 21 packaged food and restaurant companies reduced
sodium in popular products through a voluntary commitment that was part
of the New York City Health Department's National Salt Reduction
Initiative. http://www.nyc.gov/portal/site/nycgov/menuitem.
c0935b9a57bb4ef3daf2f1c701c789a0/
index.jsp?pageID=mayorpress_release&catID=1194&doc_
name=http%3A%2F%2Fwww.nyc.gov%2Fhtml%2Fom%2Fhtml%2F2013a%2Fpr058-
13.html&cc= unused1978&rc=1194&ndi=1.
---------------------------------------------------------------------------
    Successful sodium reduction requires action and partnership at all
levels--individuals, healthcare providers, professional organizations,
public health agencies, and industry. But such actions will not occur
without Government leadership. The AHA urges the subcommittee to see
that FDA and FSIS place a renewed and intensive focus on this
critically important public health issue in line with the IOM's
recommendations.
    As a first step, we suggest that the subcommittee direct the FDA
and FSIS to provide this committee with an update on the agencies'
actions following the 2011 request for information on approaches to
reduce sodium consumption.\21\
---------------------------------------------------------------------------
    \21\ Supra, n. 16.
---------------------------------------------------------------------------
    In an era of budget cutting, we recognize that the agencies'
resources to act are limited. However, our organization stands ready to
assist FDA and FSIS. We look forward to partnering with the agencies
and private organizations to achieve a population-wide reduction in
sodium intake.

    [This statement was submitted by Donna Arnett, Ph.D., President,
American Heart Association.]
                                 ______

 Prepared Statement of the American Honey Producers Association, Inc.
                                 (AHPA)
    Chairman Pryor and members of the subcommittee, my name is Randy
Verhoek, and I currently serve as president of the American Honey
Producers Association (AHPA). I am pleased today to submit the
following statement on behalf of the AHPA, a national organization of
commercial beekeepers actively engaged in honey production and crop
pollination throughout the country. The purpose of this statement is to
bring to your attention the continued threats faced by American
beekeepers and the risk those threats pose to billions of dollars in
U.S. agriculture that rely upon honeybee pollination services. To
mitigate the impact of these threats in the short term and to eliminate
the threats in the long term, we respectfully request an appropriation
that meets the needs anticipated by the 2008 farm bill--first by fully
funding the Emergency Livestock Assistance Program (ELAP) so that
affected beekeepers hit with severe losses due to colony collapse
disorder (CCD) will not need to consider shuttering the doors on their
operations. Funding for ELAP should be sufficient to meet beekeeper
demands for both fiscal year 2013 and fiscal year 2014, which based on
historic trends and current circumstances will require a fiscal year
2014 appropriation of at least $25 million that can be used to pay
claims from both fiscal years. Second, we request funding for essential
long-term research to combat CCD and to conduct other essential
honeybee research through the Agricultural Research Service (ARS) and
other agencies at the Department of Agriculture, including at least
$11.7 million for bee research at the ARS Honeybee Research
Laboratories and no less than $10 million for the National Institutes
of Food and Agriculture (NIFA) for honey bee research and extension
activities. And finally, we thank the subcommittee for its efforts in
2012 to ensure long-term commitments from USDA to maintain the vital
honey bee research agenda previously housed at the ARS Honey Bee
Research Laboratory in Weslaco, Texas. Consistent with those
commitments, we strongly encourage the subcommittee to continue to
provide oversight over the transitioning of the honey bee research
agenda from Weslaco, Texas, to the various other ARS laboratories. AHPA
stands by as a resource should our assistance be needed.
    As your subcommittee is keenly aware, honeybees are an
irreplaceable part of the U.S. agricultural infrastructure. Honeybee
pollination is critical in the production of more than 90 food, fiber,
and seed crops, and it directly results in $15 to $20 billion in U.S.
farm output each year. One key example is the almond crop. California
grows 100 percent of the Nation's almonds and supplies 80 percent of
the world's almonds, all of which are 100 percent pollinated by managed
bees. In fact, about 65 percent of managed colonies in the United
States are transported each year from other parts of the country to
pollinate those almonds. In addition to this clear commercial benefit,
honeybees are also vital to the health of all Americans given the
dietary importance of such diverse pollinated crops as almonds, apples,
oranges, melons, blueberries, broccoli, tangerines, cranberries,
strawberries, vegetables, alfalfa, soybeans, sunflower, and cotton,
among others. In fact, honeybees pollinate about one-third of the human
diet. As one recent headline noted, ``without honeybees, we may cease
to be.''
    With this in mind, a threat to the existence of managed American
honeybees is a threat to all Americans. And unfortunately, the American
honeybee continues to face a number of significant threats. While not
specifically a topic of relevance for congressional appropriators,
complex trade law circumvention and customs fraud schemes continue to
disadvantage the American honey producer, stress pollinated crops and
even threaten the health and safety of consumers. This substantial
trade threat is layered on top of the industry's ongoing battle against
CCD, a phenomenon that since at least 2005 has ravaged bee colonies
across the United States, moving from one apiary to another in
unpredictable patterns and causing the death of up to 90 percent of the
bee colonies in affected apiaries. The National Research Council at the
National Academy of Sciences has, as a result of CCD, characterized the
beekeeping industry as being in ``crisis mode''--a point echoed and re-
emphasized in a USDA action plan regarding honeybee threats. And
hundreds of news articles and many in-depth media reports have
continued to chronicle the looming disaster facing American beekeepers
and the producers of over 90 fruit, vegetable and fiber crops that rely
on honeybee pollination. This year is no exception, with some of our
Nation's largest and most systemically important beekeepers reporting
substantial losses. Expectations are that many of them will experience
losses in excess of 50 percent of their colonies. In fact, in the past
month alone, several television news segments have aired and dozens of
articles have been written on the topic. The New York Times recently
featured an article titled, ``Soaring Bee Deaths in 2012 Sound Alarm on
Malady'' and another titled ``Calamity for Our Most Beneficial
Insect''. A CBS segment accurately noted that the ``deepening honey bee
crisis creates worry over food supply''.
    As you know, the Emergency Assistance for Livestock, Honey Bees and
Farm-Raised Fish Program (ELAP) was enacted as part of the 2008 farm
bill to assist eligible producers in the face of just this kind of
crisis. ELAP is intended to help reduce losses due to diseases, adverse
weather and other conditions that are not covered under any other
program or by any insurance program. This new disaster program proved
over the last 5 years to be the only effective safety net for
struggling beekeepers whose colonies have been devastated year over
year by the major, still unresolved problem of Colony Collapse Disorder
(CCD). Unfortunately, in the American Taxpayer Relief Act of 2012, a
last-hour amendment stripped ELAP of mandatory funding for fiscal year
2013 and beyond. While we understand the challenges associated with
finding new money to fund this essential program for fiscal year 2013
and fiscal year 2014, we plea with the subcommittee to work with us to
find a solution. By our calculation, at least $25 million will be
needed to cover claims for both fiscal years.
    In addition to the acute crisis at hand, we must also stay
vigilantly focused on the long term solution to this major problem.
Despite extensive and coordinated work by experts from Government,
academia and the private sector, the definitive causes of and solutions
for CCD have yet to be identified. The research is complex, as there
are a wide range of factors that--either alone or in combination--may
be causes of this serious condition, including the impact of certain
systemic crop pesticides. Continuing infestations of the highly
destructive Varroa mite, combined with other pests and mites, are also
thought to compromise the immune systems of bees and may leave them
more vulnerable to CCD. At the same time, researchers will need to
focus on the many reported instances in which otherwise healthy, pest-
free, stationary bee colonies are also suffering collapse or problems
with reproduction.
    AHPA, other industry officials, and leading scientists believe that
an important contributing factor in the current CCD crisis is the
longstanding, substantial underfunding of U.S. bee research, resulting
in an inadequate capacity to respond to new research challenges and to
take long term steps to assure honeybee health. In recent years,
honeybee research has become overly confined to four, and now three,
ARS laboratories that, while providing the first line of defense
against exotic parasitic mites, Africanized bees, viruses, brood
diseases, pests, pathogens and other conditions, simply cannot be
expected to handle the full range of honeybee research challenges at
current funding levels. At the same time, universities and the private
sector, despite their ability to provide significant and innovative new
research on emerging bee threats, have scaled back their efforts due to
a lack of available funds.
    In recent years, the Federal Government has spent very modest
amounts at each ARS Honeybee Research Laboratory--for a sector that
contributes nearly $20 billion per year to the U.S. farm economy and
exponentially more to ensuring ecological balance and a healthy human
diet. Worse still, with the emergence of CCD, funding amounts have not
been increased commensurate with growing bee health concerns, resulting
in a serious gap between the threats faced by U.S. honeybees and the
capacity of our researchers to respond. Closing this gap will require
significant new resources. To give a sense of this cost, it is
estimated that each new scientist, technician and the support materials
that they need will cost an additional $500,000 per year. Many new
scientists are needed. The entire ARS research budget for honey bees is
a paltry $11.7 million for all three ARS Honeybee Research
Laboratories.
    To address these challenges, the AHPA respectfully requests funding
consistent with authorizations provided in the 2008 farm bill, but no
less than appropriated in fiscal year 2012, including at least $11.7
million for ARS honey bee research. Specifically, the funds should be
divided among the following Department of Agriculture agencies and
programs: (1) the three ARS Bee Research Laboratories for new
personnel, facility improvement, and additional research; (2) the
Animal and Plant Health Inspection Service to conduct a nationwide
honeybee pest and pathogen surveillance program; (3) the ARS Area Wide
CCD Research Program divided between the Beltsville, Maryland and the
Tucson, Arizona research laboratories to identify causes and solutions
for CCD in affected States; (4) the NIFA to fund extension and research
grants to investigate the following: honey bee biology, immunology, and
ecology; honey bee genomics; native bee crop pollination and habitat
conservation; native bee taxonomy and ecology; pollination biology;
sub-lethal effects of insecticides, herbicides, and fungicides on honey
bees, native pollinators, and other beneficial insects; the effects of
genetically modified crops, including the interaction of genetically
modified crops with honey bees and other native pollinators; honeybees,
bumblebees, and other native bee parasites and pathogens' effects on
other native pollinators; and (5) the additional ARS research
facilities in New York, Florida, California, Utah, and Texas for
research on honeybee and native bee physiology, insect pathology,
insect chemical ecology, and honeybee and native bee toxicology.
    Unfortunately, last year, ARS, despite our strong opposition,
closed the Weslaco ARS research facility, including the ARS Honeybee
Research Laboratory--perhaps the newest and best of the four honeybee
research laboratories in terms of practical, near term results
achieved. Although a result of broader budgetary pressures--and not a
decision aimed directly at honeybee research--the move nonetheless has
caused great concern for our industry. From ARS's closure notification,
it is our understanding that funds currently dedicated to the Weslaco
honeybee research function are being ``re-directed'' to honeybee
research currently conducted in Beltsville, Maryland; Baton Rouge,
Louisiana; and Tucson, Arizona.
    We respectfully call on the subcommittee to continue to provide
invaluable oversight to ensure that the vital research function
previously performed at the Weslaco honey bee laboratory is not lost or
diminished in this transition. In particular, we would ask the
subcommittee to encourage movement of as much of the research as
possible, including the bee colonies, from Weslaco to Baton Rouge and
not to Tucson. Tucson does not have the right climate or forage to keep
large quantities of bee colonies alive. Further, we are very concerned
about the loss of personnel that has resulted from the transition--a
loss we were assured would not happen and one we absolutely cannot
afford at this time of need. Finally, we ask the subcommittee to
consider dedicating future funding to improving the ARS facility in
Baton Rouge so that it can absorb the Weslaco research and expand its
own research capacity. The Baton Rouge facility was designed in the
1950s, and unlike the state of the art facility that was closed in
Weslaco, it needs substantial updating.
    And while to date the ARS Research Laboratories have been the
backbone of American Honeybee research, we do not believe that those
facilities alone--even when fully funded--will have the capacity to
meet today's research needs. This is why, after analyzing the new and
serious threats to U.S. honeybees, Congress, representatives of the
farm sector and leading researchers developed the research priorities
that were incorporated into the 2008 farm bill. In addition to
increased resources for ARS research, these experts pressed for new
funding, through NIFA, for Government, academic and private sector
research. They also urged new bee surveillance programs through the
Animal and Plant Health Inspection Service to address the alarming lack
of accurate information about the condition of U.S. bee colonies.
    One particularly effective way of adding needed capacity and
innovative expertise in the effort to ensure honeybee health would be
to reinvigorate private sector and university bee research initiatives.
For many years, these sectors played a vital role in honeybee research,
and many leading universities have significant bee research
capabilities. In recent years, non-Federal agency research has
substantially declined due to a lack of support for such initiatives.
Fully funding the 2008 farm bill authorization for the Department of
Agriculture's NIFA would go a long way toward achieving this worthy
goal. We respectfully request that the subcommittee provides no less
than $10 million for NIFA's honey bee research and extension activities
in fiscal year 2014.
    NIFA is tasked with advancing knowledge for agriculture by
supporting research, education, and extension programs. Funds may be
channeled through the Department to researchers at land-grant
institutions, other institutions of higher learning, Federal agencies,
or the private sector. The requested funding for NIFA would provide
important flexibility in allocating badly needed Federal dollars among
Government, private sector and university researchers. The recipients
would provide more widespread research on honeybee biology, immunology,
ecology, and genomics, pollination biology, and investigations into the
effects on honeybees of potentially harmful chemicals, pests, other
outside influences, and genetically modified crops. The result of such
funds would be to ensure flexible financing with a comprehensive plan
for battling CCD, pests, and other ongoing and future honeybee threats.
    In conclusion, we wish to thank you again for your past support of
honeybee research and for your understanding of the critical importance
that Federal funding plays in ensuring a healthy honeybee supply. By
way of summary, in fiscal year 2014, the American Honey Producers
Association strongly requests no less than $25 million for the
Emergency Livestock Assistance Program, at least $11.7 million in
funding for CCD and other honeybee research at the ARS Honeybee
Research Laboratories, and no less than $10 million for NIFA's honey
bee research and extension activities. The AHPA strongly encourages
continued oversight to ensure the vital Weslaco research agenda is
properly transferred and adequately prioritized at the other ARS
laboratories. Only through critical research can we have a viable U.S.
beekeeping industry and continue to provide stable and affordable
supplies of bee-pollinated crops, which make up fully one-third of the
U.S. diet. I would be pleased to provide answers to any questions that
you or your colleagues may have.

    [This statement was submitted by Randy Verhoek, President, American
Honey Producers Association, Inc.]
                                 ______

 Prepared Statement of the American Indian Higher Education Consortium
                                (AIHEC)
    This statement includes a summary of our fiscal year 2014 funding
recommendations and an outline of the 1994 Institutions' plan for using
our land grant programs to fulfill the agricultural potential of
American Indian communities, and to ensure that American Indians have
the skills and support needed to maximize the economic potential of
their resources.
                  summary of fiscal year 2014 requests
    While we recognize the current economic climate and resulting
constraints, and although the amounts requested are above that
previously appropriated, we believe these requests to still be modest
given the fact that the funds appropriated are currently shared among
32 tribal college land-grant institutions, and that two additional
tribal colleges will soon be added to the list of 1994 land-grant
institutions and therefore eligible to a portion of the funding, as
well. The Tribal Colleges and Universities (TCUs) that are the 1994
Land-Grant Institutions are an essential component of land grant
system. The current 1994 Institutions operate more than 70 campuses and
sites in 13 States, within whose geographic boundaries most American
Indian reservations and Federal Indian trust land lie. They serve
students from well over 250 federally recognized tribes, more than 75
percent of whom are eligible to receive Federal financial aid. In
total, the TCUs annually serve about 88,000 American Indians/Alaska
Natives (AI/AN) through a wide variety of academic and community-based
programs, including land-grant programs. TCUs are accredited by
independent, regional accreditation agencies and like all U.S.
institutions of higher education must undergo stringent performance
reviews on a periodic basis to retain their accreditation status.
    The 1994 Institutions have programs established within the USDA
National Institute of Food and Agriculture (NIFA) and the Rural
Development mission area. In NIFA, we request: $30 million for the 1994
Institutions' competitive Extension grants program; $15 million for the
1994 Institutions' competitive Research Grants program; $30 million for
the Higher Education Equity Grants; a doubling of the corpus in the
Native American Endowment fund; and in the Rural Development--Rural
Community Advancement Program (RCAP), that the full $10 million
authorized, be appropriated for the TCU Essential Community Facilities
Grants program to help the 1994 Institutions address the critical
facilities and infrastructure needs that advance their capacity to
participate as full land grant partners.
    1994 land grant programs--solid investment in economic capacity
    In the past, due to lack of expertise and training, millions of
acres on Indian reservations lay fallow, under-used, or had been
developed using methods that caused irreparable damage. The Equity in
Educational Land Grant Status Act of 1994 is helping to address this
situation and is our hope for the continued improvement of our
reservation lands. Our current land grant programs remain very small,
yet critically important to us. It is essential that American Indians
explore and adopt new and evolving technologies for managing our lands.
With increased capacity and program funding, we will become even more
fundamental contributors to the agricultural base of the nation and the
world.
    1994 Competitive Extension Grants Programs.--The 1994 Institutions'
extension programs strengthen communities through outreach programs
designed to bolster economic development; community resources; family
and youth development; natural resources development; and agriculture;
as well as health and nutrition education and awareness. Without
adequate funding the 1994 Institutions' ability to maintain existing
programs and to respond to the many emerging issues, such as food
safety and homeland security (especially on border reservations) is
severely hampered. The 1994 Institutions have continued to apply their
resourcefulness for making the most of every dollar they have at their
disposal by leveraging funds to maximize their programs whenever
possible. For example, Nebraska Indian Community College (NICC) is
conducting a 1994 Extension program called Preserving Native Seed Corn
that assists tribal members in the production and preservation of
culturally valuable heirloom seed corn through workshops and technical
assistance. Program participants learn culturally appropriate
strategies to address and solve critical issues such as food security,
health and nutrition, and community development. Ironically, the
1994s--the only land-grant institutions that are chartered by federally
recognized tribes--are the only land-grant institutions that are not
permitted to compete for grants intended to provide services to
federally recognized tribal communities. Only the 1862 (State) and 1890
(HBCU) land-grant institutions are eligible to compete for grant awards
under the Federally Recognized Tribes Extension Program (FRTEP).
    1994 Competitive Research Grants Program.--Impressive efforts to
address economic development through natural resource management have
emerged from the 1994 Institutions collaborative research projects
conducted in partnership with 1862/1890 land-grant institutions. The
1994 Research Grants program illustrates an ideal combination of
Federal resources and TCU-State institutional expertise, with the
overall impact being far greater than the sum of its parts. The
$1,805,000 appropriated in fiscal year 2010 for research to be
conducted at all 32 tribal institutions, in partnership with another
non-1994 land-grant institution, is the largest appropriation for this
program to date, and is by any measure, wholly inadequate to develop
capacity and conduct necessary research at our institutions. The 1994
Research Grants program is vital to ensuring that TCUs may finally be
recognized as full partners in the Nation's land grant system. While
many of our institutions are conducting applied research, continuing to
find the resources for this research to address their communities'
needs is a continuous challenge. Priority issue areas that are
currently being studied at the 1994 land-grants include: sustainable
agriculture and forestry; biotechnology and bioprocessing; agribusiness
management and marketing; plant propagation, including native plant
preservation for medicinal and economic purposes; animal breeding;
aquaculture; ramifications of human nutrition (including health,
obesity, and diabetes); and family, community, and rural development.
For example, Haskell Indian Nations University (HINU) in Lawrence,
Kansas is partnering with Kansas State University on a project funded
by a 1994 Research grant entitled: Food Deserts, Edible Landscapes, and
Healthier Choices in Kansas. The project seeks to determine if
extension services and peer-to-peer mentoring can improve the success
of new American Indian gardeners. Researchers will also determine the
best vegetable cultivars and fruit and nut tree varieties for the local
area and provide outreach and technical assistance to Tribal members
enrolled in Tribal gardening programs.
    1994 Institutions' Educational Equity Grant Program.--This program
is designed to assist 1994 Institutions with academic programs. Through
the modest appropriations first made available in fiscal year 2001, the
1994 Institutions have developed and implemented courses and degree
programs in natural resource management; environmental sciences;
horticulture; forestry; and food science and nutrition. This last
category is helping to address the epidemic rates of diabetes and
cardiovascular disease that plague American Indian reservations.
    Native American Endowment Fund.--Endowment installments that are
appropriated under the 1994 Institutions' account remain with the U.S.
Treasury. Only the annual interest yield, less the USDA's
administrative fee, is distributed to the 1994 Institutions. The latest
interest yield, divided among the eligible 32 TCU land-grants by
statutory formula, was $4,997,881 after the USDA NIFA claimed its
standard 4 percent administrative fee of $209,242. Once again, the
NIFA, to simply make the funds available for draw down by the eligible
1994 Institutions, received a larger share than about 80 percent of the
1994 institutions received to provide much-needed community programs
and services. We respectfully request that (1) the subcommittee
consider doubling the current endowment corpus over the next 2 years,
to help stabilize the annual funding available to each of the 1994
land-grants, and (2) direct USDA-NIFA to reduce the administrative fee
to not more than 1 percent of the 1994 Endowment annual interest yield,
so that more of these funds can be put to use by the 1994 Institutions
to conduct essential community-based programs and address critical
infrastructure needs.
    Tribal Colleges and Universities Essential Community Facilities
Program (Rural Development).--Construction and facilities maintenance
is necessary and expense. It is not unreasonable to expect that this
competitive program be funded at the fully authorized level of $10
million to help address the considerable facilities and infrastructure
needs of over 30 land-grant institutions.
                               conclusion
    The 1994 Institutions have proven to be efficient and effective
vehicles for bringing educational opportunities to American Indians/
Alaska Natives and the promise of self-sufficiency to some of this
Nation's poorest and most underserved regions. The small Federal
investment in the 1994 Institutions has already paid great dividends in
terms of increased employment, access to higher education, and economic
development. Continuation of and growth in this investment makes sound
moral and fiscal sense. American Indian reservation communities are
second to none in their potential for benefiting from effective land-
grant programs and, as earlier stated, no institutions better exemplify
the original intent of Senator Morrill's land grant concept than the
1994 Institutions.
    We truly appreciate your support of the 1994 Institutions and
recognition of their role in the Nation's land grant system. We ask you
to renew your commitment to help move our students and communities
toward self-sufficiency and respectfully request your full
consideration of our fiscal year 2014 appropriations requests.
                                 ______

  Prepared Statement of the American Nursery & Landscape Association
           (ANLA) and the Society of American Florists (SAF)
    The American Nursery & Landscape Association (ANLA) and the Society
of American Florists (SAF) welcome this opportunity to present the
nursery and floriculture industry's views regarding the U.S. Department
of Agriculture's (USDA) budget for the fiscal year 2014.
    ANLA is the national trade organization representing the U.S.
nursery and landscape industry. ANLA represents some 11,000 family
farms and small businesses who are active members of ANLA and/or its
State and regional nursery and landscape association partners. ANLA's
grower members produce all types of plant material for domestic and
export markets. Domestically, ANLA members are estimated to produce
about 75 percent of the nursery and greenhouse crops moving in domestic
commerce in the United States that are destined for landscape use.
    SAF is the national trade association representing the floriculture
industry in the United States. Membership includes some 10,000 small
businesses, including growers, wholesalers, retailers, importers and
related organizations, located in communities nationwide and abroad.
The industry produces and sells cut flowers and foliage, foliage
plants, potted flowering plants, and bedding plants, which compete in
the international marketplace.
                  economic importance of the industry
    The floriculture and nursery industry represents a vibrant and
economically very significant part of American agriculture.
Floriculture and nursery crops are the third largest domestic U.S. crop
in value, ahead of wheat, tobacco and cotton, and outranked only by
corn and soybeans. Nursery and floriculture crops represent about 15
percent of total U.S. crop receipts, and comprise over $15 billion of
the U.S. farmgate economy. But we would not have even these indicators
of our industry's importance without the surveys discussed in the
following paragraphs.
          national agricultural statistics service (usda/nass)
    The National Agricultural Statistics Service (NASS) provides
statistical survey information essential to decisionmakers not only for
Government, Congress, and other policymakers, but also for producers,
for their economic and policy decisions. The President's budget request
for fiscal year 2014 represents a $1 million reduction from the fiscal
year 2013 budget, which continues a downward trend that is a
significant concern for our industry.
    In addition, we are concerned that several statistical surveys of
great importance to the environmental horticulture industry either have
been eliminated or are in danger of being eliminated. We request that
additional funding be included in the NASS budget to ensure adequate
funding for these surveys:
  --Commercial Floriculture Crops Summary (annual survey);
  --Chemical Use Survey; and
  --Nursery Production Survey.
    We also support additional funding so that the Census of
Horticultural Specialties, a follow-on survey to the Census of
Agriculture, can be conducted every 5 years. The Census of
Horticultural Specialties is another survey of extremely high
importance to our industry. It is our understanding that the Census of
Horticultural Specialties has been planned by NASS, but there is
concern that the President's budget request may force elimination of
this critically important survey.
    The importance of the statistical information provided by these
NASS surveys to businesses cannot be overstated. Business owners in the
environmental horticulture industry must be able to pivot quickly, and
the information provided by the crop surveys helps them to decide upon
crops that will be favorable investment opportunities. Particularly if
pests or diseases strike, a business owner must be able to find
information that will help determine other crops that might be
substituted. These data not only help producers but also help retailers
make sensible decisions in this regard. In short, these important
surveys provide core data to businesses for their economic
decisionmaking.
    An interesting example of this is seen in the current marketplace,
as the disease ``Impatiens Downy Mildew'' is seen increasingly in
States across the United States. Impatiens walleriana, the common
impatiens that are seen in landscapes, is obviously a mainstay crop of
our industry, in some years accounting for over $174 million in farm
gate sales across all 50 States. Yet the new disease is creating havoc
in the markets, with consumers, garden centers and ``big box stores''
unwilling to buy impatiens for fear of losing them to this disease.
Research is being conducted, through USDA and private funding, to try
to determine the causes of this new disease and to help producers avoid
it. However, until cures can be found, growers must switch to other,
hopefully equally profitable, crops. The only place to find that kind
of information--trends, current production, and potential
marketability--is through the annual Floriculture Crops Survey. Because
the survey was cut back several years ago to just 15 major States, the
information is not perfect. But it is the best we can find, and it is
essential to small and large businesses across America.
    Specialty crops represent approximately one-half of U.S. cash crop
receipts, and floriculture and nursery crops represent one-third of
specialty crop value! These figures come from NASS' own statistics--and
we continue to need those statistics to adequately represent our
industry. Our crops must be considered as ``core'' to the NASS mission.
    Our businesses are located not only in rural communities but also
represent ``urban agriculture'' as they are located in every State and
congressional district of the United States. The NASS survey data
provide economic indicators which are of key importance to our
industry, and to the economic health of those communities.
    In addition, these data are used by other USDA programs--for
research decisions by ARS and NIFA, by APHIS in determining pest
eradication and prevention priorities and for allocation of its farm
bill mandatory funding, and by every State department of agriculture.
And, of course, those data are used by congressional decisionmakers. It
is fundamental to good statistical surveys that they must be conducted
broadly and impartially, protect proprietary information, and be
accessible to all interested users. Private industry cannot provide
this kind of industry-wide survey data.
    Just as with any other segment of U.S. agriculture, the
environmental horticulture industry cannot survive and continue to be
an important contributor to our national economy without the
statistical data provided by the NASS surveys, and we urge recognition,
by continued appropriations, of their importance.
     usda--animal and plant health inspection service (usda-aphis)
    APHIS is responsible for safeguarding U.S. agricultural and
environmental plant resources from the serious risks posed by harmful
invasive plant pests and noxious weeds. Increasing trade and travel
have accelerated the movement of plant pests around the world,
threatening the well-being and future potential of the thriving U.S.
nursery and floral industry, and agriculture in general.
    ANLA and SAF strongly support the President's budget request for
APHIS. However, we note with concern that APHIS staffing has been
reduced by more than 600 employees since fiscal year 2011 through
attrition and only filling ``critical'' vacancies, and we urge that
Congress provide adequate funding to APHIS so that this downturn can be
stopped. APHIS's mission, to protect the health and value of U.S.
agriculture and the environment, is among the most important missions
of the Department of Agriculture, particularly in the face of increased
globalization of trade. Working to prevent, or eradicate, serious and
destructive pests and diseases from the United States is essential to
our continued economic growth and success, but that can only be
accomplished with adequate funding and staffing. We believe that
additional resources are needed to support continued progress,
including in the area of Specialty Crop Pests.
    Thank you for the opportunity to present the nursery and
floriculture industry's views regarding the U.S. Department of
Agriculture's budget for the fiscal year 2014.

    [This statement was submitted by Joseph Bischoff, Ph.D., Director
of Government Relations, American Nursery & Landscape Association, and
Lin Schmale, Senior Director, Government Relations, Society of American
Florists.]
                                 ______

   Prepared Statement of the American Society for Microbiology (ASM)
    The American Society for Microbiology (ASM) is pleased to submit
the following testimony on the fiscal year 2014 appropriation for the
U.S. Food and Drug Administration (FDA). The ASM is the largest single
life science organization in the world with more than 37,000 members.
    The Nation's consumers spend nearly 25 cents of every dollar on
products regulated by the FDA. FDA protects consumers by assuring the
safety, efficacy and security of human and veterinary drugs, biological
products, the food supply, and other consumer and health related
products. The ASM urges increased funding for FDA to strengthen an
agency burdened by too few resources needed to protect public health.
    Under budget sequestration, FDA will lose $318 million from its
fiscal year 2013 funding level, which will exacerbate difficult choices
already facing the agency. The exact effects of sequestration are yet
to be determined. However, possible outcomes include more than 1,000
fewer field inspectors, fewer overseas facilities visits, delays in
product approvals, or greater numbers of foodborne illnesses. Since FDA
is largely a service organization with most of its budget for salaries,
training, and travel of its field personnel, cuts in funding are likely
to have impacts on product safety. Decreasing FDA's budget will affect
its ability to respond to market globalization and emergent pathogens.
    FDA priorities outlined in its 2011-2015 strategic plan reflect the
breadth of FDA's mission: advance regulatory science and innovation,
strengthen the safety and integrity of the global supply chain,
strengthen compliance and enforcement activities to support public
health, expand efforts to meet the needs of special populations, and
advance medical countermeasures. FDA's Center for Food Safety and
Applied Nutrition (CFSAN) monitors all cosmetics and 80 percent of our
food supply, regulating all food products except meat, poultry and egg
products overseen by the Department of Agriculture (USDA). Other FDA
units regulate drugs; medical devices; radiation-emitting products like
medical imaging equipment; vaccines, blood and biologics; animal/
veterinary products including pet food; and tobacco.
    FDA scientists and their colleagues at the Centers for Disease
Control and Prevention (CDC) investigated the microbial contamination
of unopened vials of injectable solutions from a New England
manufacturer, implicated in an outbreak of fungal meningitis that to
date has killed 50 people and sickened 722 in 20 States.
    Other recent FDA actions include recall of U.S. made pet treats due
to potential salmonella contamination; and the closure of a peanut
butter processing plant in New Mexico as the source of dozens of
illnesses in 20 States (also salmonella-linked). In January, FDA
approved the first trivalent influenza vaccine that will be produced
using an insect virus expression system and recombinant DNA technology.
Unlike current flu vaccines, the new one does not use eggs or the
influenza virus in its production, in a process already FDA approved
for certain vaccines against other infectious diseases.
    In recent years, food imports have grown by an average of 10
percent each year; over 16 percent of all food products now consumed in
the United States are produced elsewhere. More than 20 million import
lines of food, devices, drugs, and cosmetics arrived at U.S. ports of
entry in fiscal year 2010, over three times the number 10 years before.
Nearly 80 percent of pharmaceutical ingredients are now made in other
countries, further complicating consumer safety issues. FDA's Human
Drugs Program not only evaluates all new drugs prior to entering the
market, but also the quality of more than 10,000 currently marketed
drugs. The Animal Drugs and Feeds Program regulates drugs, devices, and
food additives that affect over 150 million companion animals and
billions of poultry, cattle, swine, and other species in the United
States. The public depends upon FDA's seven product and research
centers, staffed by many of FDA's 12,000 employees, to evaluate and
regulate the efficacy and quality of near limitless consumer products.
 fda funding improves quality, protects safety of the u.s. food supply
    FDA is responsible for protecting and promoting public health, in
part by ensuring that the Nation's food supply for human and animal
consumption is safe, sanitary, wholesome, and properly labeled. Each
year, the agency regulates $417 billion worth of domestic food and $49
billion of imported foods. In addition, FDA personnel oversee about
450,000 domestic and foreign facilities registered under the Public
Health Security and Bioterrorism Preparedness and Response Act.
According to the FDA, the agency expends more than 1,300 full-time
staff years (FTEs) to fulfill annual duties in conducting food and feed
inspection and investigational activities.
    FDA's food related responsibilities include collecting and
evaluating thousands of samples and shipments drawn from the voluminous
U.S. food supply chain. The Food Safety Modernization Act (FSMA) of
2011 mandated even greater responsibility to FDA, the first major food
safety law in over 70 years. FDA's performance in food safety has been
criticized over the years, with inadequate funding often indicted as
the underlying cause. Reports from the U.S. Government Accountability
Office (GAO) and other watchdog agencies periodically recommend changes
that necessitate increased FDA expenditures. Since 2007, Federal
oversight of food safety has been on GAO's high-risk list of areas that
need to be transformed for the public good, citing fragmentation caused
by 15 agencies collectively administering at least 30 laws.
    About one in every six people in this country get sick each year
from food contaminated with microbial pathogens. Most of these 50
million-plus cases go unreported, but too many cause serious illness
with nearly 130,000 hospitalized. salmonella alone causes $365 million
in direct medical costs each year. FDA and its food safety partners
like CDC have had successes like cutting E. coli O157 cases nearly in
half since 1997. But foodborne illnesses remain significant threats to
public health--in 2009-2010, CDC investigated 1,527 foodborne disease
outbreaks, most due to norovirus or salmonella. Outbreaks and
subsequent Federal enforcement exact both human costs and economic
losses. USDA estimated that during the 2011 Listeria outbreak linked to
cantaloupes, prices for cantaloupe dropped about 34 percent. The 2008
salmonella tomato-pepper outbreak forced about $145 million in losses
to tomato growers and shippers in several States, according to industry
representatives.
    FDA faces daunting numbers of regulated food-production sites in
the United States, with more than 171,500 FDA registered food
facilities and 2 million farms. FDA inspection activities require the
best available laboratory and computing tools. In addition to other
responsibilities, FDA strives to advance research on food related
technologies. For example, it has joined with CDC, the University of
California, and Agilent Technologies to create a public database of
100,000 foodborne pathogen genomes to help speed identification of
bacteria in foodborne outbreaks. The database will guide diagnostic
test development that has potential to shorten outbreak investigation
from weeks to days.
    As part of its oversight activities, FDA inspects a targeted number
of foreign facilities that process foods under its jurisdiction. The
goal is to identify potential food safety problems before products
enter the United States and to help make risk based decisions when
imported foods reach U.S. ports. Last year, we imported goods worth
nearly $2.3 trillion, a large portion as food. Imported food keeps
increasing, as a percentage of all food consumed from about 9 percent
in 2000 to over 16 percent today. Some food categories have higher
percentages, for example, 60 percent of fruits and vegetables consumed
in 2009 and 84 percent of seafood in 2011.
    In 2011 FDA created the Office of Global Regulatory Operations and
Policy to help address its growing global responsibilities. Like other
FDA duties, regulating imported foods involves very large numbers that
create logistical challenges. Today, there are more than 130,000
importers of record and about 300 U.S. ports of entry, handling
products from about 278,300 FDA registered foreign food and feed
facilities in countries worldwide. Import volumes have risen steadily
since 1994, from fewer than 3 million lines up to an estimated 28.1
million lines in 2012. Yet FDA's inspector FTE numbers remained
essentially unchanged. In fiscal year 2011, FDA inspected only about
0.4 percent of registered foreign food facilities. That year, FDA
examined about 2.2 percent of all food entry lines and tested samples
from less than 0.5 percent of all lines.
          fda funding supports advances in regulatory science
    FDA's role in public health has been changing, pushed by evolving
science and technology and an increasingly globalized world. In recent
years, the agency has placed greater emphasis on its regulatory
science, incorporating ``embracing innovation'' into its vision for a
stronger FDA. Personnel must utilize the latest scientific knowledge to
assess effectively the growing list of FDA regulated products. The
diversity of these products and their end-users mandates that FDA stay
current in its science and technology capabilities, as these examples
from the past year illustrate:
  --Proposed two new FSMA rules, requiring food manufacturers to submit
        food safety plans to FDA and enforcing safety standards for
        farms growing fresh fruits and vegetables; proposed in January,
        these rules are still open for public comment.
  --Approved the first nucleic acid test that can simultaneously
        identify 12 different bacterial types known to cause
        bloodstream infections, including Staphylococcus (including
        methicillin-resistant MRSA), Streptococcus, Enterococcus
        (including vancomycin-resistant VRE), and Listeria. Results are
        available within a few hours after initial bacterial growth,
        versus traditional methods that might require 2 to 4 days.
  --Approved a combination vaccine for infants and children ages 6
        weeks through 18 months, preventing disease caused by Neisseria
        meningitidis serogroups C and Y and Haemophilus influenzae type
        b.
  --Issued two draft guidance's regarding nanotechnology in the food
        and cosmetics industries, outlining FDA safety assessments of
        its use in cosmetic products and food processing.
    The FDA must access the most advanced scientific knowledge, to
support both regulatory activities and public health education of the
public. Congress has demonstrated strong support for FDA in the past,
evidenced by the recent bipartisan approval of the FDA Safety and
Innovation Act to bring drugs and devices to market more quickly and
encourage innovation in the biomedical industry.
    The ASM strongly urges Congress to increase the fiscal year 2014
budget for the FDA which is so critical the Nation's public health.

    [This statement was submitted by the Office of Public Affairs,
American Society for Microbiology.]
                                 ______

   Prepared Statement of the American Society for Microbiology (ASM)
    The American Society for Microbiology (ASM) is pleased to submit
the following testimony on the fiscal year 2014 appropriation for food
safety and science programs at the U.S. Department of Agriculture
(USDA). The ASM is the largest single life science organization in the
world with more than 37,000 members.
    USDA's food safety and science programs ensure the quality and
quantity of the U.S. food supply, as well as safeguard plant and animal
health. Both the Nation's public health and its economic well-being are
rooted in agriculture. USDA estimates that the agricultural sector
accounts for 1 in 12 jobs in the country and U.S. agricultural exports
consistently exceed imports. In fiscal year 2012, agriculture exports
were valued at nearly $136 billion, and U.S. production continues to
expand through innovation and technology.
    There are few aspects of life as basic as adequate, wholesome food.
The actual outcomes of USDA's mandated cuts are still unknown, but
clearly the USDA food safety and research activities are essential, and
should not be jeopardized.
    Agriculture is challenged by food demand for the growing global
population, climate variability, food safety threats, demands for
bioenergy and emerging plant and animal diseases. These challenges have
grown increasingly dependent on cutting edge science and technology.
Last year, the President's Council of Advisors on Science and
Technology (PCAST) evaluated the future of the entire U.S. research
enterprise, reinforcing the importance of robust research and
development (R&D) and applauded the tradition of agriculture research
and education initiated by the 1862 Morrill Act that created land grant
colleges. For over a century, federally funded basic and applied
research has helped transform U.S. agriculture into a production
powerhouse that feeds not only our Nation but also those who import our
agriculture products. The report also points to agriculture research
and the USDA's own laboratories, source of new products, jobs, and
industries, as exemplifying the practical benefits and importance of
fundamental research.
    PCAST released another report in December focused on agricultural
preparedness and the agriculture research enterprise. The report
concluded that ``our Nation's agricultural research enterprise is not
prepared to meet the challenges that U.S. agriculture faces in the 21st
century.'' Agriculture research is a wise investment in the future,
generating at least $10 in benefits for every dollar invested.
Unfortunately, Federal funding of agriculture research has stagnated at
roughly the same level for the past 30 years. The PCAST report also
warned that ``looking to the future, U.S. agriculture must continue to
be the backbone for the emerging U.S. bioeconomy, helping the Nation
meet its need for sustainable sources of energy and materials, and
simultaneously contributing to the prosperity of rural communities. A
vibrant U.S. agriculture enterprise is paramount to the future well-
being of the Nation.''
   usda research promotes agriculture production and protects public
                                 health
    Solving large scale problems like keeping contaminated food out of
the U.S. farm-to-table supply system requires a long term mindset and
adequate and consistent Federal funding. The ASM has consistently
advocated for stronger USDA science funding. It seems prudent to
protect the Nation's $157 billion agriculture, fishing and forestry
industries with solid science and research. We are especially concerned
that the current fiscal uncertainties might financially degrade the
USDA's microbiology related projects, which range from food safety and
bioenergy production to plant and animal diseases. Over the past year,
these projects resulted in the first broad spectrum bacterial-toxin
insecticide in 50 years and the genetic sequencing of citrus rootstock
with resistance to major citrus diseases. These are just two examples
of new USDA funded tools that boost domestic agriculture productivity.
    The USDA is the largest Federal supporter of agriculture R&D by
both university and Government researchers. In 2009, the USDA funded
more than half of the total agriculture R&D at U.S. universities and
awarded $1.4 billion through its extramural programs. The USDA's
National Institute of Food and Agriculture (NIFA) distributes grants to
colleges and universities for research, extension and education
activities. The agriculture focused PCAST report recommended the
``creation of a new innovation ecosystem for agriculture'' with greater
Federal investment in agricultural research and an additional $700
million annually. Such an investment would, among other initiatives,
increase the USDA's support for competitive extramural grants from $264
million to $500 million per year and appropriate $150 million annually
for at least 5 years to create six multidisciplinary innovation
institutes. In light of the current fiscal environment, ASM urges
Congress to fund AFRI with at least $325 million in fiscal year 2014,
the same amount as the administrations fiscal year 2013 request, and
supported by agricultural sciences coalitions.
    The Agriculture and Food Research Initiative (AFRI), the premier
competitive grants program for fundamental and applied research,
extension and education in support of agriculture and food research,
was created in 2008 in response to public requests for an increase in
scientifically rigorous agriculture research programs. Administered by
the National Institute of Food and Agriculture (NIFA), AFRI has been
authorized at $700 million annually since 2008, but in fiscal year 2012
only received $264 million while research proposals exceeded $4
billion.
    USDA intramural funds are allocated primarily among the
Agricultural Research Service (ARS), Economic Research Service (ERS)
and Forest Service. Created in 1953 as USDA's principal scientific
research entity, ARS is a cornerstone of the agency's Research,
Education, and Economics mission area. More than 8,000 ARS employees,
including 2,000 full time scientists, conduct research at more than 100
laboratories in the United States and several other countries. The ARS
Strategic Plan for fiscal years 2012 through 2017 comprised multiple
action plans focused on USDA's agency wide research priorities, which
currently include: global food security, food safety, human nutrition,
climate change and bioenergy.
    USDA funded researchers regularly make discoveries that strengthen
U.S. agriculture through innovation. Recent microbiology related
examples show the diversity of USDA research and add value to a major
sector of the U.S. economy:
  --ARS microbiologists are refining liquid culture fermentation
        methodology to increase laboratory yields of insect-killing
        fungi, for potential large-scale production as biopesticides.
        Less expensive than current practices, the new method also is
        more amenable to cultivating a wider range of the fungi which
        penetrate insect pests and kill them within days.
  --ARS scientists are developing rapid diagnostic tests for West Nile
        fever and Rift Valley fever using surface enhanced Raman
        scattering (SERS) technology. The assays will eventually be
        adapted as field testing tools to aid veterinarians on site.
        The new technology is more sensitive and detects more pathogens
        then currently available field tests.
  --Last fall, NIFA contributed to the 12 new grants awarded through
        the joint National Science Foundation-National Institutes of
        Health program called Ecology and Evolution of Infectious
        Diseases (EEID). They include university studies on ocean
        ecology's impacts on infectious marine disease and studies on
        the emergence of babesiosis in the United States.
  --ARS microbiologists discovered that bacterial contamination in
        poultry cages can be eliminated by treating washed cages for 15
        minutes with heated forced air, preventing cross contamination
        between infected and healthy birds. Any decrease in
        contamination has considerable public health and economic
        benefits. Salmonella contaminated eggs and poultry are a
        leading cause of illness in the United States, and the U.S.
        poultry industry is the world's largest producer with the total
        farm value of poultry producing in excess of $20 billion per
        year.
             usda funding ensures food safety and security
    Our food supply systems are uniquely complex, immense in volume,
diversity and monetary value. USDA's Food Safety and Inspection Service
(FSIS) enforces Federal standards for domestic and imported meats,
poultry and processed egg products to ensure that they are safe,
wholesome, properly labeled and packaged. More than 8,000 FSIS
employees inspect food and methods at more than 6,000 registered food
related facilities. The amount of food to inspect far exceeds FSIS's
resources to physically inspect and sample. U.S. producers raise about
35 million heads of livestock and over 2 billion poultry annually. U.S.
beef consumption exceeds 25 billion pounds annually while poultry meat
production is more than 43 billion pounds per year. USDA inspections,
regulatory actions and industry guidelines must be supported by the
best available science based testing and assessment tools, many of
which are developed by USDA funded researchers. Funding for USDA
science and food safety programs builds technical expertise throughout
the agency benefiting the public. An example is NIFA's recent award of
nearly $15 million for 17 extramural research projects to protect food
from microbial and chemical contamination, with a primary focus of
controlling and preventing Salmonella and Campylobacter in poultry
flocks and poultry products.
    The ASM encourages Congress to increase the fiscal year 2014 budget
to the highest amount possible in support of USDA's science, research
and food safety programs. USDA funded research is critical to the
health of our Nation's food and agriculture industries as well as the
global economy. USDA science protects human and animal health, prevents
crop losses from disease and climate changes, seeks best practices to
preserve the environment, encourages innovation in valuable agriculture
based products and supports new generations of agriculture scientists
and educators.

    [This statement was submitted by the Public and Scientific Affairs
Board, American Society for Microbiology.]
                                 ______

     Prepared Statement of the American Society for Nutrition (ASN)
    Dear Chairman Pryor and Ranking Member Blunt: The American Society
for Nutrition (ASN) respectfully requests that the U.S. Department of
Agriculture (USDA)/National Institute of Food and Agriculture/
Agriculture and Food Research Initiative receive $325 million and that
the Agricultural Research Service receive $1.2 billion in fiscal year
2014. ASN has nearly 5,000 members working throughout academia,
clinical practice, Government, and industry, who conduct research to
advance our knowledge and application of nutrition.
                agriculture and food research initiative
    The USDA has been the lead nutrition agency and the most important
Federal agency influencing U.S. dietary intake and food patterns for
years. Agricultural research is essential to address the ever-
increasing demand for a healthy, affordable, nutritious and sustainable
food supply. The Agriculture and Food Research Initiative (AFRI)
competitive grants program is charged with funding research, education,
and extension grants and integrated research, extension, and education
grants that address key problems of national, regional, and multi-state
importance in sustaining all components of agriculture. These
components include human nutrition, farm efficiency and profitability,
ranching, renewable energy, forestry (both urban and agro forestry),
aquaculture, food safety, biotechnology, and conventional breeding.
AFRI has funded cutting-edge, agricultural research on key issues of
timely importance on a competitive, peer-reviewed basis since its
establishment in the 2008 farm bill. Adequate funding for agricultural
research is critical to provide a safe and nutritious food supply for
the world population, to preserve the competitive position of U.S.
agriculture in the global marketplace, and to provide jobs and revenue
crucial to support the U.S. economy. In order to achieve those
benefits, AFRI must be able to advance fundamental sciences in support
of agriculture and coordinate opportunities to build off of these
discoveries. Therefore, ASN requests that the AFRI competitive grants
program receive $325 million in fiscal year 2014. ASN also strongly
supports funding AFRI at the fully authorized level of $700 million as
soon as practical. Current flat and decreased funding for AFRI hinders
scientific advances that support agricultural funding and research.
                     agricultural research service
    The Agricultural Research Service (ARS) is the Department of
Agriculture's lead scientific research agency. The ARS conducts
research to develop and transfer solutions to agricultural problems of
high national priority. USDA's program of human nutrition research is
housed in six Human Nutrition Research Centers (HNRCs) across the
Nation, that link producer and consumer interests and form the core for
building knowledge about food and nutrition. HNRCs conduct unparalleled
human nutrition research on the role of food and dietary components in
human health from conception to advanced old age, and they provide
authoritative, peer-reviewed, science-based evidence that forms the
basis of our Federal nutrition policy and programs. Funding for ARS
supports all of the USDA/HNRCs and ensures that these research
facilities have adequate funding to continue their unique mission of
improving the health of Americans through cutting-edge food, nutrition
and agricultural research.
    Nutrition monitoring conducted in partnership by the USDA/ARS with
the Department of Health and Human Services (HHS) is a unique and
critically important surveillance function in which dietary intake,
nutritional status, and health status are evaluated in a rigorous and
standardized manner. (ARS is responsible for food and nutrient
databases and the ``What We Eat in America'' dietary survey, while HHS
is responsible for tracking nutritional status and health parameters.)
Nutrition monitoring is an inherently governmental function and
findings are essential for multiple Government agencies, as well as the
public and private sector. Nutrition monitoring is essential to track
what Americans are eating, inform nutrition and dietary guidance
policy, evaluate the effectiveness and efficiency of nutrition
assistance programs, and study nutrition-related disease outcomes.
Because of past funding deficiencies, some food composition database
entries don't reflect the current food supply, which may negatively
impact programs and policies based on this information. It is
imperative that needed funds to update USDA's food and nutrient
databases and the ``What We Eat in America'' dietary survey, both
maintained by the USDA/ARS, are appropriated to ensure the continuation
of this critical surveillance of the Nation's nutritional status and
the many benefits it provides.
    It is the job of ARS to ensure high-quality, safe food, and other
agricultural products; assess the nutritional needs of Americans;
sustain a competitive agricultural economy; enhance the natural
resource base and the environment; and provide economic opportunities
for rural citizens, communities, and society as a whole. Therefore, ASN
requests that ARS receive $1.2 billion in fiscal year 2014. At least
$10 million above current funding levels is necessary to ensure that
the critical surveillance of the Nation's nutritional status and the
many other benefits ARS provides continue. With such funding, the ARS
will be able to continue its vision of leading America toward a better
future through agricultural research and information.
    Thank you for the opportunity to submit testimony regarding fiscal
year 2014 appropriations for the U.S. Department of Agriculture/
National Institute of Food and Agriculture/AFRI competitive grants
program and Agricultural Research Service.

    [This statement was submitted by Teresa A. Davis, Ph.D., 2012-2013
President, American Society for Nutrition; Professor of Pediatrics,
USDA/ARS Children's Nutrition Research Center, Baylor College of
Medicine.]
                                 ______

   Prepared Statement of the American Society for the Prevention of
                       Cruelty to Animals (ASPCA)
    On behalf of the American Society for the Prevention of Cruelty to
Animals (ASPCA) and our 2.5 million supporters nationwide, thank you
for the opportunity to submit this written testimony. Founded in 1866,
the ASPCA was the first humane organization in North America. Our
mission, as stated by founder Henry Bergh, is ``to provide effective
means for the prevention of cruelty to animals throughout the United
States.'' As you craft the fiscal year 2014 appropriations bill, the
ASPCA asks that you please consider the following provisions.
 reinstatement of the ban on federal funding for horse slaughterhouse
                              inspections
    A provision barring Federal funding for USDA inspections at
domestic horse slaughter plants was first added as an amendment to the
Agriculture Appropriations bill in 2005. Supported by strong,
bipartisan votes in both the House and Senate, each successive
appropriations bill included the provision until it was omitted in
fiscal year 2012--the funding bill successive continuing resolutions
have been based upon. The President's fiscal year 2014 budget
specifically includes this language, and the ASPCA urges the committee
to retain the language in its fiscal year 2014 appropriations bill.
    Including the ban on funding for horse slaughter inspections is now
more important than ever. Even though Americans do not eat horse meat,
and national polling indicates 80 percent of Americans oppose the
slaughter of horses for human consumption, the USDA is moving forward
to approve the application for horse meat inspections at a facility in
New Mexico. Cruelties associated with horse slaughter are well-
documented. Whether in the United States or over the border, horses are
trucked long distances without food, water, or rest. Many horses,
including pregnant mares, are injured, trampled, and even killed on the
cramped trucks during trips lasting more than 24 hours.
    Horses that survive their transport then endure a cruel slaughter
process that cannot be made humane. Although the formerly operating
domestic plants were regulated by USDA, the slaughter of these horses
was anything but humane. As extreme flight animals, horses are
fractious by nature and ill-suited for captive bolt stunning. Many
horses endured repeated blows and sometimes remained conscious during
their dismemberment. USDA's own photos show horses at the plants with
broken bones protruding from their bodies, eyeballs hanging by a thread
of skin, and severe open wounds, all effects of the cruel nature of the
horse slaughter process.
    American horses are not raised for food so they are routinely given
numerous drugs throughout their lives that are prohibited by the FDA
for use in animals intended for human consumption. A 2010 Food and
Chemical Toxicology Journal article detailed the ubiquitous nature of
phenylbutazone, a drug banned for use in any animal for human
consumption, in race horses subsequently sent to auction and slaughter
within days of medication.\1\ A recent New York Times expose emphasized
a virtual arms race of illegal and harmful drugs in races horses
including the use of ``cobra venom, Viagra, blood doping agents,
stimulants, and cancer drugs'' and the resulting food safety
threats.\2\ It is impossible for the Food Safety and Inspection Service
(FSIS) to test for these substances when horses have no tracking system
to indicate their health histories and trainers constantly experiment
with new and unknown stimulants to gain a competitive edge on the
track.
---------------------------------------------------------------------------
    \1\ ``Association of Phenylbutazone Usage With Horses Bought for
Slaughter: A Public Health Risk.'' Food and Chemical Toxicology: May
2010.
    \2\ ``Death and Disarray at America's Racetracks.'' The New York
Times: March 24, 2012.
---------------------------------------------------------------------------
    The shocking discovery of horse meat in European beef products
demonstrates the threats to American health and consumer confidence
that could affect domestic meat production if this grisly practice
returns to the United States. As a result of the EU situation, frozen
burger sales in the United Kingdom dropped by 43 percent in the month
following the discovery of horse meat, packaged meat sales declined 30
percent in Italy, and sales of frozen-meat dishes in France dropped by
30 percent.\3\ \4\ \5\ When the USDA was asked if such a scandal could
happen here, their only reassurance was that horses are not slaughtered
in the United States.\6\
---------------------------------------------------------------------------
    \3\ ``Frozen Burger Sales Plummet In UK After Horse Meat
Controversy, Report Says.'' The Huffington Post: February 27, 2013
    \4\ ``Package Meats Down 30 percent in Italy Amid Horsemeat
Fears.'' RTT News: March 7, 2013.
    \5\ ``Frozen Dishes Sales Collapse in France, Seen Lasting.''
Reuters: March 4, 2013.
    \6\ http://abcnews.go.com/Health/european-horse-meat-scandal-
happen-us/story?id=18506026& page=1.
---------------------------------------------------------------------------
    The committee has the opportunity to protect the welfare of our
country's horses and maintain the integrity of the American food supply
by barring funding for horse meat inspections.
    The ASPCA requests that the committee support the President's
budget request to make the fiscally responsible and humane decision to
reinstate the ban on Federal funding for horse slaughterhouse
inspections. We request the committee retain the following language
from the President's budget:

    ``None of the funds made available in this Act may be used to pay
the salaries or expenses of personnel to--
            ``(1) inspect horses under section 3 of the Federal Meat
        Inspection Act (21 U.S.C. 603);
            ``(2) inspect horses under section 903 of the Federal
        Agriculture Improvement and Reform Act of 1996 (7 U.S.C. 1901
        note; Public Law 104-127); or
            ``(3) implement or enforce section 352.19 of title 9, Code
        of Federal Regulations.''.
   increase awa enforcement funding for the inspection of puppy mills
    One of the functions of the USDA's Animal and Plant Health
Inspection Service (APHIS) is to ensure the humane care and treatment
of animals by enforcing the requirements of the Animal Welfare Act of
1966 (AWA). Included in this mandate is the inspection of large-scale
commercial dog breeding operations. Dogs raised in substandard
facilities, commonly known as puppy mills, spend their entire lives in
small, crowded cages without adequate veterinary care, food, water, and
socialization. These dogs receive no exercise or basic grooming. To
minimize waste cleanup, dogs are often kept in cages with wire flooring
that injures their paws and legs. Because these cages are often stacked
and proper sanitation requirements are not followed, waste falls
through the wire floors onto the animals housed below. Female dogs
usually have little to no recovery time between bearing litters. When,
after a few years, they can no longer reproduce, the dogs are often
abandoned or killed. Although the AWA provides very minimal standards
which should be improved, those operations not in compliance need to be
properly held accountable.
    In 2010, the USDA's Office of the Inspector General (OIG) released
a report detailing the lax and ineffective enforcement of the AWA for
puppy mills. In 2011, the House Appropriations Committee, recognizing
the importance of inspecting ``problematic dog dealers,'' repurposed $4
million for puppy mill inspection enforcement. The same OIG report
recommended closing a loophole in the AWA that currently exempts from
regulation breeders selling directly to customers over the Internet.
The USDA is now finalizing regulations that would close that loophole,
thereby increasing the number of entities regulated and inspected under
the AWA. This rule will likely be final later this year and will
require increased funding for pre-licensing inspections of these new
entities as well as for continued inspections of these breeding
facilities once licensed.
    The President's fiscal year 2014 budget request includes $29
million for Animal Welfare, which is $1 million above the current
continuing resolution funding level. The President's budget notes that
APHIS is requesting increased funding to enforce the impending rule.
Echoing the President's budget request, we encourage the committee to
continue the trend of prioritizing AWA enforcement with increased
funding levels. The ASPCA requests that the committee increase the
current funding for APHIS's Animal Welfare Act enforcement by retaining
the President's budget request of $29 million for Animal Welfare.
     exceed the statutory funding cap for horse soring enforcement
    APHIS is charged with protecting horses through its enforcement of
the Horse Protection Act (HPA) of 1970. USDA inspectors conduct
inspections at walking horse shows to examine horses for soring and
harmful and illegal chemicals. Horse soring is a cruel practice in
which caustic chemicals and foreign objects are used to cause agony to
a horse's front legs. Any contact with the ground makes horses quickly
jerk up their legs, producing the pronounced gait prized by the walking
horse industry. Since the passage of the HPA in 1970, effective USDA
enforcement of horse soring has been frustrated by a $500,000 statutory
funding cap on activities under the authority of HPA.
    In most cases, the cruelty of horse soring goes unnoticed because
USDA officials do not have the resources to oversee most shows. In
2011, USDA inspectors had the resources to attend just 62 of
approximately 700 walking horse shows nationwide. Other shows were
overseen solely by inspectors trained and hired by the horse industry
itself. Although present at only 8-10 percent of shows, USDA inspectors
found over 50 percent of reported violations in 2011. One of the
defendants in a recent criminal horse soring case testified that
``every Walking Horse that enters into a show ring is sored . . .
They've got to be sored to walk.'' \7\ Clearly the problem is endemic
and industry self-regulation is not effectively exposing violators. A
greater USDA presence is necessary to further root out the bad actors
and hold them accountable.
---------------------------------------------------------------------------
    \7\ ``Trainer Says Horse Soring Widespread.'' Chattanooga Free
Press: February 28, 2012.
---------------------------------------------------------------------------
    Congress can choose to ignore the HPA's statutory cap and fund the
program at higher levels, something the committee chose to do for
fiscal year 2013 by requesting HPA enforcement at $891,000. The
President's budget request recommends $893,000 for HPA enforcement. The
ASPCA requests that the committee retain the President's budget request
and continue to exceed the statutory funding cap to allow the USDA to
properly enforce the Horse Protection Act.
           defund wildlife services' lethal predator control
    Wildlife Services (WS) is a little-known Federal agency that uses
tax dollars to kill hundreds of thousands of animals considered by
private landowners and ranchers to be problematic or nuisances.
Unattended traps and poisons--and even helicopter shooting--are all
routine features of WS's campaign to kill wildlife. Cases of allowing
packs of dogs to kill wildlife left in traps have emerged in the public
eye recently, further igniting public interest and concern about the
use of tax dollars for such unnecessary and blatant cruelty.\8\ Their
ineffective work is carried out without oversight, fiscal
accountability, or public notification. In some cases, WS traps and
poisons have killed beloved family pets.
---------------------------------------------------------------------------
    \8\ ``Animal Torture, Abuse Called a `Regular Practice' Within
Federal Wildlife Agency.'' Foxnews.com: March 12, 2013.
---------------------------------------------------------------------------
    The WS lethal predator control program is a waste of taxpayer
dollars. Not only does WS provide a subsidized service for private
landowners, but also its indiscriminate and random targeting of
predators is not based on sound science. Ranchers have no incentive to
use more efficient nonlethal methods if the Federal Government
continues to subsidize for lethal controls. The USDA estimates that it
spends $13 million on its lethal predator control program. The ASPCA
requests that the committee act in a fiscally sound and humane manner
and reduce funding for Wildlife Services Damage Management by $13
million.

    [This statement was submitted by Nancy Perry, Senior Vice
President, Government Relations, ASPCA.]
                                 ______

 Prepared Statement of the American Society of Clinical Oncology (ASCO)
    The American Society of Clinical Oncology (ASCO), the world's
leading professional organization representing more than 30,000
physicians and other professionals who treat people with cancer, urges
the subcommittee to provide a strong investment in the Food and Drug
Administration (FDA) for fiscal year 2014. ASCO joins the community in
respectfully requesting $2.6 billion in fiscal year 2014 budget
authority for the FDA. A strong FDA is vital to ensuring access to high
quality cancer care and life-saving treatments.
    The FDA has broad and significant responsibilities. It oversees
roughly 25 percent of all consumer spending in the United States,
including 100 percent of drugs, vaccines, medical supplies, and
personal care products and 80 percent of our Nation's food supply. For
cancer patients, the FDA ensures that chemotherapy drugs are safe and
available while shepherding safe and effective ground-breaking
treatments to market with the appropriate risk-benefit analysis. In
2012, FDA issued final regulations that establish standards for testing
the effectiveness and requiring accurate labeling of sunscreen products
that are key to cancer prevention. The FDA also regulates the in vitro
diagnostic tests that are necessary to optimally deliver a new
generation of highly targeted cancer drugs.
    FDA already performs its work with relatively few resources, yet
its responsibilities grow each year. Due to globalization, many of the
FDA-regulated products that were made in the United States are now
produced overseas. Drug importation is growing at about 13 percent
annually. Approximately 80 percent of active pharmaceutical ingredients
and 40 percent of finished drugs are now manufactured abroad. The FDA
is responsible for monitoring the quality of the raw materials and
finished products that result from the complex global system. This
responsibility alone is enormously resource intensive.
    Yet Congress continues to ask the agency to do more. Since 2009,
Congress has assigned the FDA with many new and additional
responsibilities through the Family Smoking Prevention and Tobacco
Control Act (2009), the Biologics Price Competition and Innovation Act
(2010), the Secure and Responsible Drug Disposal Act (2010), the Combat
Methamphetamine Enhancement Act (2010), the Food Safety Modernization
Act (2011), and the FDA Safety and Innovation Act, or FDASIA (2012).
    Congress passed FDASIA in 2012, reauthorizing the Prescription Drug
User Fee Act of 1992. Congress also re-authorized the Best
Pharmaceuticals for Children Act and the Pediatric Research Equity Act.
These laws expanded the FDA's regulatory responsibilities and mandated
an increased level of coordination among the various stakeholders in
the drug manufacturing and utilization system. Congress currently is
considering a number of new FDA-related proposals, covering topics such
as regulation of medical mobile apps, bio-security, track and trace of
drug products, and the quality of compounded drugs.
    As the scientific complexity of foods, drugs and other products we
consume grows, so do FDA's responsibilities. This is particularly true
in the field of oncology. As we understand more about the diseases
known as cancer on a molecular level, we are able to develop targeted
therapies that can produce long term remissions for many cancer
patients. Cancer patients rely on the ongoing efforts of the FDA to
grant timely approval of innovative, new medicines, some with companion
diagnostics, for patients with important unmet medical needs while
maintaining high standards for safety and efficacy.
            the vital role of fda in cancer drug development
    There are 12 million cancer survivors alive in the United States
today and this number is growing in no small part because of the new
treatments FDA approves. ASCO has been particularly appreciative of and
impressed by the work of the Office of Hematology and Oncology Products
(OHOP) led by Dr. Richard Pazdur. OHOP is responsible for making safe
and effective drugs for cancer and hematologic conditions available to
the American public. OHOP oversees review, approval, and regulation of
drug treatments for cancer, therapeutic biologic treatments for cancer,
therapies for prevention of cancer, and products for treatment of
nonmalignant hematologic conditions.
    OHOP had the highest number of new drug approvals of any
therapeutic category in 2012 while operating at a funding level that
did not reflect a higher workload relative to other offices. OHOP is
committed to facilitating rapid development, review, and action on
promising new cancer therapies. Scientists within OHOP are working
intensively on incorporating innovations in pharmacogenomics,
bioinformatics, and clinical trial design into the drug review process.
These efforts provide the basis for accelerating introduction of new
treatments for cancer into practice. ASCO applauds the work of OHOP's
130 highly trained and dedicated employees. ASCO is concerned, however,
about the ability of the FDA in general and the OHOP specifically to
continue to expand the scope and quality of their work with shrinking
resources. This is not an area in which Congress can afford to cut
corners; lives are on the line in this endeavor.
    the vital role of fda in preventing and mitigating cancer drug
                               shortages
    Like many specialties, oncology has faced a recent crisis of life-
saving therapeutics not being available because of drug shortages. ASCO
has worked closely with the FDA's Office of Drug Shortages to deal with
these crises and to help cancer patients get access to the drugs they
so vitally need. This small office has been particularly overburdened
by the increasing number of drugs that have been unavailable in the
last 2 to 3 years. In part because of their determined efforts, we have
seen new shortages decrease from the highs reached in 2011. Despite
improvement, existing shortages remain unresolved and the problem is
far from being solved. The FDA needs sufficient resources to continue
to address drug shortages.
            the need to fund an already overburdened agency
    The FDA is consistently asked to do more with less. Sequestration
is the immediate threat to the FDA's already-inadequate funding. Under
sequestration, the agency is losing 5.1 percent of its current year
budget. Worse still, the Office of Management and Budget has testified
that the actual impact is closer to 9 percent. This is a cut of
approximately $209 million.
    This cut comes at a time when the FDA is implementing a new
Breakthrough Therapy designation to expedite development and review of
promising new therapies. Early evidence must demonstrate that these
treatments may have substantial improvement over available therapy. The
designation involves earlier and more frequent interactions with FDA
staff. In the first quarter of 2013 alone, the FDA received 24 requests
for the designation and granted 8--many for new cancer treatments. The
FDA is also working closely with the scientific community to evaluate
new surrogate endpoints to enable accelerated approval of cancer
therapies.
    ASCO is concerned that sequestration could cause slower approval of
new and potentially lifesaving drugs, a decreased ability to monitor
food and drug safety, and an inability to keep up with advancing
science and technology.
    ASCO urges the subcommittee to provide a strong investment in the
FDA for fiscal year 2014 to help the agency fulfill its critical public
health mission.

    [This statement was submitted by Sandra M. Swain, MD, FACP,
President, American Society of Clinical Oncology.]
                                 ______

 Prepared Statement of the American Society of Plant Biologists (ASPB)
    On behalf of the American Society of Plant Biologists (ASPB), we
submit this statement for the official record in support of funding for
agricultural research at the U.S. Department of Agriculture (USDA).
ASPB supports the President's request of $383.376 million for USDA's
Agriculture and Food Research Initiative (AFRI) as well as $1.279
billion for the Agricultural Research Service (ARS).
    This testimony highlights the critical importance of plant biology
research and development, as the Nation seeks to address vital issues
including: achieving a sustainable food supply and food security;
energy security, including attaining reduced reliance on all
petrochemical products through game-changing sustainable renewable
biomass utilization approaches; and in protecting our environment.
    food, fuel, environment, and health: plant biology research and
             america's competitiveness and self-sufficiency
    We often take plants for granted, but they are vital to our very
existence, competitiveness, and self-sufficiency. New plant biology
research is now addressing the most compelling issues facing our
society, including: identifying creative and imaginative approaches to
reaching Congress' goals of achieving domestic fuel security/self-
sufficiency; environmental stewardship; sustainable and secure
development of even better foods, feeds, building materials, and a host
of other plant products used in daily life; and improvements in the
health and nutrition of all Americans.
    Our bioeconomy and Federal partnership is based upon foundational
plant biology research--the strategic research USDA funds--to make
needed key discoveries. Yet limited funding committed to fundamental
discovery now threatens our national security and leadership. Indeed,
in his 2012 annual letter to the Gates Foundation, Bill Gates wrote,
``Given the central role that food plays in human welfare and national
stability, it is shocking--not to mention short-sighted and potentially
dangerous--how little money is spent on agricultural research.'' \1\
This is especially true considering the significant positive impact
crop and forest plants have on the Nation's economy (the agricultural
sector is responsible for 1 in 12 American jobs \2\).
---------------------------------------------------------------------------
    \1\ Gates, Bill. (Jan 2012). 2012 Annual Letter from Bill Gates.
Retrieved from http://www.gatesfoundation.org/annual-letter/2012/Pages/
home-en.aspx.
    \2\ Vilsack, Tom. (Mar. 9, 2012). Public Comments Before PCAST.
Retrieved from http://www.tvworldwide.com/events/pcast/120309/
globe_show/default_go_archive.cfm?gsid=1977& type=flv&test.
---------------------------------------------------------------------------
    Given these concerns and our Nation's fiscal situation, the plant
science community has been working toward addressing our Nation's
looming challenges--ASPB organized a two-phase Plant Science Research
Summit (held in September 2011 and January 2013). With funding from
USDA, the National Science Foundation, the Department of Energy, and
the Howard Hughes Medical Institute, the Summit brought together
representatives from across the full spectrum of plant science research
in order to develop a 10-year consensus plan to fill critical gaps in
our understanding of plant biology and address the grand challenges we
face.
    ASPB expects to publish a report from the Plant Science Research
Summit in spring 2013, which we will share with USDA leadership so the
USDA mission can best be served to enhance our well being over the long
term. This report will further detail the plant science community's
priorities and the key initiatives needed to address our grand
challenges.
                       immediate recommendations
    The ASPB membership has extensive expertise and participation in
the academic, industry, and Government sectors. Consequently, ASPB is
in an excellent position to articulate the Nation's plant science
priorities and standards needed as they relate to agriculture. Our
recommendations are as follows:
  --Since the establishment of the National Institute of Food and
        Agriculture (NIFA) and AFRI, interest in USDA research has
        increased dramatically--a trend ASPB hopes to see continue in
        the future. However, an increased, strategic and focused
        investment in competitive funding and its oversight is needed
        if the Nation is to continue to make ground-breaking
        discoveries and accelerate progress toward resolving urgent
        national priorities and societal needs. ASPB encourages the
        committee to support a funding level of $383.376 million in
        fiscal year 2014 for AFRI, which, although falls far short of
        the authorized level of $700 million, would provide sound
        investment in today's fiscal environment.
  --The Agricultural Research Service (ARS) provides vital strategic
        research to serve USDA's mission and objectives and as well as
        the Nation's agricultural sector. The need to bolster and
        enhance ARS efforts to leverage and complement AFRI is great
        given the challenges in food and energy security. ASPB is
        supportive the President's request of $1.279 billion for ARS in
        fiscal year 2014.
  --USDA has focused attention in several key priority areas, including
        childhood obesity, climate change, global food security, food
        safety, and sustainable bioenergy. Although ASPB appreciates
        the value of such strategic focus, we give our most robust
        support for AFRI's Foundational Program. This program provides
        a basis for outcomes across a wide spectrum, often leading to
        groundbreaking developments that cannot be anticipated in
        advance. Indeed, it is these discoveries that are the true
        engine of success for our bioeconomy.
  --Current estimates predict a significant shortfall in the needed
        agricultural scientific workforce as the demographics of the
        U.S. workforce change.\3\ For example, there is a clear need
        for additional training of scientists in the areas of
        interdisciplinary energy research and plant breeding. ASPB
        applauds the creation of the NIFA Fellows program and calls for
        additional funding for specific programs (e.g., training grants
        and fellowships) to provide this needed workforce over the next
        10 years and to adequately prepare these individuals for
        careers in the agricultural research of the future.
---------------------------------------------------------------------------
    \3\ President's Council of Advisors on Science and Technology.
(Dec. 2012). Report to the President on Agricultural Preparedness and
the Agricultural Research Enterprise, p. 41. Retrieved from http://
www.whitehouse.gov/sites/default/files/microsites/ostp/
pcast_agriculture_ 20121207.pdf.
---------------------------------------------------------------------------
  --Considerable research interest is now focused on the use of plant
        biomass for energy production. However, if we are to use crops
        and forest resources to their full potential, we must expend
        extensive effort to improve our understanding of their
        underlying biology and development, their agronomic
        performance, and their subsequent processing to meet our goals
        and aspirations. Therefore, ASPB calls for additional funding
        targeted at efforts to increase the utility and agronomic
        performance of bioenergy crops using the best and most
        imaginative science and technologies possible.
  --With NIFA, USDA is in a strong position to cultivate and expand
        interagency relationships, as well as relationships with
        private philanthropies, to address grand challenges related to
        food, renewable energy and bioproducts, the environment, and
        health. ASPB appreciates the need to focus resources in key
        priority areas. However, ASPB urges a significant increase in
        funding to individual grantees, in addition to putting in place
        robust evaluations of group awards and larger multi-
        institutional partnerships. Paradigm-shifting discoveries
        cannot be predicted through collaborative efforts alone; thus
        there is an urgent need to maintain a broad, diverse, and
        robust research agenda.
  --ASPB encourages some flexibility within NIFA's budget to update and
        improve its data management capabilities.
    Thank you for your consideration of our testimony on behalf of the
American Society of Plant Biologists. For more information about the
American Society of Plant Biologists, please see www.aspb.org.

    [This statement was submitted by Dr. Crispin Taylor, Executive
Director, American Society of Plant Biologists.]
                                 ______

        Prepared Statement of the Animal Welfare Institute (AWI)
    Thank you for the opportunity to submit testimony as you consider
fiscal year 2014 funding priorities. Our testimony addresses programs
and activities administered by the U.S. Department of Agriculture's
(USDA) Animal and Plant Health Inspection Service (APHIS), including
the Animal Care/Animal Welfare program, Wildlife Services (WS) program,
and Investigative and Enforcement Services (IES). This testimony also
addresses the USDA Food Safety Inspection Service's (FSIS) operations.
                       usda-aphis--animal welfare
    APHIS's Animal Welfare activities are critical to the proper
regulation and care of animals protected under the Animal Welfare Act
of 1966 (AWA) and the Horse Protection Act of 1970 (HPA). These
activities include inspection of facilities and individuals licensed
under the AWA to sell and use certain animals for laboratory research,
for exhibition, and as pets, among other uses, as well as enforcement
of the HPA through monitoring of horse shows. AWI requests that,
consistent with the President's fiscal year 2014 budget proposal, $29
million be allocated to Animal Welfare activities.
    This funding will provide for enhanced enforcement of the AWA and
HPA, as discussed in the comments below, and will provide the agency
with the resources needed to enforce the Animal Welfare retail pet
store rule. This rule requires that the sale of pets via Internet,
phone, and mail comply with AWA standards. Enforcement of this rule
will ensure that animals sold sight-unseen to buyers are better
monitored for health and humane treatment.
  usda-aphis--animal welfare--animal welfare act enforcement--class b
                                dealers
    In 1966, Congress passed the Animal Welfare Act (AWA) to prevent
the mistreatment of animals and to assure families that their pets
would not be sold for laboratory experiments after an expose revealed
the widespread theft of pets for that purpose.
    Unfortunately, 47 years later, this is still a problem. Despite the
well-meaning intent of the AWA and the enforcement efforts of USDA, the
AWA routinely fails both to reliably protect pet owners against the
actions of Class B dealers who sell random source dogs and cats for use
in research (also known as ``random source'' dealers) and to ensure
that these dealers provide humane care for the dogs and cats kept on
their premises.
    In response to repeated requests from Congress, the National
Institutes of Health (NIH) funded a study by the National Academy of
Sciences (NAS) on the use of Class B dogs and cats in NIH-funded
research. That report describes a ``complicated tangle of trade'' in
animals sold for use in experiments, and notes that ``loopholes in the
[Animal Welfare Regulations] permit pets to enter the research pipeline
via Class B dealers.'' \1\ Furthermore, ``USDA could not offer
assurances that pet theft does not occur, and agreed that such a crime
is exceedingly difficult to prove. . . .'' \2\ That difficulty
notwithstanding, the report stated that there are ``descriptions of
thefts provided by informants in prison . . . and documented accounts
of lost pets that have ended up in research institutions through Class
B dealers.'' \3\
---------------------------------------------------------------------------
    \1\ National Academy of Sciences Institute for Laboratory Animal
Research, Scientific and Humane Issues in the Use of Random Source Dogs
and Cats in Research (2009).
    \2\ Id.
    \3\ Id.
---------------------------------------------------------------------------
    Across the Nation, these random source Class B dealers--and the
middlemen who work for them, known as ``bunchers''--use deceit and
fraud to acquire dogs and cats. Their tactics include tricking animals'
owners into giving away their dogs and cats by posing as someone
interested in pet adoption, as well as the outright theft of family
pets. The treatment of the animals sold by these random source Class B
dealers is shocking and cruel. Hundreds of animals are kept in squalid
conditions and are denied much needed veterinary care. Again, the NAS
report cited a variety of problems with regard to animal welfare and
enforcement.
    USDA has had to implement a lengthy and time-consuming enforcement
protocol for these random source dealers, involving quarterly
inspections (more than any other licensees) and ``tracebacks,'' in
order to attempt to verify the source of their animals. While it is
exceedingly difficult to put a price tag on this extreme level of
oversight, USDA did estimate for the NAS report, at a time when eleven
random source Class B dealers were still in business (now there are
six, with three under investigation), that it was spending as much as
$300,000 per year to regulate that small number of dealers.\4\
---------------------------------------------------------------------------
    \4\ Id.
---------------------------------------------------------------------------
    Congress, too, has spent an inordinate amount of time reviewing the
actions of Class B dealers and prodding USDA and NIH to address their
respective Class B dealer problems. NIH long ago banned its intramural
researchers from using Class B dealers but had until recently ignored
Congress' repeated calls for it to do likewise with respect to outside
researchers.
    As a result of the NAS report, ongoing congressional interest,
enhanced (but disproportionate) oversight by USDA, and evaporating
demand for random source dogs and cats, very few of these dealers
remain, and with NIH's phased-in ban on the use of Class B dealers by
its extramural researchers, the Class B dealer system has become a
cruel and expensive anachronism. Those who continue to operate are an
unjustifiable drain on USDA's resources. However, as long as it is
possible to issue and renew licenses for such dealers, there is the
risk that this anachronism will continue to limp along, wasting
taxpayer money and perpetuating the inhumane treatment of animals and
the trade in illegally acquired dogs and cats.
    For this reason, we respectfully request that Congress prohibit any
further spending by USDA both to grant new licenses and to renew
existing licenses for Class B dealers selling dogs and cats for
research purposes by including the following language in the report
accompanying the fiscal year 2014 agriculture appropriations:
``Provided, That appropriations herein made shall not be available for
any activities or expense related to the licensing of new Class B
dealers who sell dogs and cats for use in research, teaching, or
testing, or to the renewal of licenses of existing Class B dealers who
sell dogs and cats for use in research, teaching, or testing''.
      usda-aphis--animal welfare--horse protection act enforcement
    The goal of the Horse Protection Act (HPA), passed in 1970, is to
end the cruel practice of soring, by which unscrupulous owners and/or
trainers, primarily within the Tennessee Walking Horse industry,
intentionally inflict pain on the legs and hooves of horses through the
application of chemical and mechanical irritants to produce an
exaggerated gait. In 2008, the American Association of Equine
Practitioners condemned soring as ``one of the most significant welfare
issues affecting any equine breed or discipline.'' \5\
---------------------------------------------------------------------------
    \5\ American Association of Equine Practitioners, Putting the Horse
First: Veterinary Recommendations for Ending the Soring of Tennessee
Walking Horses (2008).
---------------------------------------------------------------------------
    Throughout its history, however, the law has been openly flouted
and inadequate funding has hampered enforcement. USDA inspectors are
able to attend a mere fraction of Tennessee Walking Horse shows.
Consequently, there is continued reliance on an industry-run system of
certified Horse Industry Organization inspection programs that utilize
Designated Qualified Persons (DQPs), usually industry insiders with a
history of looking the other way. Reliance on DQPs has been an abysmal
failure. Statistics clearly indicate that the presence of USDA
inspectors at shows results in a far higher rate of noted violations
than occurs when DQPs are present. For instance, USDA recently released
foreign substance results gathered through the Horse Protection Program
at horse shows from 2010 through 2012. Out of 478 horses sampled at 24
shows in 2012, 309 horses--or 65 percent--tested positive for soring
agents.\6\ At the 2012 Tennessee Walking Horse National Celebration in
Shelbyville, Tennessee, 145 of the 190 horses sampled tested positive,
and at some 2012 shows every single horse examined had been exposed to
soring chemicals.\7\ In 2011, 184 of 189 horses (97 percent) sampled at
three shows tested positive for soring agents; in 2010, 312 of 363
horses (86 percent) sampled at six shows had been sored. Data from DQP
horse show inspections in 2009 (the most recent year for which reports
are available) reveal that for 436 shows at which 70,122 inspections
were conducted and 889 violations of any type were cited, only 61, or
.00087 percent of horses inspected, were for prohibited foreign
substances.
---------------------------------------------------------------------------
    \6\ USDA-APHIS Horse Protection Program, 2012 Foreign Substance
Results, available at http://www.aphis.usda.gov/animal_welfare/hp/
downloads/show%20tally%202012%20for%20 web.pdf.
    \7\ Id.
---------------------------------------------------------------------------
    From this comparison, it is clear not only that horse soring
remains a serious problem, but also that there is no substitute for
inspections by USDA personnel to ensure compliance with the HPA. The
greater the likelihood of a USDA inspection, the greater the deterrent
effect on those who routinely sore their horses. Enforcement should not
be entrusted to individuals with a stake in maintaining the status quo.
USDA cannot make progress in this area without adequate funding. We ask
that Congress appropriate the $893,000 for HPA enforcement as provided
in the administration's budget.
      usda-aphis--wildlife services--livestock protection program
    The Animal and Plant Health Inspection Service's (APHIS) Wildlife
Services (WS) program allocates millions of dollars each year to lethal
wildlife management efforts. WS relies on methods that are inhumane,
ineffective, costly, and outdated. The program kills thousands of
native predators annually in misguided attempts to protect livestock--
an objective which would be better served by other, more humane means
that have been proven effective in the field. WS' aerial gunning
operations are extremely costly and poorly targeted to depredating
animals. Its traps and poisons are nonselective and kill large numbers
of nontarget animals each year, including endangered species and family
pets. They represent threats to public safety and, in the case of
poisons like Compound 1080, to national security. In fact, Compound
1080 is ``very highly toxic'' according to the EPA, and is so dangerous
that the FBI has identified it as a potential weapon of terrorism.
Accordingly, we request that WS' Wildlife Damage Management budget be
reduced by $13 million, the program's estimated annual expenditure for
lethal predator control practices intended to protect livestock. It
should no longer be the taxpayers' responsibility to subsidize these
inhumane, costly practices to which effective alternatives are readily
available.
 usda-aphis--wildlife services--wildlife damage management program for
                             airport safety
    APHIS' Airport Wildlife Control Program is intended to address the
control of wildlife at military and civilian airports to reduce the
threat of aircraft striking wildlife, which can lead to aircraft
damage, delays, and accidents. While the media often sensationalize
such incidents, the statistical likelihood of a bird or other wildlife
striking an aircraft is exceedingly small. The chances of a strike
resulting in aircraft destruction, damage, delay, or an accident is
even more remote. Indeed, since 1988, according to the Bird Strike
Committee USA, only slightly more than 250 people worldwide have been
killed as a result of bird strikes on aircraft. This loss of life is
tragic, but when compared to the total number of aircraft passengers
(commercial and civilian) worldwide since 1988, it is obvious that the
risk of dying as a result of a bird strike is infinitesimal. Similarly,
though the Federal Aviation Administration documented 133,000 reported
wildlife strikes (bird strikes comprise approximately 97.5 percent of
all wildlife strikes) at civilian and military airports in the United
States between 1990 and 2011, only an extraordinarily small fraction of
these reported strikes resulted in the damage, delay, or destruction of
an aircraft or injuries or death to passengers. Furthermore, when the
total number of aircraft (private, commercial, and military) takeoffs
and landings are considered over that 21 year period, again the risk of
an aircraft striking wildlife is exceedingly small.
    Recognizing that the risk of wildlife strikes to aircraft is real
but not statistically significant, we support the allocation of $1.5
million to the wildlife damage management program for airport safety
included in the administration's budget. However, we ask that these
funds be earmarked only for non-lethal management programs. There are a
variety of non-lethal strategies that are effective and feasible to
address wildlife strikes to aircraft including fencing, habitat
management, runway sweeps using pyrotechnics and other noise-making
devices, trained falcons, removal of standing water/areas that attract
birds/wildlife on airport properties, modification of airport
structures to deter bird use, and public/airport employee education to
avoid behaviors (i.e., feeding birds) that may attract animals to
airports.
     usda-aphis--wildlife services--oral rabies vaccination program
    APHIS' oral rabies vaccination (ORV) activities, which are carried
out under the National Rabies Management Program, have proven to be a
significant step toward controlling the spread of rabies in the United
States. This program was established to prevent the spread of wildlife
rabies in the United States and ultimately eradicate terrestrial
rabies. APHIS' ORV distribution is an effective and humane approach to
addressing rabies, and serves to protect public health, pets, wildlife,
and livestock in a cost-effective manner. To ensure that the progress
that has been made in combating domestic rabies continues, we request
that $22.56 million be allocated to the ORV program for fiscal year
2014. This funding level is consistent with the program's estimated
fiscal year 2013 expenditures and will enable APHIS to build upon its
successes in preventing the spread of rabies.
           usda-aphis--investigative and enforcement services
    APHIS' Investigative and Enforcement Services (IES) handles
investigations related to enforcement of the laws and regulations for
APHIS' programs, which involves: collection of evidence; civil and
criminal investigations; and investigations carried out in conjunction
with Federal, State and local enforcement agencies. IES, in
collaboration with USDA's Office of the General Counsel, also handles
other types of enforcement actions including stipulations and formal
administrative proceedings. We respectfully request that IES funding
remain level with fiscal year 2013 appropriations so that the Service
may fulfill its full range of responsibilities, particularly its
increasing HPA and AWA investigatory demands.
            usda-fsis--horse slaughter facility inspections
    In 2006, the U.S. House of Representatives and U.S. Senate
overwhelmingly approved language that prevented tax dollars from being
used to inspected horse slaughter facilities. This language remained in
effect until it was removed in conference in 2011, despite having been
approved by the full House Appropriations Committee. Allowing horse
slaughter to resume will only bring the well documented abuse to U.S.
soil at great expense to the horses and the American public.
    The President's budget underscores the need to prevent the
reintroduction of domestic horse slaughter; USDA itself has called for
language prohibiting the operation of horse slaughter plants in the
United States. The fact that the very agency that will be tasked with
overseeing horse slaughter facilities if they reopen has firmly
articulated the importance of keeping this costly and inhumane industry
out of the United States weighs overwhelmingly in favor of banning
domestic slaughter. Given the USDA's clear position, as well as the
financial troubles facing the Nation, we encourage the subcommittee to
accept this bipartisan language while the full Congress moves to pass a
ban on horse slaughter:

    ``None of the funds made available in this Act may be used to pay
the salaries or expenses of personnel to--
            ``(1) inspect horses under section 3 of the Federal Meat
        Inspection Act (21 U.S.C. 603);
            ``(2) inspect horses under section 903 of the Federal
        Agriculture Improvement and Reform Act of 1996 (7 U.S.C. 1901
        note; Public Law 104127); or
            ``(3) implement or enforce section 352.19 of title 9, Code
        of Federal Regulations.''.

    [This statement was submitted by Christopher J. Heyde, Deputy
Director, Government and Legal Affairs, Animal Welfare Institute.]
                                 ______

              Letter From the Choose Clean Water Coalition
                                                    April 26, 2013.
Hon. Mark Pryor,
Chairman, Subcommittee on Agriculture, Rural Development, Food and Drug
        Administration, and Related Agencies,
Washington, DC.
Hon. Roy Blunt,
Ranking Member, Subcommittee on Agriculture, Rural Development, Food
        and Drug Administration, and Related Agencies,
Washington, DC.
    Dear Chairman Pryor and Ranking Member Blunt: As members of the
Choose Clean Water Coalition we are requesting continued support for
programs to ensure that responsible farms are economically viable.
There are 87,000 farms in the Chesapeake region, and those that are
well run protect their water resources and add much to our landscape,
environment and economy. These conservation programs are critical for
maintaining and restoring clean water to the rivers and streams
throughout the Chesapeake Bay region, and for the Bay itself. These
programs are also essential for the agricultural sector to meet
requirements under the Clean Water Act.
    At least 11 million people in this region get their drinking water
directly from the rivers and streams that flow through the cities,
towns and farms throughout our region. The quality of this water is
critical to both human health and to the regional economy.
    The efforts to clean the Chesapeake began a generation ago under
President Reagan in 1983. In his 1984 State of the Union speech
President Reagan said, ``Preservation of our environment is not a
liberal or conservative challenge, it's common sense.''
    In order to follow a common sense path to maintain economically
viable well run farms and to have healthy local water and a restored
Chesapeake Bay, which is critical for our regional economy, we request
full funding for the President's request for the following programs in
fiscal year 2014:
u.s. department of agriculture--natural resources conservation service
                                 (nrcs)
Environmental Quality Incentives Program (EQIP)--$1.35 Billion
    This national farm bill conservation program provides a formula
based allocation to farmers by State and is used for various
conservation practices, such as nutrient management, cover crops,
conservation tillage, fencing animals out of streams, restoring
vegetative buffers along streams, etc., that are critical to protecting
and restoring water quality throughout the region and the Nation. EQIP
has been essential over the years in this region for farmers to
implement and maintain practices that enhance their operations and
benefit the local environment.
Chesapeake Bay Watershed Initiative--$50 Million
    We urge you to continue funding the Chesapeake Bay Watershed
Initiative established in the 2008 farm bill (Public Law 110-246). The
President's fiscal year 2014 budget requests $50 million to continue
this critical program. The program provides enhancement to existing
conservation programs for agricultural producers and has provided
tremendous benefits to the region's farmers and local water quality.
This program is crucial to reducing the backlog of applications for
conservation programs in an area where both need and demand are high.
Agricultural conservation practices are one of the most cost-effective
ways for meeting water quality restoration goals, and the funding is
essential for helping the region reduce nutrient and sediment loads
polluting local streams and rivers and reaching the Bay.
    Thank you for your consideration on this very important request to
maintain funding for these programs which are critical to both our
agricultural community and for clean water throughout the mid-Atlantic
region.
            Sincerely,

American Rivers
Anacostia Watershed Society
Audubon Naturalist Society
Baltimore Jewish Environmental Network
Blue Ridge Watershed Coalition
Cacapon Institute
Center for the Celebration of Creation
Citizens for Pennsylvania's Future (PennFuture)
Clean Water Action
Conservation Pennsylvania
Conservation Voters of Pennsylvania
Delaware Nature Society
Earthworks
Friends of the Rappahannock
James River Association
Lower Susquehanna Riverkeeper
Lynnhaven River NOW
Maryland Conservation Council
Maryland League of Conservation Voters
National Parks Conservation Association
National Wildlife Federation--Mid-Atlantic Regional Center
Natural Resources Defense Council
Nature Abounds
Pennsylvania Council of Churches
Piedmont Environmental Council
Port Tobacco River Conservancy
Potomac Conservancy
Potomac Riverkeeper
Sassafras River Association
Savage River Watershed Association
Severn Riverkeeper
Shenandoah Riverkeeper
Southern Environmental Law Center
Trout Unlimited
Virginia Conservation Network
West Virginia Rivers Coalition
Wicomico Environmental Trust
                                 ______

        Prepared Statement of the Coalition Against Forest Pests
    The Coalition Against Forest Pests consists of nonprofit
organizations, for-profit corporations, landowners, State agencies and
academic scholars who have joined together to improve our Nation's
efforts to address this critical threat to our forests. Our Coalition
seeks to create real and lasting change, by advocating for stronger
programs and policies that work to combat this threat, mitigate the
existing impacts, and restore healthy forest ecosystems. We write today
in support of funding for programs at the USDA Animal and Plant Health
Inspection Service (APHIS) that help keep the nation's forests healthy
by responding to invasive pests.
    We urge the subcommittee on Agriculture, Rural Development, Food
and Drug Administration, and Related Agencies to maintain funding for
the lines ``Tree and Wood Pests'' and ``Specialty Crops'' under the
USDA APHIS Plant Health program. Funding through these budget accounts
supports eradication and control efforts targeting the Asian longhorned
beetle and sudden oak death pathogen; allows APHIS to maintain its
efforts to curtail spread of the emerald ash borer and other damaging
pests; and enables APHIS to address new threats, most prominently the
goldspotted oak borer, thousand cankers disease of walnut, and
polyphagous shot hole borer.
    We appreciate the difficulty that comes as Congress responds to the
Nation's rising debt. However, the Nation cannot afford to further
undermine its defenses against the ever-increasing number of plant
pests. APHIS is the agency responsible for preventing pest
introductions and countering those pests that evade prevention
measures. Since 1975, U.S. imports (excluding petroleum products) have
risen almost six times faster than staff to conduct inspections of
those imports. At the same time, the declining resources at APHIS have
limited the Agency's ability to effectively keep plant pests out of the
country; this has led to the introduction of more than 90 new plant
pests in the United States since 2009. We look forward to working with
the subcommittee to help APHIS strengthen and target its pest-
prevention and control programs, including preparation of risk
assessments; prompt adoption of regulations that effectively clean up
pathways of introduction; and increasing capability to detect
introductions quickly and respond to them before they become widespread
and difficult to control. Effective response, in turn, depends upon
capacity to develop and test exclusion, detection, and pest-management
methods.
    Funding for the ``Tree and Wood Pests'' and ``Specialty Crops''
programs is essential to protecting America's irreplaceable rural and
urban forests from the rising tide of tree-killing pests. Forested
landscapes cover approximately one-third of the total land area of the
United States including 100 million acres in urban environments. Every
American benefits from forests, whether in the form of wood products
for construction or paper, neighborhood amenities, wildlife habitat,
carbon sequestration, clean water and air, and even our spiritual well-
being. Many Americans' jobs are linked to trees. The U.S. forest
products industry employs nearly 900,000 people; it is among the top 10
manufacturing sector employers in 47 States. Jobs associated with
production of nonwood forest products are estimated to be in the tens
of thousands.
    Municipal governments across the country are spending more than
$1.7 billion each year to remove trees on city property killed by these
pests. Homeowners are spending $1 billion to remove and replace trees
on their properties; they are absorbing an additional $1.5 billion in
reduced property values.
    Over the past decade, 19 new wood-boring pests have been detected
in the United States. Despite the rising risk, APHIS' ability to
counter these pests--funded by the ``Tree and Wood Pest'' spending
line--was cut by more than one-quarter from fiscal year 2011 to fiscal
year 2012. A new pest that poses a significant threat to trees arrives,
on average, every 2 to 3 years. Additional cuts further limit the
ability of APHIS to reduce the level of damages caused by the growing
number of such pests.
    The principal program funded under the ``Tree and Wood Pest''
account is eradication of the Asian longhorned beetle. It is imperative
to complete eradication of the Asian longhorned beetle at known
outbreak sites, and to continue expanded detection programs to ensure
that this highly destructive beetle is not established at additional
sites. (Despite its large size, the Asian longhorned beetle is often
present for several years before authorities learn of its presence.)
The Asian longhorned beetle kills trees in 15 botanical families--
especially maples and birches which constitute much of the forest
reaching from Maine to Minnesota and urban trees worth an estimated
$600 billion. We cannot afford to let this beetle become established in
North America, so APHIS must continue improving its detection and
eradication tools.
    At the same time, funding under the ``Tree and Wood Pest'' line
must be sufficient to enable APHIS to counter additional pests that
threaten other forest resources. While the emerald ash borer outbreak
is large, significant numbers of ash trees are outside the currently
infested area, especially in cities and towns of the Great Plains,
West, and South. Reducing APHIS' ``slow the spread'' effort will expose
municipal governments and property owners in these areas to millions of
dollars in costs for tree removal.
    Other impending losses, including from the Thousand canker disease,
are even greater. Thousand cankers disease threatens black walnut
across the East; the value of walnut growing stock is estimated to be
$539 billion. APHIS must have sufficient funds to help States manage
this pest and to support ongoing efforts to develop detection traps,
biological controls, and other tools aimed at reducing the damage it
causes.
    Funds are also needed to support APHIS programs targeting firewood
as a major pathway by which the emerald ash borer and other pests are
spread to new areas. The agency should counter further spread of the
goldspotted oak borer, which has killed 80,000 oak trees in less than
15 years in southern California. The insect threatens oaks throughout
California, including in greater Los Angeles and in Yosemite National
Park. APHIS should establish a quarantine and evaluate whether oak
trees in the Southeast are at risk.
    Funding for the ``Specialty Crops'' program is essential to
improving the ability of APHIS to curtail spread of the pathogen called
either sudden oak death or Ramorum leaf and stem blight. APHIS'
regulations have been only partially successful in ensuring that
infected plants are not shipped to vulnerable areas, such as the
Southeast. APHIS should work with the nursery trade and the States to
adopt more promising measures agreed to through a stakeholder process.
APHIS should also evaluate the threat to oaks, maples, willows, and
sweetgum trees across the country posed by the polyphagous shot hole
borer and the fungus it carries. At present, this pest complex is found
in Los Angeles County, California.
    These vitally important programs are leveraged by collaborations
with other Federal agencies, States, and numerous academic, non-
governmental, and commercial entities. If reduced funding hampers these
efforts, forests across the Nation will be at increased risk from Asian
longhorned beetle, emerald ash borer, sudden oak death, thousand
cankers disease of walnut, laurel wilt, and a host of other wood-
inhabiting pests.
    We greatly appreciate the opportunity to share testimony as the
subcommittee prepares a fiscal year 2014 Agriculture, Rural
Development, Food and Drug Administration and Related Agencies
Appropriations bill. We look forward to sharing more specific
recommendations following release of the fiscal year 2014
administration budget.

Alliance for Community Trees
American Forests
American Forest Foundation
American Forest & Paper Association
American Nursery and Landscape Association
California Forest Pest Council
National Alliance of Forest Owners
National Association of Conservation Districts
National Association of State Foresters
National Network of Forest Practitioners
National Wooden Pallet and Container Association
National Woodland Owners Association
Pennsylvania Department of Conservation and Natural Resources
Society of American Florists
Society of American Foresters
The Nature Conservancy
                                 ______

 Prepared Statement of the Colorado River Basin Salinity Control Forum
    Waters from the Colorado River are used by approximately 40 million
people for municipal and industrial purposes and used to irrigate
approximately 4 million acres in the United States. Natural and man-
induced salt loading to the Colorado River creates environmental and
economic damages. The U.S. Bureau of Reclamation (Reclamation) has
estimated the currently quantifiable damages at about $376 million per
year. Modeling by Reclamation indicates that the quantifiable damages
will rise to approximately $577 million per year by the year 2030
without continuation of the Program. Congress authorized the Colorado
River Basin Salinity Control Program (Program) in 1974 to offset
increased damages caused by continued development and use of the waters
of the Colorado River. The USDA portion of the Program, as authorized
by Congress and funded and administered by the Natural Resources
Conservation Service (NRCS) under the Environmental Quality Incentives
Program (EQIP), is an essential part of the overall effort. A funding
level of $17 million to $18 million annually is required to prevent
further degradation of the quality of the Colorado River and increased
downstream economic damages.
    In enacting the Colorado River Basin Salinity Control Act in 1974,
Congress directed that the Colorado River Basin Salinity Control
Program should be implemented in the most cost-effective way. The
Program is currently funded under EQIP through NRCS and under
Reclamation's Basinwide Program. The act requires that the basin States
cost share 30 percent of the overall effort. Historically, recognizing
that agricultural on-farm improvements were some of the most cost-
effective strategies, Congress authorized a program for the United
States Department of Agriculture (USDA) through amendment of the act in
1984. With the enactment of the Federal Agriculture Improvement and
Reform Act of 1996 (FAIRA), Congress directed that the Program should
continue to be implemented as part of the newly created Environmental
Quality Incentives Program. Since the enactment of the Farm Security
and Rural Investment Act (FSRIA) in 2002, there have been, for the
first time in a number of years, opportunities to adequately fund the
Program within EQIP. In 2008, Congress passed the Food, Conservation
and Energy Act (FCEA). The FCEA addressed the cost sharing required
from the Basin Funds. In so doing, the FCEA named the cost sharing
requirement as the Basin States Program (BSP). The BSP will provide 30
percent of the total amount that will be spent each year by the
combined EQIP and BSP effort.
    The Program, as set forth in the act, is to benefit Lower Basin
water users hundreds of miles downstream from the sources of salinity
in the Upper Basin. The salinity of Colorado River waters increases
from about 50 mg/L at its headwaters to more than 700 mg/L in the Lower
Basin. There are very significant economic damages caused downstream by
high salt levels in the water. EQIP is used to improve upstream
irrigation efficiencies which in turn reduce leaching of salts to the
Colorado River. There are also local benefits from the Program in the
form of soil and environmental benefits, improved water efficiencies,
reduced fertilizer use and lower labor costs. Local producers submit
cost-effective applications under EQIP in Colorado, Utah, and Wyoming,
and offer to cost share in the acquisition of new irrigation equipment.
The mix of funding under EQIP, cost share from the Basin States and
efforts and cost share brought forward by local producers has created a
most remarkable and successful partnership.
    After longstanding urgings from the States and directives from
Congress, NRCS has recognized that this Program is different than small
watershed enhancement efforts common to EQIP. In the case of the
Colorado River salinity control effort, the watershed to be considered
stretches more than 1,400 miles from the river's headwater in the Rocky
Mountains to the river's terminus in the Gulf of California in Mexico.
Each year the NRCS State Conservationists for Colorado, Utah, and
Wyoming, prepare a 3-year funding plan for the salinity efforts under
EQIP. The Forum supports this funding plan which recognizes the need
for $17.3 million in fiscal year 2014. This includes the moneys needed
for both farm and technical assistance. State and local cost-sharing is
triggered by the Federal appropriation. The States and local producers
are able and anxious to participate in the Program. The Forum
appreciates the efforts of NRCS leadership and the support of this
subcommittee in implementing the Program.
    The Forum is composed of gubernatorial appointees from Arizona,
California, Colorado, Nevada, New Mexico, Utah, and Wyoming. The Forum
is charged with reviewing the Colorado River's water quality standards
every 3 years. In so doing, it adopts a Plan of Implementation
consistent with these standards. The level of appropriation requested
in this testimony is in keeping with the adopted Plan of
Implementation. If adequate funds are not appropriated, significant
damages from the higher salinity concentrations in the water will be
more widespread in the United States and Mexico.
    Concentration of salt in the Colorado River causes approximately
$376 million in quantified damages and significantly more in
unquantified damages in the United States and results in poor water
quality for United States users. Damages occur from:
  --a reduction in the yield of salt sensitive crops and increased
        water use to meet the leaching requirements in the agricultural
        sector;
  --increased use of imported water and cost of desalination and brine
        disposal for recycling water in the municipal sector;
  --a reduction in the useful life of galvanized water pipe systems,
        water heaters, faucets, garbage disposals, clothes washers, and
        dishwashers, and increased use of bottled water and water
        softeners in the household sector;
  --an increase in the cost of cooling operations and the cost of water
        softening, and a decrease in equipment service life in the
        commercial sector;
  --an increase in the use of water and the cost of water treatment,
        and an increase in sewer fees in the industrial sector;
  --a decrease in the life of treatment facilities and pipelines in the
        utility sector; and
  --difficulty in meeting wastewater discharge requirements to comply
        with National Pollutant Discharge Elimination System permit
        terms and conditions, and an increase in desalination and brine
        disposal costs due to accumulation of salts in groundwater
        basins.
    Over the years, NRCS personnel have developed a great working
relationship with farmers within the Colorado River Basin. Maintaining
salinity control achieved by implementation of past practices requires
continuing education and technical assistance from NRCS personnel.
Additionally, technical assistance is required for planning and design
of future projects. Last, the continued funding for the monitoring and
evaluation of existing projects is essential to maintaining the
salinity reduction already achieved.
    In summary, implementation of salinity control practices through
EQIP has proven to be a very cost effective method of controlling the
salinity of the Colorado River and is an essential component to the
overall Colorado River Basin Salinity Control Program. Continuation of
EQIP with adequate funding levels will prevent the water quality of the
Colorado River from further degradation and significantly increased
economic damages to municipal, industrial and irrigation users. A
modest investment in source control pays huge dividends in improved
drinking water quality to nearly 40 million Americans.

    [This statement was submitted by Don A. Barnett, Executive
Director, Colorado River Basin Salinity Control Forum.]
                                 ______

      Prepared Statement of the Colorado River Board of California
    This testimony is in support of funding for the U.S. Department of
Agriculture (USDA) and its on-farm Colorado River Basin Salinity
Control Program (Program) for fiscal year 2014. This program has been
carried out through the Colorado River Basin Salinity Control Act
(Public Law 93-320), since it was enacted by Congress in 1974. Further,
with the enactment of the Federal Agricultural Improvement and Reform
Act (FAIRA) in 1996 (Public Law 104-127), Congress directed that the
Program should continue to be implemented as one of the components of
the Environmental Quality Incentives Program (EQIP). Finally, Congress
passed the Food, Conservation, and Energy Act (FCEA) in 2008, that
addressed the cost-sharing required from the Basin Funds, and
redesignated the cost-sharing requirement as the Basin States Program
(BSP). Currently, the BSP provides approximately 30 percent of the
total amount that will be spent each year by the combined EQIP and BSP
efforts.
    The Salinity Control Program benefits both the Upper Basin water
users through more efficient water management and the Lower Basin water
users, through reduced salinity concentration of Colorado River water.
For example, California's Colorado River water users continue to suffer
economic damages in the hundreds of million of dollars per year due to
the current salinity of the Colorado River.
    The Colorado River Board of California (Colorado River Board) is
the State agency charged with protecting California's interests and
rights in the water and power resources of the Colorado River system.
In this capacity, California participates along with the other six
Colorado River Basin States through the Colorado River Basin Salinity
Control Forum (Forum), the interstate organization responsible for
coordinating the Basin States' salinity control efforts. In close
cooperation with the U.S. Environmental Protection Agency (EPA) and
pursuant to requirements of the Clean Water Act (Public Law 92-500),
the Forum is charged with reviewing the Colorado River's water quality
standards every 3 years. The Forum adopts a Plan of Implementation
consistent with these water quality standards. The level of
appropriation being supported in this testimony is consistent with the
Forum's 2011 Plan of Implementation. The Forum's 2011 Plan of
Implementation can be found on this website: http://
www.coloradoriversalinity.org/docs/2011%20REVIEW-October.pdf. If
adequate funds are not appropriated, significant damages associated
with increasing salinity concentrations of Colorado River water will
become more widespread in the United States and Mexico.
    Currently, the salinity concentration of Colorado River water
causes about $376 million in quantifiable damages in the United States
annually. Economic and hydrologic modeling by the U.S. Bureau of
Reclamation (Reclamation) indicates that the quantifiable damages could
rise to more than $577 million by the year 2030 without the
continuation of the Salinity Control Program as identified in the 2011
Plan of Implementation. For example, salinity damages occur from:
  --A reduction in the yield of salt-sensitive crops and increased
        water use for leaching in the agricultural sector;
  --A reduction in the useful life of galvanized water pipe systems,
        water heaters, faucets, garbage disposals, clothes washers, and
        dishwashers, and increased use of bottled water and water
        softeners in the household sector;
  --An increase in the use of water for cooling, and the cost of water
        softening, and a decrease in equipment service life in the
        commercial sector;
  --An increase in the use of water and the cost of water treatment,
        and an increase in sewer fees in the industrial sector;
  --A decrease in the life of treatment facilities and pipelines in the
        utility sector;
  --Difficulty in meeting wastewater discharge requirements to comply
        with National Pollutant Discharge Elimination System permit
        terms and conditions, and an increase in desalination and brine
        disposal costs due to accumulation of salts in groundwater
        basins, and fewer opportunities for recycling due to
        groundwater quality deterioration; and
  --Increased use of imported water for leaching and the cost of
        desalination and brine disposal for recycled water.
    In recent fiscal years, the Natural Resources Conservation Service
(NRCS) has directed that about $17 million to $18 million of EQIP funds
be used for the Salinity Control Program. The Colorado River Board
respectfully urges the subcommittee to support funding for the Colorado
River Basin Salinity Control Program for fiscal year 2014 at least at
this level.
    The Forum has taken the position that funding for the Program
should be consistent with the 3-year funding plan submitted by the
three NRCS State Conservationists for Colorado, Utah and Wyoming. The
NRCS funding plan for 2014 is $17.3 million and includes both farm and
technical assistance program elements. It should also be pointed out
that State and local cost-sharing is triggered by Federal
appropriations.
    In conclusion, the Colorado River Board of California recognizes
that the Federal Government has made significant commitments to the
seven Colorado River Basin States with regard to the delivery of
Colorado River water. In order for those commitments to continue to be
honored, it is essential that Congress continue to provide funds to the
USDA to allow it to provide needed technical support to agricultural
producers for addressing salinity control activities in the Colorado
River Basin. Over the past 29 years, the Colorado River Basin Salinity
Control program has proven to be a very cost-effective and
collaborative approach to help mitigate the impacts of the salinity of
Colorado River water. Continued Federal funding of the USDA elements of
this important Basin-wide program is essential to maintaining this
effort.

    [This statement was submitted by Tanya M. Trujillo, Executive
Director, Colorado River Board of California.]
                                 ______

       Prepared Statement of the Cystic Fibrosis Foundation (CFF)
    On behalf of the Cystic Fibrosis Foundation and the approximately
30,000 people with cystic fibrosis (CF) in the United States, we are
pleased to submit the following testimony to the Senate Appropriations
Committee's Subcommittee on Agriculture, Rural Development, Food and
Drug Administration, and Related Agencies on our funding requests for
fiscal year 2014.
    In order to encourage efficient review of drugs for cystic fibrosis
and other rare diseases, we urge the committee to prioritize the Food
and Drug Administration (FDA) in fiscal year 2014 by providing the
highest possible funding level for this critical agency. We urge
special consideration and support for the Center for Drug Evaluation
and Research (CDER), its Office of New Drugs (OND), and the Office of
Orphan Products Development (OOPD).
  the food and drug administration--sufficient funding for swift drug
                                 review
    The Cystic Fibrosis Foundation requests that the committee provide
robust funding for drug review at the Food and Drug Administration in
fiscal year 2014. The FDA has broad and significant responsibilities,
regulating roughly 25 percent of consumer spending, and its
responsibilities grow each year. In light of this, we are significantly
concerned about the impact of the recently enacted sequester, which
results in a loss of about $208 million, 5.1 percent of the agency's
budget.
    This figure includes sequestration of user fees for prescription
drugs. The Foundation strongly opposes sequestering these funds, which
are collected from industry for the express purpose of supporting drug
review and are critical to the efficient review of rare disease
treatments. It is vital that the FDA have the funding it needs to
ensure that the Nation has a safe and effective supply of drugs and
devices and that the agency can give the necessary attention to
reviewing therapies that treat small patient populations and serve
specific unmet medical needs.
    The Cystic Fibrosis Foundation applauds FDA Commissioner Dr.
Margaret A. Hamburg, CDER Director Dr. Janet Woodcock, and Associate
Director for Rare Diseases Dr. Anne Pariser for their sensitivity to
the challenges posed by the evaluation of rare disease treatments and
support for swift rare disease drug review and approval.
    Last year's approval of KalydecoTM, a groundbreaking
cystic fibrosis treatment called ``the most important drug of 2012'' by
Forbes Magazine, is an example of this support. Reviewed and approved
in only 3 months, Kalydeco was one of the fastest approvals in the
history of the FDA. Kalydeco's review is a testament to the agency's
efficiency and its commitment to patients who live everyday with
serious chronic diseases.
    Kalydeco, developed by Vertex Pharmaceuticals in cooperation with
the Cystic Fibrosis Foundation, is the first treatment to target the
underlying genetic cause of cystic fibrosis. It is effective in those
with a particular CF mutation, impacting about 4 percent of the cystic
fibrosis population. Other treatments like Kalydeco that target the
root cause of the disease in larger portions of the CF population are
moving quickly through the pipeline. Phase 3 clinical trials are
underway to study a combination of Kalydeco and a new compound, VX-809,
which would treat those with the most common CF mutation, affecting
about 50 percent of those with CF in the United States. Additionally,
the CF Foundation has significantly expanded its research investments
with leading pharmaceutical companies, including Pfizer, Genzyme and
Vertex, to accelerate the discovery and development of new drugs that
will help more CF patients.
    As innovative, genetically targeted treatments like Kalydeco are
developed, it is important that the FDA has the resources it needs to
support a sufficient amount of reviewers and retain those with
appropriate and extensive expertise in rare diseases in order for new
drugs to be evaluated effectively, efficiently and without delay.
    The review of rare disease drugs involves myriad issues not faced
in the evaluation of treatments for more common ailments. For example,
treatments akin to Kalydeco target specific genetic mutations. However,
there are over 1,000 mutations of cystic fibrosis and some of these
mutations may impact very small patient populations, creating
challenges in designing clinical trials. In some cases it may be
necessary to consider alternate approaches, including accelerating
classification of biomarkers, testing combinations of drugs in
populations that might include patients with several different CF
mutations and the development and testing of single and combination
therapies in so-called ``n of 1'' trials (trials consisting of a single
patient).
    Experienced FDA personnel who understand the complexities of rare
disease clinical research contribute to a more nimble review process
and cultivate an environment where more novel approaches are
considered. Providing the FDA with sufficient resources is the only way
the agency can retain the high caliber workforce it needs to review the
life-saving drugs of tomorrow.
  the food and drug administration safety and innovation act (fdasia)
    In July 2012, the President signed the Food and Drug Administration
Safety and Innovation Act (FDASIA) into law. This legislation included
many provisions with the potential to speed the development and review
of rare disease treatments, but it cannot be implemented effectively
unless the FDA has adequate resources.
    One provision in particular outlined in FDASIA is a new pathway for
``Breakthrough Therapies.'' This new pathway was created to expedite
the development and review of a potential new medicine intended to
treat a serious or life-threatening disease or condition, which
evidence indicates could demonstrate substantial improvement over
existing therapies. The first two Breakthrough Therapy designations
were awarded to Vertex Pharmaceuticals for Kalydeco monotherapy (use of
Kalydeco by people with certain CF mutations not evaluated in prior
studies) and the combination regimen of Kalydeco and VX-809 currently
being studied in clinical trials. This additional pathway has the
potential to help move new treatments quickly to CF patients, but the
FDA needs sufficient funding to implement it effectively.
    Another provision, recommended by the Cystic Fibrosis Foundation
for inclusion in FDASIA, encourages FDA consultation with external
experts regarding the review of rare disease and genetically targeted
drugs, authorizing the Secretary to maintain a list of experts to
consult on rare disease topics. These topics include the unmet medical
need associated with rare diseases, an assessment of the benefits and
risks of therapies to treat rare disease and the design of clinical
trials for rare disease populations and subpopulations. As we reap the
benefits of the mapping of the human genome and the creation of
innovative models for advancing drug development, FDA outreach to
external rare disease experts will be more important than ever.
    An example of the importance of this type of outreach can be found
in the swift approval of Kalydeco. Throughout Kalydeco's review, the
Cystic Fibrosis Foundation and renowned CF experts worked closely with
Vertex and the FDA, providing valuable insight on very specialized
issues. We believe this contributed to an efficient review and
approval, a testament to what can be achieved when all interested
stakeholders collaborate.
                   collaboration leads to innovation
    The CF Foundation urges the committee to support funding for
collaborative efforts between the Food and Drug Administration and the
National Institutes of Health, such as the Regulatory Science
Initiative and the FDA-NIH Joint Leadership Council. Collaboration
between the FDA and NIH can help move innovative new drugs more quickly
through the development process and into the hands of patients by
providing an opportunity to share resources, strategies, and tools,
streamlining the development process from the laboratory to FDA review
and enhancing the regulation of drugs in this ever-changing scientific
landscape.
        about cystic fibrosis and the cystic fibrosis foundation
    Cystic fibrosis is a rare genetic disease that causes the body to
produce abnormally thick mucus that clogs the lungs and results in
life-threatening infections. This mucus also obstructs the pancreas and
stops natural enzymes from helping the body break down and absorb food.
    The Cystic Fibrosis Foundation's mission is to find a cure for CF
and improve quality of life for those living with the disease. Through
the Foundation's efforts, the life expectancy of a child with CF has
doubled in the last 30 years and research to find a cure is more
promising than ever. The Foundation's research efforts have helped
create a robust pipeline of potential therapies that target the disease
from every angle. Nearly every CF drug available today was made
possible because of the Foundation's support and our ongoing work to
find a cure.
    Once again, we urge the committee to make funding for the Food and
Drug Administration a priority in fiscal year 2014, and stand ready to
work with the committee and congressional leaders on the challenges
ahead. Thank you for your consideration.

    [This statement was submitted by Robert J. Beall, Ph.D., Cystic
Fibrosis Foundation, President and Chief Executive Officer.]
                                 ______

    Prepared Statement of the Federation of American Societies for
                      Experimental Biology (FASEB)
    The Federation of American Societies for Experimental Biology
(FASEB) respectfully requests a fiscal year 2014 appropriation of a
minimum of $325 million for the Agriculture and Food Research
Initiative (AFRI) within the National Institute of Food and
Agriculture. This funding level would keep AFRI on a path to its
authorized level of $700 million in the 2008 Food, Conservation, and
Energy Act.
    As a federation of 26 scientific societies, FASEB represents more
than 100,000 life scientists and engineers, making it the largest
coalition of biomedical research associations in the United States.
FASEB's mission is to advance health and welfare by promoting progress
and education in biological and biomedical sciences, including the
research funded by AFRI, through service to its member societies and
collaborative advocacy. FASEB enhances the ability of scientists and
engineers to improve--through their research--the health, well-being,
and productivity of all people.
    AFRI is the premier competitive grants program of the United States
Department of Agriculture (USDA), supporting research, extension, and
education projects at public, land grant universities and private
institutions nationwide. AFRI facilitates collaborative,
interdisciplinary research to address broad societal challenges and
generate knowledge in high-priority areas of the food and agricultural
sciences and translate these discoveries into agricultural practice.
AFRI also encourages young scientists to pursue careers in agricultural
research by providing research funding for over 1,700 of the Nation's
most promising pre- and postdoctoral scholars.
    Examples of recent USDA-funded research include:
  --Preventing Foodborne Illness.--Scientists are using
        multidisciplinary approaches to better understand the process
        by which disease-causing E. coli bacteria are released from the
        digestive tracts of cattle into the food supply. Research on
        the genetic, microbial, and environmental factors that cause
        the bacteria to spread throughout livestock populations will
        enable scientists to develop new strategies for reducing cattle
        infections and preventing food contamination.
  --Controlling the Spread of Disease.--The emergence and transmission
        of infectious diseases among humans and other animals represent
        an enormous public health threat. In collaboration with
        National Institutes of Health and National Science Foundation,
        AFRI is supporting interdisciplinary teams of researchers to
        deepen our insight and to generate knowledge that will help
        policymakers to develop better strategies for prevention and
        suppression of zoonotic transmission to humans.
  --Enabling the Production of Better Livestock.--The completion of the
        swine genome project is helping us understand the genetic
        architecture underlying high-quality pork production, disease
        resistance, and the efficiency with which feed is converted to
        meat. Taken together, this new knowledge with enable the
        sustainable and more economical production of high-quality pork
        by farmers. In addition, newly revealed similarities between
        the swine and human genomes contribute to our understanding of
        human health.
  --Managing Agricultural Pests.--A team of scientists supported by
        USDA is studying the genomes of soilborne microorganisms that
        severely damage soybeans and other crops. By identifying genes
        important for the pathogen's harmful effects on plants,
        scientists can develop strategies to manage disease and
        increase crop production. Extension specialists, economists,
        and biologists involved with the project will also ensure that
        the research is efficiently translated into technologies that
        benefit farmers, who lose an estimated $300 million to soybean
        root and stem rot diseases each year.
  --Training the Next Generation Agricultural Scientist.--A new AFRI-
        funded fellowship program has been established to train and
        develop the next generation of agricultural, forestry, and food
        scientists and educators. In its first year, the program
        awarded a total of $6 million to 54 students from 32
        universities across the country. Fellows are already advancing
        important research projects, including a study to identify
        sources of microbial contamination in imported foods.
     appropriately realizing the potential of agricultural research
    Global food demand is expected to double by the year 2050, yet the
amount of land available for agriculture is not expected to increase
substantially. The world must address the increased demand for food
while simultaneously meeting the need for better nutrition, new biofuel
materials, sustainable agriculture practices, and food safety. The
effective coordination of research, extension, and education activities
like those supported by AFRI enables efficient translation of
scientific discoveries into a broad range of solutions to some of our
most daunting obstacles. The implementation of those solutions requires
a robust and scientifically diverse agricultural research workforce.
    Agricultural research directly benefits all sectors of society and
every geographic region of the country. The private sector relies on
public investments to increase productivity, improve crops, and train
future cohorts of agricultural scientists. Strong funding for AFRI is
one effective way to attract outstanding scientists to careers in
agricultural research. With the critical focus of its mission and the
growing need for progress, AFRI is significantly underfunded relative
to its current capacity. Because of the program's limited budget in
fiscal year 2010, only 60 percent of project proposals recommended for
funding by review panels received support. This is woefully inadequate
to ensure viability of a research enterprise at the core of our
economy. The estimated value of U.S. agricultural exports increased
32.2 percent between fiscal year 2007 and fiscal year 2010,
illustrating the growing demand for agricultural products worldwide,
yet the AFRI budget has stagnated since the program was established
with an authorized funding level of $700 million in the 2008 farm bill.
FASEB recommends at least $325 million for AFRI in fiscal year 2014.
This could support an additional 100 research grants. Given that the
capacity of the agricultural research system is much greater, we
support additional sustainable increases to reach the fully authorized
level for AFRI as soon as feasible. Our recommended increase of $58.4
million would fund 100 additional projects.
    Thank you for the opportunity to offer FASEB's support for AFRI.
                                 ______

     Prepared Statement of the Florida Home Partnership, Inc. (FHP)
    On behalf of Florida Home Partnership (FHP), I wish to thank you
for accepting this testimony in support of Rural Housing Funding for
fiscal year 2014. FHP is a nonprofit Community Housing Development
Organization (CHDO) with a mission to provide low- and moderate-income
families with affordable, quality-built, energy-efficient homes in
communities that offer long-term value and comfort.
    Since 2010, U.S. Department of Agriculture (USDA) Rural Housing
programs have been cut by nearly $400 million. Further cuts to Rural
Housing programs proposed by the administration's budget request are
unwise and unwarranted. As such, I am urging the Appropriations
subcommittee to fund the following USDA Rural Housing Programs at the
higher of the President's fiscal year 2014 budget request or fiscal
year 2013 levels, prior to sequestration, including: (1) $900 million
for Section 502 Direct Homeownership Loans; (2) $30 million for Section
523 Self-Help Housing Program; and (3) $6.12 million for the Rural
Community Development Initiative.
   section 502 direct loans and section 523 mutual self-help housing
    The Section 502 Loans provide affordable mortgage opportunities for
low-income rural Americans, while the section 523 funds allow Self-Help
Housing grantees across rural America to provide technical assistance
to rural Americans engaged in building their own homes through USDA's
Mutual Self Help Housing Program.
    FHP administers the USDA Mutual Self-Help Housing Program in the
rural areas of Hillsborough and Pasco Counties in Florida. The impact
of this service asserts a positive result in four areas: (1)
Affordable, quality housing for low- to moderate-income families; (2)
Green Built and Energy Star-certified homes conserve precious
resources; (3) Safe and affordable housing instills higher goals for
the future of youth and teens; and (4) the Mutual Self-help Program
sustains and stimulates the local economic environment.
    With the support of the USDA Mutual Self-Help Program, FHP guides
groups of 6 to 10, low- to moderate-income families to work together to
help build each other's homes. In the past 15 years, over 500 homes and
five communities have been built. Leveraging dollars from the USDA
Mutual Self-help Program, the State of Florida's Home Ownership Pool,
and down payment assistance through Hillsborough and Pasco Counties,
Federal funds enable FHP to efficiently operate a very complex, yet
effective program. FHP has successfully administered over $65,000,000
to implement this USDA affordable housing program.
    Participating families share the common goal of homeownership and
commit themselves to share in the work that will make that goal a
reality. When all homes in the construction ``Group'' are completed,
all homeowners are authorized to move into their new homes on the same
day, creating an instant community. Families and individuals contribute
a minimum of 600 hours of ``sweat equity'' in the construction of their
new homes in exchange for their down payment. Hard work is the key,
along with a willingness to work cooperatively with other participants.
No construction experience is necessary! Participants perform a variety
of unskilled and semi-skilled tasks from digging the foundation, to
carpentry, painting, electrical and plumbing activities through
construction clean-up and landscaping--along with everything in
between. Our knowledgeable family construction coordinators (who
themselves have gone through the program) guide participants through
the construction process, all the while teaching the participants many
new skill sets. Friends, family, church members, and others help these
families accomplish the labor requirements. Therefore, it becomes a
community endeavor to complete all the homes in a group.
    Each Self Help Home is currently being built as a GREEN Certified
home, and is constructed to Exceed Energy Star Standards. To date, FHP
has constructed over 150 GREEN and Energy Star Certified homes. These
homes conserve energy resources for our country, and just as
importantly, conserve the precious financial resources of the low-
income rural clients we serve. Many of the Self Help Housing
organizations across America build their homes to these same Green and
Energy Conserving Standards.
    FHP provides services before, during, and after to assure the
success of the families. Services provided ``during'' the application
process include homeownership education, improving credit, and
understanding the responsibilities of homeownership. Once the home is
built, homeowners are also educated and encouraged to become active
with their homeowners association to assure their community remains a
quality and safe neighborhood. FHP recently hosted a Parliamentary
Procedure Training class for interested homeowners and to train new and
seasoned HOA board members.
    While FHP provides safe housing and encourages community
involvement, the groundwork is being laid to support a positive outlook
for youth and teens in the community. The youth of our communities have
witnessed the hard work of their parents leading to the accomplishment
of the American Dream, homeownership. We have had multiple experiences
where children growing up in our decent affordable Self-Help Housing
communities, have gone on to build Self-Help Homes of their own. These
children have learned that hard work and perseverance do pay off.
    The USDA Mutual Self-help Program has also had a positive impact on
the local economy. In addition to a staff of 17 employees, in which 58
percent are Self Help Homeowners, FHP has been able to regularly
subcontract with small family owned, mid-size and chain store
businesses. A great portion of the $65,000,000 has been circulated to
these various businesses since our inception in 1993. Consequently, as
a primary client for many businesses, including Home Depot, in the
Ruskin, Florida area, FHP has contributed to supporting jobs throughout
its rural service area.
    The value of the Mutual Self-help Program has inherent benefits
that provide answers to other social problems in our society by meeting
the needs of affordable, quality and energy-efficient housing that
provides safe environments for our rural families. Accordingly, the
program also prepares the children of these homeowners with the tools
to change their collective destinies; all while creating and
maintaining meaningful jobs for rural Americans.

    [This statement was submitted by Earl Allen Pfeiffer, Executive
Director, Florida Home Partnership, Inc.]
                                 ______

  Prepared Statement of Friends of Agricultural Research--Beltsville,
                              Inc. (FAR-B)
    Mr. Chairman and members of the subcommittee, thank you for this
opportunity to present our statement supporting funding for the USDA's
Agricultural Research Service (ARS), and especially for its flagship
research facility, the Henry A. Wallace Beltsville Agricultural
Research Center (BARC), in Beltsville, Maryland. We strongly recommend
full fiscal year 2014 funding support for research programs at
Beltsville.
    Usually, our testimony would discuss relevant sections of the
President's annual budget proposal. This year, however, it appears as
though the President's annual budget proposal may not be available
before the March 20 deadline the subcommittee has announced for
accepting testimony from interested members and outside witnesses.
Thus, drawing on a discussion with subcommittee staff, our testimony
for fiscal year 2014 generally summarizes and re-states the testimony
that we submitted a year ago.
    Henry A. Wallace Beltsville Agricultural Research Center.--The
Nation's premier agricultural research center--has spearheaded
technical advances in American agriculture for over 100 years.
Beltsville celebrated 100 years of research leadership and technical
advances in 2010. The long list of landmark research achievements over
that time is truly remarkable. Still at the threshold of its second
century, Beltsville stands unequalled in scientific capability, breadth
of agricultural research portfolio, and concentration of scientific
expertise. Under the leadership of Director Dr. Joseph Spence and with
its powerful scientific capability, the Beltsville Agricultural
Research Center is distinctively, indispensably prepared for the
challenges that lie ahead.
     priorities in the president's fiscal year 2013 budget request
    Now, Mr. Chairman, we turn to key research areas highlighted in the
President's proposed fiscal year 2013 budget. We continue to strongly
recommend this proposed funding as we did a year ago.
    We were pleased to see that the fiscal year 2013 budget includes
increases for environmental stewardship; crop breeding and protection;
animal breeding and protection; food safety; and human nutrition.
Obviously, these are areas of great concern to all Americans, and they
are certainly among the highest priorities for agricultural research
today. All of these research areas are strengths of the Beltsville
Agricultural Research Center and they will benefit well from the unique
facilities and scientific expertise at the Center. We encourage you to
seriously consider funding the proposed budget and to ensure that
Beltsville receives the funding that it needs to address these critical
research needs.
    Although funds are not requested for major facilities projects in
the fiscal year 2013 budget, we would like to bring to your attention
the urgent need for renovation of Building 307 on the Beltsville
campus. The Center has aggressively moved to consolidate space and
reduce costs and has been very successful at doing so. However, these
plans require the renovation of a building--Building 307--that was
vacated some years ago in anticipation of a complete renovation. In the
past, Congress approved partial funding for this renovation, and those
monies were retained pending appropriation of the full amount required
for the renovation. Unfortunately, those funds now have been lost to
ARS. Consequently, renovation of this vacant, highly useful building is
on indefinite hold. While we realize that funding is extremely tight,
we confirm that Beltsville urgently needs a renovated Building 307 for
adequate, high quality lab space. Moreover, a renovated Building 307
would not only yield substantial energy savings, but also would allow
Beltsville to move forward with other long-delayed relocation and
consolidation plans. At a minimum, funds are urgently needed to
stabilize this vacant building from continuing deterioration.
    In summation, we would highlight these spheres of excellence:
    Animal Breeding and Protection.--Beltsville conducts extensive
research on animal production and animal health. The research center is
the foundation of genetic improvement in dairy cow production.
Beltsville is examining ways to prevent resistance to drugs for animal
parasite prevention and control.
    Crop Breeding and Protection.--Beltsville scientists have an
extensive record of ongoing research relating to protecting crops from
pests and emerging pathogens. Beltsville has distinctive expertise for
identifying pathogens, nematodes, and insects that destroy crops or
make crops ineligible for export. Beltsville houses the Germplasm
Resource Information Network, the United States coordinating body to
identify and catalog plant germplasm.
    Child and Human Nutrition.--The Beltsville Human Nutrition Research
Center (BHNRC) is the Nation's largest, most comprehensive Federal
human nutrition research center; unique activities include the What We
Eat in America survey, which is the Government's nutrition monitoring
program, and the National Nutrient Databank, which is the gold standard
reference of food nutrient content that is used throughout the world.
These two activities are the basis for food labels, nutrition education
programs, food assistance programs including SNAP, the Supplemental
Nutrition Assistance Program, school feeding programs, and Government
nutrition education programs.
    Global Climate Change.--Beltsville became actively engaged in
climate change research long before climate change became a topic of
intense media interest. Beltsville scientists are at the forefront of
climate change research--understanding how climate change affects crop
production and the effects of climate change on growth and spread of
invasive and detrimental plants (such as weeds.) A central aim is
finding ways to mitigate negative effects of climate change on crops.
Beltsville houses unequalled facilities for replicating past climates
or climates that may exist in the future.
    Plant, Animal, and Microbial Collections.--Beltsville houses
matchless national biological collections that are indispensable to the
well-being of American agriculture. In addition to the actual
collections, Beltsville scientists are internationally recognized for
their expertise and ability to quickly and properly identify insect
pests, fungal pathogens, bacterial threats, and nematodes. This
expertise is crucial to preventing loss of crops and animals, ensuring
that invasive threats to American agriculture are identified before
they can enter the country, thus helping to protect homeland security,
and ensuring that American exports are free of pests and pathogens that
could prohibit exports. Also, Beltsville houses the National Animal
Parasite collection and has the expertise to identify parasites that
are of importance to agricultural animals.
    Mr. Chairman, this concludes our statement. Thank you for
consideration and support for the educational, research, and outreach
missions of the Beltsville Agricultural Research Center.

    [This statement was submitted by James D. Anderson, Ph.D.,
President, Friends of Agricultural Research--Beltsville.]
                                 ______

 Prepared Statement of the Global Health Technologies Coalition (GHTC)
    Chairman Pryor, Ranking Member Blunt, and members of the committee,
thank you for the opportunity to provide testimony on the fiscal year
2014 appropriations funding for the U.S. Food and Drug Administration
(FDA). We appreciate your leadership in global health, and we hope that
your support will continue. I am submitting this testimony on behalf of
the Global Health Technologies Coalition (GHTC), a group of over 25
nonprofit organizations working together to advance U.S. policies that
can accelerate the development of new global health innovations--
including new vaccines, drugs, diagnostics, microbicides, multi-purpose
technologies, and other tools--to combat global health diseases and
conditions. The GHTC members strongly believe that to meet the world's
most pressing global health needs, it is critical to invest in research
for and regulation of new global health technologies today so that the
most effective health solutions are available now and in the future. We
also believe that the U.S. Government has a historic and unique role in
doing so. My testimony reflects the needs expressed by our member
organizations, which include nonprofit advocacy organizations, policy
think-tanks, implementing organizations, product development
partnerships (PDPs), and many others.\1\ We strongly urge the committee
to continue its established support for global health research and
development (R&D), as well as product safety by: (1) Sustaining and
supporting U.S. investments in global health product development by
robustly funding FDA to conduct its work in fiscal year 2014, and
encourage FDA to increase its internal capacity in neglected diseases;
(2) support FDA's authority to fund research and development for global
health technologies, including but not limited to those created though
the Critical Pathways Initiative; (3) instructing FDA to continue to
build stronger partnerships with non-U.S. regulatory stakeholders, such
as the WHO; (4) requesting that FDA create an office of neglected
diseases in the Office of the Commissioner; (5) instruct the FDA to
include the neglected tropical disease Chagas on the list of global
health conditions for which FDA is legally allowed to review health
products; (6) instructing FDA to report on its global health and
neglected disease activities in its next report to Congress; and (7)
instructing FDA to work with the other U.S. agencies engaged in global
health R&D to develop a 5-year cross-Government strategy for U.S.
global health research and development funding and programming.
---------------------------------------------------------------------------
    \1\ Global Health Technologies Coalition. http://
www.ghtcoalition.org/coalition-members.php.
---------------------------------------------------------------------------
               critical need for new global health tools
    Every day, more than 35,000 people die from AIDS, tuberculosis
(TB), malaria, and other neglected diseases. While drugs and other
health technologies exist for these diseases, many have grown
ineffective due to increasing drug resistance and toxicity or are
costly and difficult to administer in poor, remote, and unstable
settings. There are several very promising technology candidates in the
R&D pipeline; however, these tools will never be available if the
support needed to continue research, development and regulation is not
supported and sustained.
              global health product development challenges
    Developers of products intended for the developing world face
challenges in three key areas:
    First, capacity to conduct as well as adequately regulate clinical
trials does not exist or is often weak in countries where diseases are
endemic. And third, the approval process for new products for neglected
diseases is poorly coordinated and involves multiple, complex steps.
Global regulatory systems are not sufficiently streamlined and the
capacity of regulatory authorities to approve products for the
developing world is frequently weak. Therefore, regulatory review and
introduction of new safe and effective products takes longer than
necessary.
              advancing global health product development
    Because private industry does not invest significantly in the
development of products for diseases for which there are no lucrative
markets, a host of new organizational models and incentive mechanisms
have emerged to address this challenge, with varying success.
    One organizational model that has proven promising is the product
development partnership (PDP). PDPs are a unique form of public-private
partnership established to drive greater development of products for
neglected diseases. Currently, there are more than 26 PDPs developing
drugs, vaccines, microbicides, and diagnostics that target a range of
infectious and neglected diseases, including HIV/AIDS, malaria, TB,
Chagas disease, dengue fever, and visceral leishmaniasis.
    While PDPs operate differently depending on their disease and
product area(s) of focus, they typically employ a portfolio approach to
R&D to accelerate product development by pursuing multiple strategies
for the same disease area. They also work in close partnership with
academia, large pharmaceutical companies, the biotechnology industry,
and with regulatory and other Government agencies in developing
countries.
    PDPs are delivering on their promise to develop lifesaving products
for use in countries where disease burdens are highest and no viable
commercial markets exist. To date, PDPs have developed and licensed 19
products to combat neglected diseases in low- and middle-income
countries. More can be expected from PDPs in the future with sustained
and additional support: in 2012 PDPs had more than 374
biopharmaceutical, diagnostic, and vector-control candidates in various
stages of development, including 23 in late-stage clinical trials. In
the next 5 years, it is anticipated that several new technologies could
be ready for use or in final stages of clinical development.
    For example, six TB vaccine candidates are in clinical trials
worldwide, including the first late-stage infant study of a TB vaccine
in more than 80 years. There are also several new TB drug candidates in
testing, which, if approved, would become the first new TB drugs in
nearly 50 years. Also, a vaccine candidate and drug candidates are
currently in clinical trials to prevent and treat visceral
leishmaniasis, a neglected disease whose current treatments are costly
and toxic. Additionally, two artemisinin combination therapies--the
gold standard of malaria drug treatment--developed in part by the PDP
Medicines for Malaria Venture have recently been approved for licensure
and will be reaching those in need in the near future.
    PDPs have seen remarkable success over the last decade; however
they face significant and unique challenges, including management of
complex multi-country clinical trials, which must be conducted in the
regions where diseases are endemic, and the range of regulatory
barriers that come with that challenge, including onerous application
processes and lengthy reviews. Furthermore, global health product
development can involve unprecedented regulatory hurdles in the United
States. In these situations, early and frequent communication between
regulators and product developers is essential to the quality and
efficiency of the regulatory system.
        fda's critical role in global health product regulation
    The FDA has demonstrated through a number of recent actions that it
can have an impact on the introduction of global health tools. These
include:
  --The FDA's program to review HIV/AIDS drugs delivered in the
        developing world through the U.S. President's Emergency Plan
        for AIDS Relief.
  --The release of guidance documents that outlined the FDA's
        willingness to review vaccines and other products for diseases
        not endemic to the United States.
  --The agency's partnership with global bodies, such as the World
        Health Organization (WHO), to enhance access to medicines for
        the developing world and assist other countries in bolstering
        their regulatory capacity.
  --The FDA's Priority Review Voucher Program, which awards a voucher
        for future expedited product review to the sponsor of a newly
        approved drug or biologic that targets a neglected tropical
        disease (NTD).
  --The FDA's Office of Critical Path Initiatives, which supports the
        development of regulatory science such as biomarkers and animal
        models to better evaluate and register new TB tools.
  --The FDA's issuance of a guidance for testing new anti-TB drugs in
        combination, which accelerates the development of new, safe,
        and highly effective treatment regimens with shorter therapy
        durations.
  --The FDA's release of a draft guidance for the development and
        regulation of vaginal microbicide products to prevent HIV.
  --The FDA Center for Biologics Evaluation and Research issuance of a
        strategic plan for 2012-2016 that highlights FDA's
        international collaboration including research and information
        sharing.
  --The recent release of the FDA's Strategic Plan for Regulatory
        Science, which promoted the task of reviewing and licensing
        products for global health as one of its main areas of work.
    The FDA's efforts in these areas are to be applauded. The agency
can and should continue to increasingly leverage its expertise to
benefit the millions of people affected by infectious diseases around
the world.
                            recommendations
    Support for global health research that saves lives around the
world--while at the same time promoting innovation, creating jobs, and
spurring economic growth at home--is unquestionably among the Nation's
highest priorities. In keeping with this value, the GHTC respectfully
requests that the committee do the following:
  --Sustain and support U.S. investments in global health product
        development by robustly funding FDA to conduct its work, and
        encourage FDA to increase its capacity to provide technical
        advice to other regulatory bodies and review and license health
        products for diseases not usually endemic to the United States.
        The committee should also support FDA's authority to fund
        research and development for global health technologies,
        including but not limited to those created though the Critical
        Pathways Initiative.
  --Instruct FDA to continue to build stronger partnerships with non-
        U.S. regulatory stakeholders, such as the WHO, including a
        formal arrangement with WHO allowing simultaneous reviews of
        global health products, thereby speeding access to much-needed
        new health tools worldwide.
  --Request that FDA create an office of neglected diseases in the
        Office of the Commissioner to ensure that neglected diseases
        and global health issues are consistently elevated at the
        leadership level.
  --Instruct the FDA to include the neglected tropical disease Chagas
        on the list of global health conditions for which FDA is
        legally allowed to review health products, if it has not
        already done so.
  --Instruct FDA to report on its global health and neglected disease
        activities in its next report to Congress, scheduled for early
        2013, to improve transparency and clarity.
  --Instruct FDA to work with the Centers for Disease Control and
        Prevention, the National Institutes for Health, the Office of
        Global Affairs at the Health and Humans Services, the U.S.
        Agency for International Development and State Department
        Office of Global Health Diplomacy and the Department of Defense
        to develop a 5-year cross-Government strategy for U.S. global
        health research and development funding and programming.
    On behalf of the members of the GHTC, I would like to extend my
gratitude to the committee for the opportunity to submit written
testimony for the record.

    [This statement was submitted by Kaitlin Christenson, Director,
Global Health Technologies Coalition.]
                                 ______

       Prepared Statement of the Housing Assistance Council (HAC)
    The Housing Assistance Council (HAC) appreciates this opportunity
to submit testimony regarding the U.S. Department of Agriculture (USDA)
Rural Development budget for fiscal year 2014. HAC greatly appreciates
the subcommittee's support for USDA rural housing programs in recent
years' appropriations bills.
    Since its creation in 1971, HAC has provided financing,
information, and technical services to nonprofit, for-profit, public,
and other providers of rural housing. Because HAC works closely with
local organizations around the country, we know firsthand the
challenges rural communities face.
    During the current recession it is particularly important to
support the rural housing programs administered by USDA Rural
Development's Rural Housing Service (RD). The housing needs of low-
income people in both urban and rural places predated the housing crash
and will outlast it. RD's programs have a long history of success in
meeting these needs, and can help rural America not only to recover
from the recession, but also to move forward.
    Almost one of every four homes in this country is located in a
rural area. Over 7 million rural households--3-in-10--pay more than the
Federal standard of 30 percent of their monthly income for housing.
Most of these cost-burdened rural households have low incomes. At the
same time, more than 30 percent of the Nation's housing units lacking
hot and cold piped water are in rural and small town communities.
Housing problems are often not isolated and in many cases are
compounded by the combination of inadequacies related to affordability,
housing quality, and crowding. Over half of rural and small town
households with multiple problems of cost, quality, or crowding are
renters. Minorities in rural areas are among the poorest and worst
housed groups in the entire Nation, with much higher levels of
inadequate housing conditions. Housing needs are particularly severe
for certain rural places and populations including Native Americans,
the Mississippi Delta, Appalachia, the colonias along the United
States-Mexico border, and farmworkers. Complicating efforts to improve
rural housing, many rural places lack strong, experienced nonprofit
housing organizations.
    Despite the needs, funding for USDA rural housing programs has
decreased significantly in recent years. These reductions deprive rural
Americans of the assistance they need to obtain decent, affordable
homes.
    HAC's specific recommendations for fiscal year 2014 appropriations
are provided in table 1. By funding RD housing programs at these
levels, the subcommittee would:
    Support Continued Strong Direct Lending Programs for Single- and
Multifamily Rural Housing Development.--RD's housing toolbox includes
direct loan programs for homeownership and for development of rental
housing, and loan guarantee programs for the same two purposes. The
administration's budgets have consistently emphasized the guarantee
programs because their costs are covered by fees to participants rather
than by Federal spending. The guarantee programs cannot replace the
direct programs, however, because they do not serve the same
populations.
    In 2011, homeowners receiving section 502 direct loans had an
average income of $27,053, compared to $50,571 for owners with section
502 guaranteed loans. Similarly, the average income of tenants in
developments financed with section 515 direct loans was $11,337 as of
April 2012. No recent figure is available for tenants in properties
with private loans guaranteed under USDA's section 538 program, but in
2005 the average income of tenants in section 538 developments was more
than $10,000 higher than the average income for tenants in section 515
properties.
    Support Self-Help ``Sweat Equity'' Housing.--The 2014 budget
proposes to cut the small section 523 self-help housing account by two-
thirds, from $30 million to $10 million. The program deserves better:
it is an incredibly effective way to make homeownership accessible to
low- and very low-income rural Americans. Groups of 8 to 10 families
work together building their own and their neighbors' homes with up to
1,500 hours of sweat equity. Families provide 65 percent of the
construction labor, spending long hours working on their houses in the
evenings after work and on weekends. These extensive labor
contributions mean that families have equity in their homes, and that
the new owners know how to repair their houses, know their neighbors,
and have a strong sense of community. In addition, a number of them use
their on-the-job training to find new jobs in construction.
    Enable the Section 515 Rental Program To Support Preservation of
Existing Properties and Also Development of New Ones.--Affordable
rental housing is scarce in many rural places, and new construction has
dropped sharply over the last 20 years as section 515 funds have been
cut. Rural housing organizations have made good use of section 538
guaranteed loans and Low Income Housing Tax Credits, but these
resources alone cannot produce rentals affordable to the lowest income
rural residents. Section 515 funds are also used to help preserve
existing USDA-funded rental properties. The $28.4 million level in the
administration's budget would fund preservation only; no new
construction money would be available.
    Provide Enough USDA Section 521 Rental Assistance To Renew All
Expiring Contracts and To Fill the Gap in Fiscal Year 2013 Funding.--
The cost of USDA's Rental Assistance (RA) program increases every year
not only because rents are increasing, but also because more RA
contracts are expiring--and therefore being renewed--every year. At one
time RA contracts were 20 years long, with the entire cost of the
contract charged to the agency's budget in the first year. Then
contracts were shortened to 5 years and eventually to 1 year.
Gradually, then, as old contracts expire and are renewed for 1 year at
a time, an ever larger number of contracts must be renewed every year.
    The budget proposes to increase RA funding, asserting that the
proposed $1 billion will be enough to renew all RA contracts due to
expire during fiscal year 2014. HAC has two concerns about the amount
proposed. First, USDA has stated publicly that in fiscal year 2013,
because of sequestration and the additional 2.5 percent cut to USDA
programs, RD will run out of Rental Assistance funding during the month
of September and will be unable to renew over 15,000 RA contracts. At a
House Agriculture Appropriations Subcommittee hearing on April 24, USDA
Deputy Under Secretary Doug O'Brien stated, in response to a question
from Rep. Sam Farr, that the administration's fiscal year 2014 budget
does not include enough to cover those contracts. Second, RD has not
made data available that would enable others to make their own
calculations about the amount needed to renew all expiring RA contracts
in fiscal year 2014.
    Full funding for RA is essential because tenants receiving RA are
particularly vulnerable. The average income for section 515 residents
with RA is less than $9,500 per year, compared to the already low
$11,300 average for all section 515 tenants in USDA-financed rental
housing. Sixty-one percent of section 515 tenants are elderly or
disabled, most living on fixed incomes. Tenants in section 514/516
housing are farmworkers and their families, many of whom earn irregular
and low wages.
    Fund the Section 514/516 Farm Labor Housing Program for
Construction of Needed New Units.--Housing problems such as substandard
housing quality, crowding, and affordability issues are commonplace
among migrant farmworkers who travel to follow crop seasons and labor
demand, as well as those who reside in the same community year-round.
RD farm labor housing funds are an important resource for developers,
but funding has always been too low compared to the need.
    Preserve and Revitalize Affordable Section 515 and 514 Rural Rental
Housing.--These properties are aging, with many badly in need of
repairs and renovations. At the same time, some owners want to prepay
their mortgages and leave the section 515 program, often because they
hope to convert their apartments to market-rate rentals. Federal
intervention is needed. HAC recommends that Congress provide
substantial funding for the Multi-Family Housing Revitalization (MPR)
and Preservation Revolving Loan Fund (PRLF) programs. Created a few
years ago as demonstration programs, MPR and PRLF have proven to be
invaluable tools in preservation efforts. Congress should also continue
to set aside $6 million in RA each year for debt forgiveness or RA
payments as authorized by section 502(c). This set-aside gives USDA a
degree of flexibility in using these funds that is not provided by
section 521 but is essential for preservation efforts.
    Continue Building the Capacity of Rural Housing Organizations To
Meet Their Own Communities' Needs.--Mission-driven community
organizations, primarily nonprofits, play an essential role in putting
rural housing funds to work in rural places. To use rural housing
programs effectively to improve housing and contribute to sustained
economic recovery, a strong nonprofit presence is required. To support
community-based nonprofit organizations, their employees, and their
vital role, the Housing Assistance Council recommends an appropriation
of $6.1 million in fiscal year 2014 for USDA's Rural Community
Development Initiative (RCDI), which funds intermediary organizations
that build organizational capacity for local housing organizations.
    Capacity building for nonprofit rural housing providers is one of
the recommendations made recently by the Bipartisan Policy Center's
Housing Commission. The Commission's report, which devotes a chapter to
rural housing, also recommends that housing policy ``support and
strengthen USDA's role in rural housing. USDA has a presence in rural
communities that is critical for administering support to vulnerable
households. . . . USDA is well-positioned to leverage the existing
resources and infrastructure of rural service providers that understand
the unique conditions of local markets.''
    Thank you for the opportunity to provide this testimony for the
record. HAC asks the subcommittee, and the Congress, to support jobs,
job training opportunities, asset building for hardworking low-income
families, and preservation of past Federal investments in rural
America, by supporting HAC's proposed fiscal year 2014 funding levels
for USDA's rural housing programs.

             TABLE 1.--HOUSING ASSISTANCE COUNCIL'S RECOMMENDED RURAL HOUSING PROGRAM FUNDING LEVELS
                                            [In millions of dollars]
----------------------------------------------------------------------------------------------------------------
                                                                         Fiscal year--
                                             -------------------------------------------------------------------
       USDA Rural Development Program                                                 2014
                                                   2012             2013        administration's     2014 HAC
                                              appropriation  appropriation \1\       budget       recommendation
----------------------------------------------------------------------------------------------------------------
502 Single Fam. Direct......................        900               900                360             900
504 Very Low-inc. Rpr. Loans................         10                28                 26.3            28
504 Very Low-inc. Rpr. Grts.................         29.5              29.5               25              29.5
515 Rental Hsg. Direct......................         64.5              31.3               28.4            64.5
514 Farm Labor Hsg. Loans...................         20.8              25.6               23.5            26
516 Farm Labor Hsg. Grts....................          7.1               8.84              14               9
521 Rental Assistance \2\...................        904.7             907.1            1,015          1,015+
    Preservation RA.........................  .............  .................  ................         (6)
    New Constr. 515 RA......................         (1.5)   .................  ................          (1.5)
    New Constr. 514/516 RA..................         (2.5)            (3)                (3)              (2.5)
523 Self-Help TA............................         30                30                 10              30
533 Hsg. Prsrv. Grants......................          3.6               3.6     ................           3.6
Rental Prsrv. Demo. (MPR)...................          2                17.8               20              27.8
Rental Prsrv. Revlg. Lns....................  .............  .................  ................           1.8
Rural Cmnty. Dev't Init.....................          3.6               6.1     ................           6.1
----------------------------------------------------------------------------------------------------------------
\1\ Figures shown do not include 5 percent sequester and 2.5 percent across the board reduction.
\2\ Amounts in parentheses are included in the Rental Assistance totals.


    [This statement was submitted by Moises Loza, Executive Director,
Housing Assistance Council.]
                                 ______

   Prepared Statement of the Housing Development Alliance, Inc. (HDA)
    On behalf of Housing Development Alliance, Inc. and the communities
we serve, I wish to thank the subcommittee for the opportunity to
submit testimony on fiscal year 2014 appropriations for the Department
of Agriculture (USDA) Rural Housing Programs. Since 2010, U.S.
Department of Agriculture (USDA) Rural Housing programs have been cut
by nearly $400 million. Further cuts to Rural Housing programs proposed
by the administration's budget request are unwise and unwarranted. As
such, I urge this subcommittee to fund USDA Rural Housing programs at
the higher of the President's fiscal year 2014 budget request or fiscal
year 2013 levels, prior to sequestration, including: (1) $900 million
for Section 502 Direct Homeownership Loans; (2) $28 million for Section
504 Very-Low Income Rural Housing Repair Loans; and (3) $29.5 million
for Section 504 Very-Low Income Rural Housing Repair Grants.
    Housing Development Alliance, Inc. (HDA) serves Perry, Knott,
Leslie and Breathitt Counties in Kentucky. These are among four of the
poorest counties in the Nation, with poverty rates ranging from 24
percent to over 33 percent. In these four counties, over 12,650
households have annual incomes of less than $25,000, including over
5,100 households with incomes less than $10,000. Furthermore, these
counties suffer from persistent poverty (having more than 20 percent of
population in poverty for more than five decades) which has resulted in
a poor housing stock and a broken housing market. In short, our
community has a critical need for safe, decent and affordable housing.
    Since 1996, the Housing Development Alliance has constructed 90 new
homes which were sold to qualified low and very-low income homebuyers
who received financing through the Section 502 Single Family Direct
Loan Program. In this same period, the Housing Development Alliance has
repaired nearly 180 homes using Section 504 Loan and Grants. These
programs often serve the poorest of the poor. In fact, the average
annual income of our Section 502 Direct Loan homebuyers was $14,252 and
the average annual income of our Section 504 Loan and Grant repair
client was $10,660 per year.
    In many cases the living conditions of the households prior to
receiving assistance are deplorable. These homes often lack an adequate
heat source; have little or no insulation; often have major structural
defects including collapsing foundations, rotting floors and walls and
leaking roofs; have unsafe electrical wiring; and lack complete
plumbing. For example recently the Housing Development Alliance
encountered an elderly woman whose gas water heater was spewing
potentially deadly levels of carbon monoxide into her home and another
elderly woman whose tub/shower was not hooked to the sewer and was
draining directly under her home.
    However, the benefits of these programs are not limited to just to
the households purchasing the new home or receiving the affordable home
repair. The programs provide jobs and other needed economic activity to
our community. For example, in 2011, seven homes were constructed and
financed in part by the Section 502 Single Family Direct Loan Program.
Using the National Association of Home Builders' estimate that each
home constructed creates/preserve 3 construction jobs, in 2011 the
Housing Development Alliance's use of Section 502 Direct Loans created/
preserved 21 construction jobs. Even more jobs were created or
preserved through our use of the Section 504 Repair Loans and Grants
which funded 14 home repairs.
    While these numbers may seem modest, as they are repeated in rural
communities throughout America these programs have a huge impact on
jobs in rural America.
    Furthermore the Section 502 Single Family Direct Loan Program is
the most cost-effective Federal housing program. Despite serving low
and very-low income households, the average lifetime cost of a Section
502 Single Family Direct Loan is just $3,000, while the average cost of
Section 8 Housing Assistance is nearly $7,000 per year. This low cost
is due in part to the fact that Section 502 Direct portfolio maintains
an excellent repayment history with a foreclosure rate of just over 4
percent.
    The administration and others have suggested that the Section 502
Guarantee Program is a suitable alternative to the Section 502 Direct
Loan Program; this is simply not true in our community. We completed a
study of our 502 Direct Loan Program recipients and found that only 1
out 10 would have been able to afford the higher interest cost
associated with a Section 502 Guarantee Loan.
    Thank you again for the opportunity to provide testimony on the
critically important programs. Without adequate funding for these
programs low income households will remained trapped in substandard, if
not outright deplorable, housing and construction and other related
jobs will be lost across rural America.

    [This statement was submitted by R. Scott McReynolds, Executive
Director, Housing Development Alliance, Inc.]
                                 ______

  Prepared Statement of the Humane Society of the United States (HSUS)
    As the largest animal protection organization in the country, we
appreciate the opportunity to provide testimony to your subcommittee on
fiscal year 2014 items of great importance to The Humane Society of the
United States (HSUS). In this testimony, we request the following
assistance for the following USDA accounts:
  --APHIS/Animal Welfare Act Enforcement--$28,203,000;
  --APHIS/Horse Protection Act Enforcement--$893,000;
  --APHIS/Investigative and Enforcement Services--$16,350,000;
  --FSIS/Horse Slaughter--language mirroring fiscal year 2013 House
        committee bill provision;
  --FSIS/Humane Methods of Slaughter Act Enforcement--language
        directing FSIS to ensure that inspectors hired with funding
        previously specified for Humane Methods of Slaughter Act
        enforcement focus their attention on overseeing compliance with
        humane handling rules for live animals as they arrive and are
        offloaded and handled in pens, chutes, and stunning areas, and
        that they receive robust national training, including on the
        Regulatory Essentials, Humane Animal Tracking System, and
        Public Health Information System;
  --OIG/including Animal Fighting Enforcement--$89,902,000;
  --NIFA/Veterinary Medical Services Act--$4,790,000;
  --APHIS/Emergency Management Systems/Disaster Planning for Animals--
        $1,017,000; and
  --APHIS/Wildlife Services Damage Management--reduce by $13 million.
    At this time of intense budget pressure, we thank you for your
outstanding past support for enforcement of key animal welfare laws by
the U.S. Department of Agriculture, and we urge you to sustain this
effort in fiscal year 2014. While we understand the focus on reducing
Federal spending, we believe there should be room for careful
decisionmaking within the budget to achieve macro-level cuts and at the
same time ensure adequate funding for specific accounts that are vital
and have previously been underfunded.
    Your leadership is making a difference, helping to protect the
welfare of millions of animals across the country and upholding the
values of the American public. As you know, better enforcement also
directly benefits American citizens by: (1) preventing the sale of
unhealthy pets from unlawful commercial breeders, commonly referred to
as ``puppy mills''; (2) improving laboratory conditions that may
otherwise impair the scientific integrity of animal-based research; (3)
reducing risks of disease transmission from, and dangerous encounters
with, wild animals in or during public exhibition; (4) minimizing
injury, loss, and death of pets on commercial airline flights due to
mishandling and exposure to adverse environmental conditions; (5)
decreasing food safety risks to consumers from sick animals who can
transmit illness, and injuries to slaughterhouse workers from suffering
animals; and (6) dismantling orchestrated dogfights and cockfights that
often involve illegal gambling, drug trafficking, human violence, and
can contribute to the spread of costly illnesses such as bird flu. In
order to continue the important work made possible by the committee's
prior support, we request the following for fiscal year 2014:
 animal and plant health inspection service (aphis)/animal welfare act
                           (awa) enforcement
    We request that you support the President's request of $28,203,000
for AWA enforcement under APHIS. We commend the committee for
responding in recent years to the urgent need for increased funding for
the Animal Care Division. The funding has helped improve inspections by
Animal Care of approximately 27,916 sites (more than double last year's
number), including commercial breeding facilities, laboratories, zoos,
circuses, and airlines, to ensure compliance with AWA standards. In May
2010, USDA's Office of Inspector General released a report criticizing
the agency's history of lax oversight of dog dealers, finding that
inhumane treatment and horrible conditions often failed to be properly
documented and yielded little to no enforcement actions. While
Agriculture Secretary Vilsack called for more inspections and a tougher
stance on repeat offenders, the agency must have the resources to
follow through on that commitment. USDA is also implementing a new
responsibility created by Congress in 2008--enforcing a ban on imports
from foreign puppy mills where puppies are mass produced under inhumane
conditions and forced to endure harsh long-distance transport. And as
indicated in the President's fiscal year 2014 budget, USDA anticipates
needing adequate resources to enforce the imminent Animal Welfare Act
retail pet store rule, which will close a loophole for pets being sold
over the Internet, by phone, and by mail that are currently exempt from
the regulatory process. The requested funding levels will help support
these important regulatory efforts. Animal Care currently has 127
inspectors (with 11 vacancies), compared to 64 inspectors at the end of
the 1990s. An appropriation at the requested level would help the
agency continue to address the concerns identified by the OIG, enforce
the new puppy import ban and the retail pet store rule, and provide
adequate oversight of the many licensed/registered facilities.
              aphis/horse protection act (hpa) enforcement
    We request that you support the President's request of $893,000 for
strengthened enforcement of the Horse Protection Act. Congress enacted
the HPA in 1970 to make illegal the abusive practice of ``soring,'' in
which unscrupulous trainers use a variety of methods to inflict pain on
sensitive areas of Tennessee Walking Horses' hooves and legs to
exaggerate their high-stepping gait and gain unfair competitive
advantage at horse shows. For example, caustic chemicals--such as
mustard oil, diesel fuel, and kerosene--are painted on the lower front
legs of a horse, then the legs are wrapped for days in plastic wrap and
tight bandages to ``cook'' the chemicals deep into the horse's flesh,
and then heavy chains are attached to slide up and down the horse's
sore legs. Though soring has been illegal for 40 years, the well-
intentioned but seriously understaffed APHIS inspection program has
been unable to rein in this cruel practice, particularly given the
inherent conflicts of interest in the industry self-policing system
established to supplement Federal enforcement. A report released in
October 2010 by USDA's Office of Inspector General documents these
problems and calls for increased funding to enable the agency to more
adequately oversee the law. Several horse show industry groups, animal
protection groups, and the key organization of equine veterinarians
have also called for funding increases to enable the USDA to do a
better job enforcing this law. To meet the goal of the HPA, Animal Care
inspectors must be present at more shows. Exhibitors who sore their
horses go to great lengths to avoid detection--even fleeing shows when
USDA inspectors arrive. With current funding Animal Care is able to
attend only about 10 percent of the more than 500 Tennessee Walking
Horse shows held annually. We greatly appreciated the enactment of a
modest increase for Horse Protection Act enforcement in fiscal year
2012 (bringing the budget for this to $696,000), the first time in
decades that the program received more than $500,000. An appropriation
at the requested level will help ensure that this program doesn't lose
ground but instead builds on that crucial first step in addressing the
need for additional inspectors, training, security--for threats of
violence against inspectors--and advanced detection equipment.
              aphis/investigative and enforcement services
    We request that you support the President's request of $16,350,000
for APHIS Investigative and Enforcement Services (IES). We appreciate
the committee's consistent support for this division. IES handles many
important responsibilities, including the investigation of alleged
violations of Federal animal welfare laws and the initiation of
appropriate enforcement actions. The volume of animal welfare cases is
rising significantly. An appropriation at the requested level would
enable the agency to keep pace with the additional enforcement
workload.
       food safety and inspection service (fsis)/horse slaughter
    We request inclusion of the same language barring USDA from the
expenditure of funds for horse slaughter inspections as was included in
the House committee's fiscal year 2013 Agriculture Appropriations bill.
This provision is vital to prevent renewed horse slaughter activity in
this country, particularly in light of the recent scandal involving
horse meat found in other food products. Horse slaughter is cruel and
poses serious public health risks. American horses are raised to be
companions, athletes and work horses, and they are often treated with
drugs, both legal and illegal, that can endanger the food supply. There
is currently no system in the United States to track drugs and
veterinary treatments given to horses to ensure that their meat is safe
for human consumption. In addition to the public health concerns
associated with the consumption of horsemeat, horse slaughter is
inherently inhumane and cannot be made humane for horses. The methods
used to kill horses rarely result in quick, painless deaths, as horses
are skittish animals and often endure repeated blows to make them
unconscious, sometimes remaining conscious during the slaughtering
process. USDA reports show that over 92 percent of horses going to
slaughter are healthy and could have gone on to lead productive lives.
However, ``killer buyers'' profit by selling horsemeat from healthy
horses that bring the best price per pound for their meat, and they
frequently outbid rescue groups at auctions. Inclusion of language to
bar the expenditure of funds on horse slaughter inspections would
protect consumers and horses, and would prevent the needless waste of
American taxpayer dollars (particularly at a time when budget pressures
are so great) on a practice that 80 percent of the American public
opposes.
            fsis/humane methods of slaughter act enforcement
    We request language to ensure strengthened HMSA enforcement. We
appreciate the committee's inclusion of language in the fiscal year
2013 committee report regarding humane slaughter. USDA oversight of
humane handling rules for animals at slaughter facilities is vitally
important not only for animal welfare but also for food safety.
Effective day-to-day enforcement can prevent abuses like those
previously documented in undercover investigations, and reduce the
chance of associated food safety risks and costly recalls of meat and
egg products. We therefore urge inclusion of language directing FSIS to
ensure that inspectors hired with funding previously provided
specifically for Humane Methods of Slaughter Act enforcement focus
their attention on overseeing compliance with humane handling rules for
live animals as they arrive and are offloaded and handled in pens,
chutes, and stunning areas, and that they receive robust national
training, including on the Regulatory Essentials, Humane Animal
Tracking System, and Public Health Information System.
        office of inspector general/animal fighting enforcement
    We request that you support the President's request of $89,902,000
for the Office of Inspector General (OIG) to maintain staff, ensure
effectiveness, and allow investigations in various areas, including
enforcement of animal fighting laws. We appreciate the committee's
inclusion of funding and language in recent years for USDA's OIG to
focus on animal fighting cases. Congress first prohibited most
interstate and foreign commerce of animals for fighting in 1976,
tightened loopholes in the law in 2002, established felony penalties in
2007, and further strengthened the law as part of the 2008 farm bill.
We are pleased that USDA is taking seriously its responsibility to
enforce this law. Its work with State and local agencies to address
these barbaric practices, in which animals are drugged to heighten
their aggression and forced to keep fighting even after they've
suffered grievous injuries, is commendable. Dogs bred and trained to
fight endanger public safety, and some dogfighters steal pets to use as
bait for training their dogs. Also, in 2002-2003 cockfighting was
linked to an outbreak of Exotic Newcastle Disease that cost taxpayers
more than $200 million to contain. Cockfighting has further been linked
to the death of a number of people in Asia reportedly exposed to bird
flu. Given the potential for further costly disease transmission, as
well as the animal cruelty involved, we believe it is a sound
investment for the Federal Government to increase its efforts to combat
illegal animal fighting activity. We also support the OIG's auditing
and investigative work to improve compliance with the Animal Welfare
Act, the Horse Protection Act, and the Humane Methods of Slaughter Act
and downed animal rules.
national institute of food and agriculture/veterinary medical services
                                  act
    We request that you support the President's request of $4,790,000
to continue the implementation of the National Veterinary Medical
Service Act (Public Law 108-161). We appreciate that Congress is
working to address the critical maldistribution of veterinarians
practicing in rural and inner-city areas, as well as in Government
positions at FSIS and APHIS. A 2009 Government Accountability Office
report enumerating the challenges facing veterinary medicine identified
that an inadequate number of veterinarians to meet national needs is
among the foremost challenges. Having adequate veterinary care is a
core animal welfare concern. To ensure adequate oversight of humane
handling and food safety rules, FSIS must be able to fill vacancies in
inspector positions. Veterinarians support our Nation's defense against
bioterrorism. The Centers for Disease Control estimates that 75 percent
of potential bioterrorism agents are zoonotic--transmitted from animals
to humans. Veterinarians are also on the front lines addressing public
health problems such as those associated with pet overpopulation,
parasites, rabies, chronic wasting disease, and bovine spongiform
encephalopathy--``mad cow'' disease. Veterinary school graduates face a
crushing debt burden of $151,672 on average, with an average starting
salary of $65,404. For those who choose employment in underserved rural
or inner-city areas or public health practice, the National Veterinary
Medical Service Act authorizes the Secretary of Agriculture to repay
student debt. It also authorizes financial assistance for those who
provide services during Federal emergency situations such as disease
outbreaks.
    aphis/emergency management systems/disaster planning for animals
    We request that you support the President's request of $1,017,000
for Animal Care under APHIS' Emergency Management Systems line item.
Hurricanes Katrina and Rita demonstrated that many people refuse to
evacuate if they are forced to leave their pets behind. The Animal Care
Division develops infrastructure to help prepare for and respond to
animal issues in a disaster and incorporate lessons learned from
previous disasters. Funds are used for staff time and resources to
support the efforts of State, county and local governments and humane
organizations to plan for protection of people with animals. They also
enable the agency to participate, in partnership with FEMA, in the
National Response Plan without jeopardizing other Animal Care programs.
               aphis/wildlife services damage management
    We request that funding be reduced for Wildlife Services Damage
Management by $13 million, the estimated USDA annual expenditure on
lethal predator control to protect livestock. In light of the desire
for deficit reduction, this is a wasteful subsidy that needs to be
terminated. Under its ``livestock protection'' program, Wildlife
Services provides taxpayer-subsidized wildlife extermination services
to private agribusiness. USDA data show that less than 1 percent of
livestock are killed by predators. Livestock producers and property
owners--not U.S. taxpayers--should be financially responsible for
protecting their property from damage attributed to wildlife. Expensive
lethal control methods used by Wildlife Services such as aerial
gunning, poisoning, and trapping are indiscriminate and ineffective,
often killing non-target species including endangered species protected
by Federal law and companion animals. Common sense non-lethal methods
like the use of guard animals (e.g., llamas, dogs), lighting, penning,
and good animal husbandry practices like shepherding are cheaper and
have proven more effective in reducing predation to livestock. Ranchers
have no incentive to use these methods if the Federal Government
continues to pay for unlimited lethal control. By cutting this wasteful
and unnecessary program, we will ensure that U.S. taxpayers stop
subsidizing lethal wildlife control for the benefit of private
livestock producers and property owners.
    Again, we appreciate the opportunity to share our views and
priorities for the Agriculture, Rural Development, Food and Drug
Administration, and Related Agencies Appropriation Act for Fiscal Year
2014. We are so grateful for the committee's past support, and hope you
will be able to accommodate these modest requests to address some very
pressing problems affecting millions of animals in the United States.
Thank you for your consideration.

    [This statement was submitted by Mimi Brody, Director of Federal
Affairs, The Humane Society of the United States.]
                                 ______

 Prepared Statement of the Humane Society of the United States (HSUS)--
                           Equine Protection
    On behalf of the undersigned horse industry and animal welfare
organizations, and former Senator Joseph Tydings, we submit the
following testimony seeking funding for the USDA/APHIS Horse Protection
Program of $893,000 for fiscal year 2014. We recognize that Congress is
focused on the imperative of cutting Federal spending. But we believe
that it should be possible to achieve meaningful reductions in the
overall budget while still addressing shortfalls in very specific
accounts that are vital and have been seriously underfunded. This
$893,000 is urgently needed to begin to fulfill the intent of the Horse
Protection Act--to eliminate the cruel practice of soring--by allowing
the USDA to strengthen its enforcement capabilities for this law.
    In 1970, Congress passed the Horse Protection Act to end soring,
the intentional infliction of pain to the hooves and legs of a horse to
produce an exaggerated gait, practiced primarily in the Tennessee
Walking Horse show industry.
    For example, caustic chemicals--such as mustard oil, diesel fuel,
and kerosene--are painted on the lower front legs of a Tennessee
Walking Horse, then the legs are wrapped for days in plastic wrap and
bandages to ``cook'' the chemicals deep into the horse's flesh. This
makes the horse's legs extremely painful and sensitive, and when
ridden, the horse is fitted with chains that slide up and down the
horse's sore legs, forcing him to produce an exaggerated, high-stepping
gait in the show ring. Additional tactics include inserting foreign
objects such as metal screws or hard acrylic between a heavy stacked
shoe and the horse's hoof; pressure shoeing--cutting a horse's hoof
down to the sensitive live tissue to cause extreme pain every time the
horse bears weight on the hoof; and applying painful chemicals such as
salicylic acid to slough off scarred tissue, in an attempt to remove
evidence of soring.
    The Horse Protection Act authorizes the USDA to inspect Tennessee
Walking Horses, Racking Horses, and Spotted Saddle Horses--in transport
to and at shows, exhibits, auctions and sales--for signs of soring, and
to pursue penalties against violators. Unfortunately, since its
inception, enforcement of the act has been plagued by underfunding. As
a result, the USDA has never been able to adequately enforce the act,
allowing this extreme and deliberate cruelty to persist on a widespread
basis.
    The most effective way to eliminate soring and meet the goals of
the act is for USDA officials to be present at more shows. However,
limited funds allow USDA attendance at only about 10 percent of
Tennessee Walking Horse shows. So the agency set up an industry-run
system of certified Horse Industry Organization (HIO) inspection
programs, which are charged with inspecting horses for signs of soring
at the majority of shows. These groups license examiners known as
Designated Qualified Persons (DQPs) to conduct inspections. To perform
this function, some of these organizations hire industry insiders who
have an obvious stake in preserving the status quo. Statistics clearly
show that when USDA inspectors are in attendance to oversee shows
affiliated with these organizations, the numbers of noted violations
are many times higher than at shows where industry inspectors alone are
conducting the inspections. By all measures, the overall DQP program as
a whole has been a failure--the only remedy is to abolish the
conflicted industry-run inspection programs charged with self-
regulation and give USDA the resources it needs to adequately enforce
the act.
    USDA appears to have attempted to step up its enforcement efforts
in recent years, and has begun to work with the Department of Justice
in prosecuting criminal cases as provided for under the act. In 2011, a
Federal prosecutor sought the first-ever criminal indictments under the
act and as a result, a well-known, winning trainer in the Spotted
Saddle Horse industry served a prison sentence of over 1 year. A former
Walking Horse Trainers' Association Trainer of the Year and winner of
the Tennessee Walking Horse World Grand Championship was indicted in
2012 on 52 counts (18 of them felony) of violating the act and pleaded
guilty to felony conspiracy to violate the act.
    While these are significant actions which should have a deterrent
effect, there are many other violators who go undetected, and many
cases which go unprosecuted due to a lack of resources. USDA needs
enhanced resources to carry out its responsibilities under this act, as
Congress, and the public, expects.
    In years past, inspections were limited to physical observation and
palpation by the inspector. Protocols for the use of new technologies,
such as thermography and ``sniffer'' devices (gas chromatography/mass
spectrometry--or GC/MS--machines), have been implemented, which can
help inspectors identify soring more effectively and objectively. The
results of USDA's recent GC/MS testing for prohibited foreign
substances used by violators on the legs of horses (either to sore
them, or to mask underlying soring and evade detection by inspectors)
are staggering: 97.6 percent of the samples taken at various Tennessee
Walking Horse competitions in 2011 tested positive for illegal foreign
substances, and 86 percent tested positive in 2010.
    Effective though this inspection protocol may be, due to budget
constraints, USDA has been unable to purchase and put enough of this
testing into use in the field, allowing for industry players to
continually evade detection. In 2011, USDA was able to afford to
collect and test samples at only three of the industry's largest shows;
in 2010, only five. With increased funding, the USDA could purchase
more equipment and dispatch more inspectors to use it properly, greatly
increasing its ability to enforce the HPA.
    Currently, when USDA inspectors arrive at shows affiliated with
some industry organizations, many of the exhibitors load up and leave
to avoid being caught with sored horses. While USDA could stop these
trailers on the way out, agency officials have stated that inspectors
are wary of going outside of their designated inspection area, for fear
of harassment and physical violence from exhibitors. Armed security is
frequently utilized to allow such inspections, at additional expense to
this program. The fact that exhibitors feel they can intimidate
Government officials without penalty is a testament to the inherent
shortcomings of the current system.
    Lack of a consistent presence by USDA officials at events featuring
Tennessee Walking Horses, Racking Horses, and Spotted Saddle Horses has
fostered a cavalier attitude among industry insiders, who have not
stopped their abuse, but have only become more clandestine in their
soring methods. The continued use of soring to gain an advantage in the
show ring has tainted this segment of the horse industry, and creates
an unfair advantage for those who are willing to break the law in
pursuit of victory. Besides the indefensible suffering of the animals
themselves, the continued acceptance of sored horses in the show ring
prevents those with sound horses from competing fairly for prizes,
breeding fees and other financial incentives, while those horse owners
whose horses are sored may unwittingly suffer property damage and be
duped into believing that their now abused, damaged horses are
naturally superior.
    The egregious cruelty of soring is not only a concern for horse
industry and animal protection organizations, but also for
veterinarians. In 2008, the American Association of Equine
Practitioners (AAEP) issued a white paper condemning soring, calling it
``one of the most significant welfare issues faced by the equine
industry.'' It called for the abolition of the DQP Program, saying
``the acknowledged conflicts of interest which involve many of them
cannot be reasonably resolved, and these individuals should be excluded
from the regulatory process.'' The AAEP further stated, ``The failure
of the HPA to eliminate the practice of soring can be traced to the
woefully inadequate annual budget . . .  allocated to the USDA to
enforce these rules and regulations.''
    The USDA Office of Inspector General conducted an audit of the
Horse Protection Program, and issued its final report in September
2010. The report recommends the abolition of the DQP program, and an
increase in funding for APHIS enforcement of the Horse Protection Act.
The agency concurred with the findings and recommendations in the
report, specifically recommendation 2: ``Seeking the necessary funding
from Congress to adequately oversee the Horse Protection Program,''
indicating that it would develop a budgeting and staffing plan to phase
in the resources needed to adequately oversee the Horse Protection
Program.
    It is unacceptable that more than 40 years after passage of the
Horse Protection Act, the USDA still lacks the resources needed to end
this extreme form of abuse. It is time for Congress to give our public
servants charged with enforcing this act the support and resources they
want and need to fulfill their duty to protect these horses as
effectively and safely as possible.
    We appreciate the opportunity to share our views about this serious
problem, and thank you for your consideration of our request.
            Sincerely,

                                   Keith Dane,
                                           Director of Equine
                                               Protection, The Humane
                                               Society of the United
                                               States.
                                   Former U.S. Senator Joseph Tydings,
                                           Original Sponsor of the
                                               Horse Protection Act.
                                   Lori Northrup,
                                           President, Friends of Sound
                                               Horses, Inc.
                                   Chris Heyde,
                                           Deputy Director, Government
                                               and Legal Affairs,
                                               Animal Welfare
                                               Institute.
                                   Nancy Perry,
                                           Senior Vice President,
                                               Government Relations,
                                               American Society for the
                                               Prevention of Cruelty to
                                               Animals (ASPCA).
                                   Robin Lohnes,
                                           Executive Director, American
                                               Horse Protection
                                               Association.
                                   Shelley Sawhook,
                                           President, American Horse
                                               Defense Fund.
                                   Gayle Miller,
                                           President, Plantation
                                               Walking Horses of
                                               Maryland.
                                   Karen Brown,
                                           Director of Programs, Red
                                               Rover.
                                   Karen Ayres,
                                           President, National
                                               Plantation Walking Horse
                                               Association.
                                   Susan Crotty,
                                           President, Plantation
                                               Walking Horse
                                               Association of
                                               California.
                                   Ian Walker,
                                           President, United Pleasure
                                               Walking Horse
                                               Association.
                                   Gina Vehige,
                                           Gaitway Walking Horse
                                               Association.
                                   Bonnie Yeager,
                                           President, International
                                               Pleasure Walking Horse
                                               Registry.
                                   Sharon Halpin,
                                           SHO--Sound Horse Outreach.
                                   Penny Austin,
                                           President, One Horse At a
                                               Time, Inc. Horse Rescue.
                                   Kristin Herman, M.D.,
                                           President, Northern
                                               California Walking Horse
                                               Association.
                                   Bob Kuykendall,
                                           Tennessee Walking Horse
                                               Association of Oklahoma.
                                   Cris Van Horn,
                                           President, Pure Pleasure
                                               Gaited Horse
                                               Association.
                                   Rick Brighton,
                                           President, Northwest Gaited
                                               Horse Club.
                                   Walter Farnholtz,
                                           President, New York State
                                               Plantation Walking Horse
                                               Club.
                                   Michele McGuire,
                                           Northwest Pleasure Tennessee
                                               Walking Horse
                                               Association.

    [This statement was submitted by Keith Dane, Director of Equine
Protection, The Humane Society of the United States, on behalf of the
undersigned horse industry and animal welfare organizations and former
Senator Joseph Tydings, regarding fiscal year 2014 funding for
enforcement of the Horse Protection Act.]
                                 ______

    Prepared Statement of the Izaak Walton League of America (IWLA)
    The Izaak Walton League of America appreciates the opportunity to
submit testimony concerning appropriations for fiscal year 2014 for
various agencies and programs under the jurisdiction of the
subcommittee. The League is a national, nonprofit organization founded
in 1922. We have more than 41,000 members and 250 community-based
chapters nationwide.
    Our members are committed to advancing common sense policies that
safeguard wildlife and habitat, support community-based conservation,
and address pressing environmental issues. The League has partnered
with farmers and participated in agriculture policy development since
the 1930s. The following pertains to conservation programs administered
by the U.S. Department of Agriculture.
    The Food, Conservation, and Energy Act of 2008 (farm bill) was
enacted with a prominent commitment to increased mandatory conservation
spending. It was bipartisan and supported by more than a thousand
diverse organizations engaged in farm bill policy. This commitment
represents a long-term investment in conservation programs that
preserve and protect the resources critical not only to the environment
but also to the long term productivity of agricultural lands.
    Unfortunately, this investment is being squandered. Since the
passage of the 2008 farm bill, approximately $3.2 billion has been cut
from mandatory conservation program funding levels. Although we
recognize that spending cuts were and continue to be necessary to put
the Nation's fiscal house in order, a disproportionate share of farm
bill program cuts have come from conservation programs. Nearly 77
percent of cuts from mandatory farm bill programs since the passage of
the 2008 farm bill came from conservation programs.
    We urge the subcommittee to maintain the mandatory spending levels
for conservation programs as provided in the 2008 farm bill. If changes
in mandatory program spending (CHIMPS) are necessary to meet deficit
reduction goals, those cuts should be distributed proportionately among
all farm bill titles.
    Furthermore, repeated annual cuts to the Wetlands Reserve Program
(WRP), the Conservation Stewardship Program (CSP) and other mandatory
conservation programs have created huge backlogs among qualified
landowners seeking to enroll in those programs. This failure to enroll
qualified producers in a timely fashion results in needless delays in
getting conservation practices implemented that protect water, land and
other vital natural resources. The League strongly opposes cuts to
these critical natural resource conservation programs.
    Additionally, the effective implementation of farm bill
conservation programs depends upon adequate technical resources to work
with landowners in addressing their unique environmental concerns.
Although conservation programs are available, under-investment in
technical assistance limits agency support to assist farmers and
ranchers in selecting and optimizing appropriate programs for their
operations. The technical expertise of the Natural Resource
Conservation Service and partners that assist in the delivery of
programs directly to landowners is necessary for the adoption and
maintenance of conservation practices. We request that the subcommittee
support the levels of conservation program funding as provided in the
2008 farm bill to enable robust technical resources to implement those
programs successfully.
    Finally, the League remains hopeful that a new farm bill will be
enacted in 2013. Authority for the Conservation Reserve Program (CRP)
and funding for both the Grasslands Reserve Program (GRP) and the
Wetlands Reserve Program (WRP) expire on September 30, 2013. If a new
farm bill is not passed by the end of fiscal year 2013, we request that
the Appropriations Committee explore alternative funding mechanisms for
these and the numerous other title II Conservation programs that were
de-authorized as a result of the expiration of the 2008 farm bill.
    We appreciate the opportunity to testify in strong support of fully
funding agricultural conservation programs.

    [This statement was submitted by Bill Wenzel, Director, Agriculture
Program, Izaak Walton League of America.]
                                 ______

 Prepared Statement of the Little Dixie Community Action Agency, Inc.
                                (LDCAA)
    Since 2010, U.S. Department of Agriculture (USDA) Rural Housing
programs have been cut by nearly $400 million. Further cuts to Rural
Housing programs proposed by the administration's budget request are
unwise and unwarranted. On behalf of Little Dixie Community Action
Agency, Inc. (LDCAA), I strongly urge this subcommittee to fund USDA
Rural Housing programs at the higher of the President's fiscal year
2014 budget request or fiscal year 2013 levels, prior to sequestration,
including: (1) $900 million for Section 502 Direct Homeownership Loans
and (2) $30 million for Section 523 Self-Help Housing Program.
             section 502 single family direct loan program
    The Section 502 Direct Loan program has far exceeded any other
Federal homeownership program in terms of successful outcomes. No other
Federal program can equal the profile of families served: approximately
60 percent of the families receiving Section 502 Direct Loans have
incomes of less than 60 percent of the median income, and 40 percent of
families participating in the program have incomes that do not exceed
50 percent of the median income.
    Despite serving families with limited economic means, the Section
502 Direct Loan program is the most cost effective affordable housing
program in the Federal Government. In fiscal year 2012, the total per
unit cost for a homeownership loan to a low-income family was about
$3,000, over the entire lifetime of the loan. This is far less than the
annual cost of other Federal housing assistance programs.
              section 523 mutual self-help housing program
    Currently, more than 100 organizations across America participate
in the Section 523 Mutual Self-Help Housing program. These
organizations unite groups of 8 to 10 families who work collectively to
build each family's home. They perform approximately 65 percent of the
overall construction labor. This ``sweat equity'' results in each
homeowner earning and gaining equity in their homes. It also makes a
significant investment in their community, often resulting in the
building of homes and neighborhoods together. And, despite the fact
that Self-Help Housing families constitute the lowest incomes of
participants in the Section 502 Direct Loan portfolio, data
demonstrates that these families prove to have the lowest rates of
default and delinquency.
    For the past 3 years, Self-Help Housing organizations have
constructed almost 3,500 homes. This construction has in turn led to
more than 11,000 jobs, more than $738 million in local income and $77
million in taxes and revenue in rural communities across the Nation, as
evidenced from economic impact numbers from the National Association of
Homebuilders.

    [This statement was submitted by Joan Edge, Program Director, T&MA
Contractor Department, Little Dixie Community Action Agency, Inc.]
                                 ______

   Prepared Statement of the Metropolitan Water District of Southern
                            California (MWD)
    The Metropolitan Water District of Southern California
(Metropolitan) encourages the subcommittee's support for fiscal year
2014 Federal funding of $18 million from the U.S. Department of
Agriculture's Environmental Quality Incentives Program for the Colorado
River Basin Salinity Control Program (Program).
    The concentrations of salts in the Colorado River cause
approximately $376 million in quantified damages in the lower Colorado
River Basin States each year and significantly more in unquantified
damages. Salinity concentrations of Colorado River water are lower than
at the beginning of Program activities by over 100 milligrams per liter
(mg/L). Modeling by the U.S. Bureau of Reclamation indicates that the
quantifiable annual damages would rise to $577 million by the year 2030
without continuation of the Program.
    Water imported via the Colorado River Aqueduct has the highest
level of salinity of all of Metropolitan's sources of supply, averaging
around 630 mg/L since 1976, which leads to economic damages. For
example, damages occur from:
  --a reduction in the yield of salt sensitive crops and increased
        water use for leaching in the agricultural sector;
  --a reduction in the useful life of galvanized water pipe systems,
        water heaters, faucets, garbage disposals, clothes washers, and
        dishwashers, and increased use of bottled water and water
        softeners in the household sector;
  --an increase in the cost of cooling operations, and the cost of
        water softening, and a decrease in equipment service life in
        the commercial sector;
  --a decrease in the life of treatment facilities and pipelines in the
        utility sector;
  --difficulty in meeting wastewater discharge requirements to comply
        with National Pollutant Discharge Elimination System permit
        terms and conditions, and an increase in desalination and brine
        disposal costs due to accumulation of salts in groundwater
        basins, and fewer opportunities for recycling due to
        groundwater quality deterioration; and
  --increased cost of desalination and brine disposal for recycled
        water.
    Concern over salinity levels in the Colorado River has existed for
many years. To deal with the concern, the International Boundary and
Water Commission signed Minute No. 242, Permanent and Definitive
Solution to the International Problem of the Salinity of the Colorado
River in 1973, and the President signed into law the Colorado River
Basin Salinity Control Act in 1974. High total dissolved solids in the
Colorado River as it entered Mexico and the concerns of the seven
Colorado River Basin States regarding the quality of Colorado River
water in the United States drove these initial actions. To foster
interstate cooperation and coordinate the Colorado River Basin States'
efforts on salinity control, the seven Basin States formed the Colorado
River Basin Salinity Control Forum.
    The salts in the Colorado River system are indigenous and
pervasive, mostly resulting from saline sediments in the Basin that
were deposited in prehistoric marine environments. They are easily
eroded, dissolved, and transported into the river system, and enter the
river through both natural and anthropogenic sources.
    The Program reduces salinity by preventing salts from dissolving
and mixing with the river's flow. Irrigation improvements (sprinklers,
gated pipe, lined ditches) and vegetation management reduce the amount
of salt transported to the Colorado River. Point sources such as saline
springs are also controlled. The Federal Government, Basin States, and
contract participants spend over $40 million annually on salinity
control programs.
    The Program, as set forth in the act, benefits the Upper Colorado
River Basin water users through more efficient water management,
increased crop production, benefits to local economies through
construction contracts, and through environmental enhancements. The
Program benefits the Lower Basin water users, hundreds of miles
downstream from salt sources in the Upper Basin, through reduced
salinity concentration of Colorado River water. California's Colorado
River water users are presently suffering economic damages in the
hundreds of millions of dollars per year due to the river's salinity.
    Appropriated Federal dollars will be augmented by the State cost
sharing of 30 percent with an additional 25 percent provided by the
agricultural producers with whom the U.S. Department of Agriculture
contracts for implementation of salinity control measures. Over the
past years, the Program has proven to be a very cost effective approach
to help mitigate the impacts of increased salinity in the Colorado
River. Continued Federal funding of this important Basin-wide program
is essential.
    Metropolitan urges the subcommittee to support funding for fiscal
year 2014 of $18 million from the U.S. Department of Agriculture's
Environmental Quality Incentives Program for the Colorado River Basin
Salinity Control Program.

    [The statement was submitted by Jeffrey Kightlinger, General
Manager, Metropolitan Water District of Southern California.]
                                 ______

   Prepared Statement of the National Affordable Housing Management
                          Association (NAHMA)
    Thank you, Chairman Pryor and Ranking Member Blunt for the
opportunity to submit this testimony on behalf of the National
Affordable Housing Management Association (NAHMA). My testimony
concerns the fiscal year 2014 budget for the U.S. Department of
Agriculture, and in particular, funding for the Rural Housing Service
(RHS) multifamily housing programs.
                              about nahma
    NAHMA members manage and provide quality affordable housing to more
than 2 million Americans with very low to moderate incomes. Our
membership consists of presidents and executives of property management
companies, owners of affordable rental housing, public agencies and
national organizations involved in affordable housing, and providers of
supplies and services to the affordable housing industry. In addition,
NAHMA serves as the national voice in Washington for 19 regional, State
and local affordable housing management associations (AHMAs)
nationwide.
              funding for rhs multifamily housing programs
    Section 521 Rural Rental Assistance.--The Section 521 Rural Rental
Assistance (RA) program is project-based rental assistance administered
by USDA-RHS. It is often used in conjunction with section 515 housing
or farm labor housing to pay apartment owners the difference between
tenants' contributions (30 percent of their income) and the monthly
rental rate.
    For fiscal year 2014, RHS requests $1.015 billion for Section 521
Rural Rental Assistance. RHS believes this request is sufficient to
accommodate renewals. Because the President's budget assumes repeal of
sequestration, NAHMA is concerned that this request may not be
sufficient to fully fund the fiscal year 2014 renewals and cover any
shortfalls resulting from rescissions in fiscal year 2013. NAHMA
supports funding at a level of $1.015 billion, plus any additional
appropriations necessary to ensure there are no shortfalls as a result
of sequestration and the additional rescissions in the fiscal year 2013
appropriations legislation.
    In a letter to stakeholders dated April 16, 2013, Under Secretary
Dallas Tonsager wrote:

``Effective on March 1, 2013, the Budget Control Act of 2011 (Public
Law 112-25) mandated budget reductions, known as sequester, totaling
$85 billion across the Federal Government for the remainder of the
Federal fiscal year. The Consolidated and Further Continuing
Appropriations Act, 2013 (Public Law 113-6), signed into law on March
26, 2013, maintained the sequester cut and included two further across-
the-board reductions (rescission) for USDA discretionary funding
totaling 2.77 percent . . . .
``Given the variables affecting RA usage, it will be some time before
we know how far the remaining funding can be extended to accommodate
renewals. Rural Development will continue to fully renew RA contracts
as they expire. However, we anticipate that funding will run out before
the end of the fiscal year. To the extent possible, Rural Development
will work with affected borrowers within its regulatory authority to
mitigate the effects of these cuts, including the potential use of any
of the special servicing actions described in 7 C.F.R. [Parts] 3560.454
and 3560.455. We appreciate the potentially difficult position the
reductions in rental assistance may create for your properties.''

    NAHMA is extremely concerned that RHS expects to run out of funding
for renewals before October 1, but they have announced no concrete
plans to manage the expected RA shortfalls. As it stands, property
owners whose contracts expire later in fiscal year 2013 do not know
when, or if, their contracts will be renewed. This uncertainty makes it
extremely difficult to plan for even normal property operations such as
paying the mortgage, utility bills and meeting payroll. Similarly,
property owners whose contracts expire in fiscal year 2014 do not know
how the fiscal year 2013 shortfall will affect their contracts. NAHMA
strongly urges the subcommittee to conduct thorough oversight on this
matter. It is essential to determine exactly how much RHS needs in
additional appropriations to fund the full 12-month terms of RA
contracts in fiscal year 2013. Once the need is determined, we
respectfully request that the subcommittee act with urgency to provide
the funding at the earliest opportunity. If the funding cannot be
supplemented in fiscal year 2013, then it is imperative to include
these necessary funds as part of the fiscal year 2014 appropriations.
    Aside from funding, RHS also requests access to the Health and
Human Services National Database of New Hires as well as the IRS data,
similar to what the Department of Housing and Urban Development has for
project-based section 8. RHS is seeking this authority to reduce
improper payments in its means-tested programs--and especially in its
RA program. NAHMA is interested in reviewing the specific legislative
language of RHS' proposal, but we support the request in concept.
Rather than create an entirely new system, NAHMA recommends granting
access to HUD's Enterprise Income Verification (EIV) System to RHS
staff, as well as to authorized property owners and managers.
    Section 515.--Section 515 Direct Rural Rental Housing Loans are
direct, competitive mortgage loans which finance affordable multifamily
rental housing for low-income families, the elderly and persons with
disabilities in rural America. The 2014 budget request proposes $28
million for the section 515 direct loan program. NAHMA supports funding
at a level of at least $28 million.
    Section 538.--The Section 538 Multifamily Loan Guarantee program
provides loan guarantees which encourage construction, acquisition, or
rehabilitation of rural multifamily housing for low-income residents.
The budget requests $150 million for this program. NAHMA supports this
request.
    Multifamily Preservation and Revitalization (MRP) Program.--The
Multifamily Housing Revitalization Program funds tenant protection
vouchers, property rehabilitation and preservation demonstration
programs. RHS requests $32.6 million in budget authority for this
program. Of this total funding, $12.6 million is directed to the Rural
Housing Voucher Program, which provides a rental subsidy to any low-
income household (including those not receiving rental assistance)
residing in a property financed with a section 515 loan which has been
prepaid after September 30, 2005. Once again, we urge the subcommittee
to ensure the rescissions written into the fiscal year 2013
appropriations bill do not create a shortfall in the Rural Housing
Voucher program. Likewise, $20 million is proposed for the section 515
MRP demonstration program which is used to preserve and recapitalize
aging rural multifamily rental properties. NAHMA supports funding for
MRP program at a level of at least $32.6 million.
                               conclusion
    Thank you again for the opportunity to submit this testimony. I
look forward to working with the subcommittee to ensure that the RHS'
multifamily housing programs are fully funded and properly
administered.

    [This statement was submitted by Kris Cook, CAE, Executive
Director, National Affordable Housing Management Association.]
                                 ______

   Prepared Statement of the National Association of County and City
                       Health Officials (NACCHO)
    The National Association of County and City Health Officials
(NACCHO) is the voice of the approximately 2,800 local health
departments across the country. City, county, metropolitan, district,
and tribal health departments work every day to ensure the safety of
the water we drink, the food we eat, and the air we breathe. Local
health departments work with State, local, and national partners to
prevent, identify, and respond to outbreaks of foodborne illness.
   food and drug administration, center for food safety and applied
                               nutrition
NACCHO Request: $1 Billion
            Fiscal Year 2012: $883 Million
    NACCHO urges sufficient funding for the FDA Center for Food Safety
and Applied Nutrition (CFSAN) to carry out its inspection duties and
support the work of local health departments in responding to outbreaks
of foodborne illness. According to the Centers for Disease Control and
Prevention, in a 4-year period starting in 2006, 94 percent of
foodborne illness outbreaks involved a single county.
    Local health departments represent two-thirds of the 3,000 State,
local and tribal agencies that have primary responsibility to regulate
the more than 1 million food establishments in the United States. Local
health departments are on the front lines conducting food safety
inspections, educating food handlers in their communities, and
responding to outbreaks of illness. Local health departments inspect
restaurants, grocery stores, daycare facilities, hospitals, schools,
and some food manufacturing plants to ensure safe food handling
practices and sanitary conditions. Local health departments also
respond to citizen complaints, investigate the causes of foodborne
outbreaks, and take steps to prevent further spread of disease. Local
health departments work with local businesses to remove products from
grocery store shelves and from menus and, as appropriate, to take
corrective action to ensure that food establishments comply with
sanitation standards.
    Repeated rounds of budget cuts and layoffs continue to erode local
health department capacity. Since 2008, local and State health
departments have lost nearly 50,000 jobs due to budget reductions. In
the area of food safety, that means there are fewer inspectors and
trained food safety and food service professionals--from restaurants
and school cafeteria workers to street fair vendors--able to identify
risks and prevent foodborne illness. Recent surveys of local health
departments have found that retail food establishments are inspected
less frequently, and local public health professionals fear the effect
this will have on food safety.
    In 2010, Congress passed the Food Safety Modernization Act (FSMA),
which recognized the importance of protecting the public from foodborne
illness and the need to strengthen our current system for prevention of
these costly illnesses. In the 21st century, our global food supply
system is more complex than ever before and has an increased risk of
accidental or intentional contamination. In FSMA, the Federal
Government made a commitment to foster coordination and increase
capacity at the local, State and Federal level to prevent and respond
to foodborne illness. The return on Federal investment in food safety
training, surveillance and investigation capacity can be measured in
improved health and lower healthcare costs and lost productivity.
    In fiscal year 2012, Congress made a down payment on the
implementation of FSMA by providing $39 million. NACCHO recommends
Congress take further steps in fiscal year 2013 to fully implement
FSMA. FDA's Center for Safety and Applied Nutrition (CFSAN) supports
partnerships at the local, State and Federal level to protect consumers
from, and quickly respond to and track, foodborne illness outbreaks.
CFSAN also oversees the food safety training program which helps to
maintain uniform standards in food inspection and the retail food
safety initiative which provides best practices for retail food
handlers. NACCHO applauds FDA's efforts last year to assist local and
State retail food regulatory programs in achieving conformance with the
Voluntary National Retail Food Regulatory Program Standards. To advance
efforts for a nationally integrated food safety system, such
opportunities should be available in subsequent years for additional
jurisdictions.
    A national food safety training system, including a certification
system, will ensure that officials at all levels of Government have
consistent, up-to-date knowledge, as well as the necessary skills, to
do their jobs. Without a robust national training system, there is less
capacity to consistently and continuously improve knowledge and skills
based on the latest science and risk assessments. It is crucial that
regulators and public health partners have the appropriate knowledge
and training to carry out their duties to safeguard the public from
foodborne illness. Food safety training requires continued funding to
increase capacity and adequately train our nation's food protection
workers.
    FDA's dedicated retail food safety initiative supports research and
distribution of technologies that prevent, mitigate, or detect
foodborne illness hazards in the retail environment. FDA resources
allow local health departments to learn about and adopt best practices
for prevention of foodborne illness in the retail setting and to
utilize products developed by FDA to educate the public and food
service workers in their communities. These Federal tools and resources
stretch the limited resources of local health departments by providing
templates that can be adapted to the local setting.
    Despite the best efforts of Federal, State, and local public
officials, over 48 million cases of preventable foodborne illness occur
every year in this country. Many of these cases cause pain and
suffering, high medical bills, disability, lost productivity, lower
life expectancy and death. Foodborne illness causes an estimated
128,000 hospital visits and 3,000 deaths annually.
    Foodborne illness has significant costs associated with direct
medical expenses, lost productivity, and decreased revenue for food
manufacturers and retail establishments. Salmonella, which causes 1
million cases of foodborne illness, costs $365 million a year in direct
medical expenses. The 2009 salmonella outbreak saw a double digit
decline in the amount of peanut products purchased. Prevention,
detection and control of foodborne illness are important to protect the
health of the public and the sustainability of businesses that supply
food in retail settings.
    As the subcommittee drafts the fiscal year 2014 Agriculture-Rural
Development-FDA Appropriations bill, NACCHO urges consideration of
these recommendations for FDA programs that are critical to ensuring
the safety of our Nation's food supply and protecting the public's
health.
                                 ______

    Prepared Statement of the National Association of State Energy
                           Officials (NASEO)
    Chairman Pryor and Ranking Member Blunt, I am David Terry,
Executive Director of the National Association of State Energy
Officials (NASEO), and I am testifying in support of funding for the
energy title of the farm bill. Specifically, we support funding of at
least $70 million for the Rural Energy for America (REAP) program
(section 9007 of the last multi-year farm bill). The REAP program was
created in the 2002 farm bill and it has been a huge success. Over
10,000 energy efficiency and renewable energy projects have been
implemented in every State since 2003. With a required $3 match of non-
Federal funds for every Federal dollar invested in REAP, over $1.6
billion in matching funds have been provided. This program has
specifically benefited farmers, ranchers and rural small businesses.
NASEO members work directly with eligible entities, as well as State
agricultural agencies and rural interests to promote this successful
program. Rising oil and distillate prices have made this program even
more important. REAP is about rural economic development.
    The Biorefinery Assistance Program also provides critical financing
for the first generation of biorefineries. It is important for the
Nation to expand our fuel diversity. $75 million should be provided for
this program.
    The Biomass Crop Assistance Program supports producers who will
supply biomass feedstocks for advanced biofuels. We urge the
subcommittee to provide $50 million for this effort in fiscal year
2014.
    NASEO represents the energy offices in the States, territories and
the District of Columbia. The REAP program, and the other critical
programs in the energy title of the last multi-year farm bill, helps
create jobs, increases agricultural productivity, saves energy for
farmers, ranchers and rural small businesses, generates energy,
promotes use of alternative fuels, reduces our dependence on imported
petroleum and saves money in rural America. The cost is very low and
the payback is very high.
    We hope that a new multi-year farm bill will be approved this year.
The short-term fiscal year 2014 extension of the farm bill excluded the
critical energy title programs. The $800 million in mandatory spending
contained in the Senate version of last year's farm bill would be a
good start.
    We urge your support for the REAP program, the Biorefinery
Assistance Program and the Biomass Crop Assistance Program.
                                 ______

Prepared Statement of the National Coalition for Food and Agricultural
                       Research (National C-FAR)
    Dear Chairman Pryor and Ranking Member Blunt: The National
Coalition for Food and Agricultural Research (National C-FAR) urges
your subcommittee to commit to a strong Federal investment in the U.S.
Department of Agriculture's (USDA) Research, Education, and Economics
(REE) mission area as a critical component of Federal appropriations
for fiscal year 2014.
    National C-FAR strongly supports funding for the Agriculture and
Food Research Initiative (AFRI) at the fully authorized level of $700
million as soon as practicable and urges the subcommittee to
appropriate at least $383 million in funding for AFRI in fiscal year
2014. This level of funding is a significant step in the right
direction and builds on the increased funding level approved by your
subcommittee and the full Senate for fiscal year 2013.
    However, maintaining a balanced research portfolio is critical; and
National C-FAR urges that increases in the AFRI budget not come at the
expense of other food and agricultural REE programs. Demand in the AFRI
program is far greater than the available funding. In addition, it is
important to grow funding because many AFRI grants awarded involve
multiple year commitments. Unless AFRI funding increases, the necessary
flexibility to fund new projects and address emerging issues would be
greatly diminished.
    National C-FAR's support encompasses the entire REE mission,
including the need to modernize our Nation's food and agricultural
science infrastructure at USDA labs and universities. The
administration has recognized the importance of REE funding in its
fiscal year 2014 budget request, while recognizing current budgetary
constraints. National C-FAR's support includes both USDA's suite of
extramural programs in the National Institute of Food and Agriculture
(NIFA), such as AFRI and formula funds, and USDA's intramural programs
including the Agricultural Research Service (ARS), the Economic
Research Service (ERS), and the National Agricultural Statistics
Service (NASS). National C-FAR wishes to go on record in support of
funding for Forest Service research programs, recognizing that this
falls under the jurisdiction of another Appropriations subcommittee.
    National C-FAR believes the Nation has a serious food and
agricultural research, extension and education deficit, just as the
Nation has a budget deficit. This food and agricultural science funding
deficit is serious, long running and unsustainable. Failure to address
this research deficit will have real negative consequences, not just to
the agriculture and food system but to the entire Nation and U.S.
economy.
    The Research title of the farm bill represents the Nation's
signature Federal investment in the future of the food and agricultural
sector. Other farm bill titles depend heavily upon the Research title
for tools to help achieve their stated objectives. Public investment in
food and agricultural research, extension and education today and in
the future must simultaneously satisfy multiple needs, including food
quality and quantity, nutrition, food safety, resource preservation and
producer profitability.
    National C-FAR supports the key recommendation in the President's
Council of Advisors on Science and Technology (PCAST) December 2012
``Report to the President on Agriculture Preparedness and the
Agriculture Research Enterprise'' to increase Federal investments in
food and agricultural research by $700 million per year in order to
help generate the science needed to meet critical future challenges in
the food and agricultural sector. By any measure, Federal funding for
food and agricultural research, extension and education has failed to
keep pace with identified priority needs. Federal investment in
research and development at the USDA reportedly has declined by about
one-fourth since fiscal year 2003. A continuing deficit in terms of a
commitment to Federal funding for agricultural research will have
detrimental effects on human and animal health and the Nation's
economy.
    Publicly financed REE is a necessary complement to private sector
research, focusing in areas where the private sector does not have an
incentive to invest, when (1) the payoff is over a long term; (2) the
potential market is more speculative; (3) the effort is during the pre-
technology stage; and (4) where the benefits are widely diffused.
Public research, extension and education help provide oversight and
measure long-term progress. Investments now also help detect and
resolve problems in an early stage, thus saving American taxpayer
dollars in remedial and corrective actions.
    Scientific outcomes and tools realized through USDA's REE mission
are needed to help achieve safer, more nutritious, convenient and
affordable foods delivered to sustain a well nourished, healthy
population; more efficient and environmentally friendly food, fiber and
forest production; improved water quality, land conservation, wildlife
and other environmental conditions; less dependence on non-renewable
sources of energy; expanded global markets and improved balance of
trade; and more jobs and sustainable rural economic development.
    National C-FAR believes it is imperative to lay the groundwork now
to respond to the many challenges and promising opportunities ahead
through Federal policies and programs needed to promote the long-term
health and vitality of food and agriculture for the benefit of both
consumers and producers. Stronger public investment in food and
agricultural REE is essential in producing scientific outcomes needed
to help deliver beneficial and timely solutions on a sustainable basis.
    National C-FAR serves as a forum and a unified voice in support of
sustaining and increasing public investment at the national level in
food and agricultural research, extension and education. National C-FAR
is a nonprofit, nonpartisan, consensus-based and customer-led coalition
established in 2001 that brings food, agriculture, nutrition,
conservation and natural resource organizations together with the food
and agriculture research and extension community.
    At a time when USDA's REE mission has experienced serious cuts due
to sequestration and related factors, National C-FAR urges the
subcommittee to take action by increasing funding significantly in
fiscal year 2014. The potential payoff is enormous for both Americans'
health and the Nation's economy.

    [This statement was submitted by R. Thomas (Tom) Van Arsdall,
Executive Director, the National Coalition for Food and Agricultural
Research.]
                                 ______

Prepared Statement of the National Commodity Supplemental Food Program
                          Association (NCSFPA)
    Mr. Chairman and subcommittee members, thank you for this
opportunity to present information regarding the USDA/FNS Commodity
Supplemental Food Program (CSFP). The National Commodity Supplemental
Food Program Association (NCSFPA) requests that the Senate Agriculture
Appropriations Subcommittee fund CSFP for fiscal year 2014 at
$207,682,000--$202,682,000 as requested by the U.S. Department of
Agriculture, an additional $5 million to begin CSFP operations in six
States with USDA-approved plans (Connecticut, Hawaii, Idaho, Maryland,
Massachusetts, and Rhode Island). NCSFPA would also like the
subcommittee to take notice of the fact that on February 1, the State
of California began a waiting list because they are at their maximum
caseload. Currently participating States have requested 117,052
additional slots to meet the rising demand for nutritional assistance
among our Nation's vulnerable seniors.
    In fiscal year 2012, 97 percent of all CSFP recipients were low-
income seniors. With this in mind, it is interesting to note that
NCSFPA has proposed, as part of the next farm bill, a full conversion
of CSFP into a seniors-only program, with sufficient time allowance for
currently participating mothers and children to transition off of CSFP.
This recommendation was adopted in both the House-reported and Senate-
passed farm bills last year, and we have urged both committees to
maintain this language in further farm bill action this year.
    CSFP is a unique program which brings together Federal and State
agencies, along with public and private entities. In fiscal year 2012,
the CSFP provided services through 150 nonprofit community and faith-
based organizations at 1,800 sites located in 39 States, the District
of Columbia, and two Indian Tribal Organizations (Red Lake, Minnesota
and Oglala Sioux, South Dakota).
    USDA purchases specific nutrient-rich foods at wholesale prices
from American farmers including: canned fruits and vegetables, juices,
meats, fish, peanut butter, cereals, grain products, cheese and dairy
products. State agencies provide administrative oversight and contract
with local community and faith based organizations to warehouse and
distribute food; certify eligibility; and provide nutrition education
to participants. These local organizations build broad collaboration
among nonprofits, health units, and area agencies on aging to provide
easy access to the program. This partnership reaches even homebound
seniors in both rural and urban settings with vital nutrition and
remains an important ``market'' for commodities supported under various
farm programs.
    CSFP continues to be a testimony to the power of community
partnerships of faith-based organizations, farmers, private industry
and Government agencies. The CSFP offers a unique combination of
advantages unparalleled by any other food assistance program:
  --The CSFP specifically targets our Nation's most nutritionally
        vulnerable populations: low-income seniors and young children.
  --The CSFP provides a monthly selection of food packages tailored to
        specific nutritional needs. The nutritional content of the food
        provided has improved with the introduction of low-fat cheese,
        whole grain products, canned fruits packed in fruit juice or
        extra light syrup, and low sodium canned vegetables.
  --The CSFP purchases foods at wholesale prices, directly supporting
        American farmers. The estimated FNS funded cost for the mothers
        and children monthly food package is $25.98 in fiscal year 2013
        and $26.50 in fiscal year 2014. The estimated FNS funded cost
        of the elderly food package is $20.51 in fiscal year 2013 and
        $20.93 in fiscal year 2014. FNS is adding an additional $4.12
        per month to the mothers and children food package and $3.47
        per month to the elderly package per month through free
        (donated) items in both fiscal year 2013 and fiscal year 2014.
  --The CSFP involves the entire community. Thousands of volunteers and
        private companies donate money, equipment, and most importantly
        time and effort to deliver food to needy and homebound seniors.
        These volunteers not only bring food but companionship and
        other assistance to seniors who might have limited support
        systems.
    The 1997 report by the National Policy and Resource Center on
Nutrition and Aging at Florida International University, Miami--``Elder
Insecurities: Poverty, Hunger, and Malnutrition'' indicated that
malnourished elderly patients experience 2 to 20 times more medical
complications, have up to 100 percent longer hospital stays, and incur
hospital costs $2,000 to $10,000 higher per stay. Proper nutrition
promotes health, treats chronic disease, decreases hospital length of
stay and saves healthcare dollars. America is aging. CSFP must be an
integral part of Senior Nutrition Policy and plans to support the
productivity, health, independence and quality of life for America's
seniors, many of whom now need to continue working at least part-time
beyond retirement age to afford basics.
    In the most recent (2007) CSFP survey, more than half of seniors
living alone reported an income of less than $750 per month. One-half
of respondents from two-person households reported an income under
$1,000 per month. Twenty-five percent were enrolled in the Supplemental
Nutrition Assistance Program (SNAP) and 50 percent said they ran out of
food during the month. Seventy percent of senior respondents said they
choose between medicine and food.
    In 2012 an informal senior participant survey revealed individual
accounts of the value of CSFP benefits. An Arkansas recipient tells us
that they would not otherwise be able to eat the balanced meals that
CSFP provides each month. Arkansas program operators talk about the
importance of interaction between seniors and program staff, saying
this interaction is very important for the well-being of recipients,
and recipients are able to live more stable, self sufficient lives as a
result. Colorado participants say that they would not be able to have
juice and cereal without CSFP, and many appreciate the program because
they are homebound. Seniors in St. Louis, Missouri, say that CSFP foods
help them get through to their next checks. Participants in Nebraska
say that they don't know what they would do without this food, calling
the program a ``lifesaver''. New Hampshire participants tell us that
they use CSFP as a primary source of nutrition each month and would see
a dramatic loss in food availability without the program. One Wisconsin
recipient said that they would starve without the program, while others
said that CSFP on their limited income meant that they could pay
necessary living expenses.
    The CSFP State and Local Agencies are committed grassroots
operators with dedicated volunteers fulfilling a mission to provide
quality nutrition assistance economically, efficiently, and
responsibly. In cooperation with USDA, NCSFPA seeks to meet the current
and emerging needs of CSFP participants. NCSFPA wishes to commend the
Food Distribution Division of Food and Nutrition Service of the
Department of Agriculture for their continued innovations to strengthen
the quality of the food package and streamline administration.
    The Senate Agriculture Appropriations Subcommittee has consistently
supported CSFP, acknowledging it as a cost-effective way of providing
nutritious supplemental foods. We urge the subcommittee to provide
$202,628,000 in order to allow us to maintain our current service level
and to also strongly consider our request for $5,000,000 for the six
additional States to begin providing nutritional assistance to their
vulnerable seniors.
    Again, thank you for your continuing support. We look forward to
working with you on behalf of CSFP participants.

    [This statement was submitted by Brian Greene, President, National
CSFP Association.]
                                 ______

 Prepared Statement of the National Council of State Housing Agencies
                                (NCSHA)
    Thank you for the opportunity to provide testimony on behalf of our
Housing Finance Agency (HFA) members. As you consider your fiscal year
2014 USDA appropriations bill, we urge you to define rural areas for
USDA Rural Housing Service (RHS) program eligibility to ensure that
areas currently qualified for it and needing such assistance maintain
eligibility, despite potential eligibility changes due to the 2010
census. We also ask that you ensure USDA does not administratively
remove some Section 521 Rental Assistance from use. We request that you
provide fiscal year 2014 program funding levels for RHS programs
adequate to maintain assistance for those currently receiving it, allow
new families needing assistance to access it, and provide for the
construction, rehabilitation, and preservation of rural affordable
housing.
    The National Council of State Housing Agencies' (NCSHA) members are
the HFAs of the 50 States, the District of Columbia, New York City,
Puerto Rico, and the U.S. Virgin Islands. HFAs administer and utilize a
wide range of affordable housing and community development programs,
including section 502 and section 538 rural housing loans, other rural
housing assistance, HOME, section 8, homelessness assistance, down
payment assistance, counseling, tax-exempt Housing Bonds, and the Low
Income Housing Tax Credit (Housing Credit). HFAs effectively employ
these resources to advance their common public-purpose mission of
providing affordable housing to the people of their jurisdictions who
need it.
                             defining rural
    We urge you to modify the definition of rural areas for purposes of
USDA program eligibility, including maintaining USDA rural housing
funding and guarantee program eligibility, for jurisdictions needing
such assistance and at risk of losing their eligibility as USDA
incorporates data from the 2010 census into its program eligibility
criteria. Congress approved a similar definition modification in 1990
and extended it in 2000. The Bipartisan Policy Center's Housing
Commission recommends in its recently released report ``Housing
America's Future: New Directions for National Policy'' that the current
definition of rural areas be extended through the year 2020, except for
areas with populations exceeding 25,000.
    Without a change to the definition, eligibility will be limited to
communities that have a population of less than 20,000 and are not
located in metropolitan statistical areas (MSA). However, half of the
entire rural population lives in an MSA. Without a statutory change,
more than 900 rural communities will become ineligible for rural
development funds at the end of fiscal year 2013. For some of these
communities, it will mean losing their only source of Federal housing
funding.
                     section 521 rental assistance
    The Section 521 Rental Assistance program provides assistance to
low-income renters, those earning no more than 80 percent of area
median income (AMI), and very-low income renters, those earning no more
than 50 percent of AMI, in section 515 and section 514/516 assisted
housing. Assistance is provided so that tenants are required to pay no
more than 30 percent of their incomes for rent. The assistance is
provided through contracts with owners of assisted housing.
    The need for affordable rental housing in rural areas far exceeds
current supply. Forty-seven percent of rural renters are cost burdened,
paying more than 30 percent of their incomes for housing, and nearly
half of them are paying more than 50 percent of their monthly incomes
for housing. Section 521 Rental Assistance helps reduce rent burdens on
low-income households, but is not available for every Rural Development
(RD) apartment.
    Underfunding of Section 521 Rental Assistance has led USDA to
implement policies that takes assistance out of circulation, reduces
the number of low-income households that can utilize the subsidy, and
diminishes the quality of the housing provided. We urge you to ensure
that USDA does not administratively remove existing Section 521 Rental
Assistance units from the program or cancel Section 521 Rental
Assistance contracts from assisted properties that USDA removes from
the program.
    Traditionally, when rental properties left the program through
prepayment or foreclosure, RD would transfer their Rental Assistance
units to other properties. However, in an unnumbered letter dated May
18, 2011, RD states that for certain properties it has decided not to
transfer the Rental Assistance, but instead to retire it to achieve
program savings. This administrative change shifts economic hardship to
tenants and threatens the recapitalization and preservation of
properties.
    It further limits the amount of rental assistance provided to
families that need it and makes it harder for rural rental housing
units to attract and leverage other sources of funding, such as the
Housing Credit. In 2011, more than one-third of State HFAs reported
having a rural housing set-aside within their Housing Credit program.
In response to RD's decision to limit redistribution of Rental
Assistance, HFAs raised concerns that the lack of rental assistance
provided to units that need it will make it more difficult for
developments to maintain financial feasibility, as well as making
rehabilitation and preservation financing more difficult.
                         rural housing funding
    We urge you to provide funding for RHS programs adequate to
continue providing assistance to all families currently receiving it
and to help as many new families still waiting for assistance as
possible. The need for access to affordable housing in rural areas
remains great. Median income in rural areas is 20 percent lower than
the national median income and rural communities are four times more
likely than urban areas to have at least 20 percent of their population
living in poverty.
    We appreciate your support of funding for the section 502 single-
family direct loan program and urge you to resist efforts to cut
funding for this program. We also thank you for supporting funding for
the Multifamily Preservation and Revitalization (MPR) demonstration
program and urge you to continue its funding and to support its
permanent authorization.
    In addition to meeting the need for affordable rural homeownership
and rental housing opportunities, both the section 502 single-family
guaranteed and the section 538 multifamily loan programs do not require
budget authority to support their loans. In fact, in recent years, both
of these programs have generated revenue for the Federal Government. We
encourage your continued support for them.
    We urge you to provide funding for the section 515 rural rental
housing loan program to support new development and preservation of
rental housing and to provide full funding for the Section 521 Rental
Assistance program.
    We recognize the continued constrained fiscal environment in which
you must craft your fiscal year 2014 appropriations legislation. We
urge you to consider the proven effectiveness of RHS programs and the
great unmet need for them, which has been further exacerbated in these
difficult economic times, as you make your funding decisions. NCSHA
appreciates this opportunity to offer a statement on behalf of these
programs and we are ready to assist you in any way we can as you move
forward with the fiscal year 2014 appropriations process.
                                 ______

   Prepared Statement of the National Rural Housing Coalition (NRHC)
    Mr. Chairman and members of the subcommittee, thank you for the
opportunity to submit testimony on behalf of the National Rural Housing
Coalition (NRHC) on fiscal year 2014 appropriations for Department of
Agriculture (USDA) Rural Housing Programs. NRHC is a national
membership organization made up of housing developers, nonprofit
housing organizations, State and local officials, and housing
advocates.
    Since 2010, USDA Rural Housing programs have been cut by nearly
$400 million. As a result, fewer families can become homeowners, new
rental housing development is virtually non-existent, and the existing
rental housing portfolio is in great need of repair and restoration.
The President's fiscal year 2014 budget singles out USDA Rural Housing
programs for further reductions which are both unwise and unwarranted.
Instead, we urge the subcommittee to fund USDA Rural Housing programs
in fiscal year 2014 at the higher of the President's fiscal year 2014
budget request or fiscal year 2013 levels, prior to sequestration. In
particular, we support appropriations for rural housing programs that
will provide at least: (1) $900 million for Section 502 Direct Loans;
(2) $26 million for Section 514 Farm Labor Housing Program Loans; (3)
$9 million for Section 516 Farm Labor Housing Program Grants; (4)
$1.015 billion for Section 521 Multi-Family Rental Housing Rental
Assistance Program; (5) $30 million for Section 523 Self-Help Housing
Program; (6) $32.6 million for the Multi-Family Housing Preservation
and Revitalization Program; and (7) $6.12 million for the Rural
Community Development Initiative. We urge the subcommittee to fund the
Section 515 Rural Rental Housing Program at the fiscal year 2012 level
of $64.5 million.
                     housing needs in rural america
    In December 2012, NRHC issued a report on the success of USDA's
rural homeownership programs, titled ``Opening Doors to Rural
Homeownership \1\.'' The report highlights (1) the success of Section
502 Direct Loans in getting rural families into decent housing at a
very low cost to the Federal Government and (2) how families work
nights and weekends to build their own homes through the Mutual Self-
Help Housing program. For many rural families of modest incomes, rural
housing programs such as Section 502 Direct Loans and Mutual Self-Help
Housing are an important, and in many cases, the only means, of gaining
decent, affordable housing and building wealth. There remains a
substantial need for rural housing assistance across our Nation's small
town and farming communities. While homeownership is still the
predominate type of housing available in rural America, rural housing
is much more likely to be substandard than in urban areas. In fact, 6
percent of rural homes are either moderately or severely substandard,
often with leaking roofs, or inadequate plumbing or heating systems.
Some 8 million rural families pay more than 30 percent of income for
housing and 23 percent of all rural families pay more than 35 percent
of income for shelter. Rural median incomes ($40,038) are 20 percent
lower than the national median income ($50,046). Rural communities are
four times more likely than urban areas to have at least 20 percent of
their population living in poverty. More than 88 percent of the
Nation's ``persistently poor'' counties are rural.
---------------------------------------------------------------------------
    \1\ http://ruralhousingcoalition.org/wp-content/uploads/
Opening%20Doors%20to%20Rural%20 Homeownership.pdf.
---------------------------------------------------------------------------
    In its new report \2\, the Bipartisan Policy Center Commission on
Housing issued strong, support for USDA Rural Housing programs,
recognizing the critical role these programs play in meeting the unique
challenges to affordable housing in rural America and the very low cost
to the Government to operate them. The Commission calls on Congress
preserve eligibility for USDA Rural Housing programs by extending the
definition of ``rural'' under section 520 of the Housing Act of 1949.
Without congressional action, over 900 rural communities may lose
access to what is often their only source Federal housing funding.
---------------------------------------------------------------------------
    \2\ http://bipartisanpolicy.org/sites/default/files/
BPC_Housing%20Report_web.pdf.
---------------------------------------------------------------------------
                      usda rural housing programs
    Section 502 Single-Family Direct Homeownership Loans.--Over 60
years, the Section 502 Direct Loan Program has helped more than 2.1
million families realize the American Dream and build their wealth by
more than $40 billion. Demand for Section 502 Direct Loans continues to
outpace supply with over 15,000 loan applications totaling over $1.9
billion on the program's waiting list. Section 502 Direct Loans is the
only Federal homeownership program that is exclusively targeted to very
low- and low-income rural families. By law, at least 40 percent of
section 502 funds must be used to assist families earning less than 50
percent of the area median income. Despite serving families with
limited economic means, section 502 is the single, most cost-effective
Federal housing program, period. On average, each section 502 loan
costs about $3,000 over its entire lifetime. Compare that to other
Federal housing programs, which can cost taxpayers twice as much each
year. Likewise, Section 502 Direct Loans--in terms of delinquency and
foreclosure--performs on par or better than other loan portfolios
serving higher income borrowers. For example, only 10 percent of
section 502 borrowers are delinquent. This is far better than the 20
percent rate among private market subprime borrowers, and on par with
other Federal direct lending programs, including the Federal Housing
Administration (FHA). While Section 502 Direct Loan borrowers earn less
than 80 percent of the area median income, the FHA program has no
income limits. Yet, the programs' combined foreclosure and delinquency
rates are substantially similar at about 16 and 17 percent,
respectively.
    Section 523 Mutual Self-Help Housing.--The Self-Help Housing
program adapts the rural tradition of barn-raising to provide housing
opportunities for families with limited economic means. Through this
program, more than 3,500 families have been able to realize the
American Dream in the past 3 years. This construction has led to over
11,000 jobs, more than $738 million in local income and $77 million in
taxes and revenue in rural communities across the country. Self-Help
Housing is the only Federal program that combines ``sweat equity''
homeownership opportunities with technical assistance and affordable
loans for America's rural families. Self-Help Housing families work
nights and weekends to provide 65 percent of the construction labor--
frequently amounting to more than 1,000 hours--on their own and each
other's homes. In doing so, families earn equity, decrease construction
costs, and make lasting investments in their community. The hallmark of
the Self-Help Housing program is its emphasis on hard work, self-
reliance, and community. This program is exclusively targeted to very
low- and low-income families who are otherwise unable to access decent
housing. Over half of the participants are minorities. Although these
families have lower incomes, default rates are significantly lower than
other borrowers.
    Section 515 Rural Rental Housing.--Section 515 is the principal
source of financing for rental housing in rural communities. Today,
more than 500,000 families live in housing financed by section 515.
Rental units developed with section 515 loans are exclusively targeted
to very low-, low-, and moderate-income families, the elderly, and
persons with disabilities. A vast majority--94 percent--of section 515
tenants have very-low incomes. The average yearly income is only
$11,000. Some 57 percent these households are elderly or disabled, 26
percent are headed by persons of color, and 73 percent are headed by
women.
    Section 514/516 Farm Labor Housing.--The Section 514/516 Farm Labor
Housing Loan and Grant program is the only nationwide program targeted
to the housing needs of migrant and seasonal farmworkers. Over the
history of the program, USDA has financed some 36,000 units for a cost
of $1.27 billion. The level of funding for Farm Labor Housing has
steadily decreased over the years. In fiscal year 2008, Congress
provided $22 million for loans and $10 million for grants. The fiscal
year 2009 budget proposed to eliminate the program. This past year,
Congress expanded eligibility for the program--which has been targeted
to workers in the field who work with unprocessed commodities--to
include workers in processing plants, which will further drive up the
demand. As a result, these drastic cuts come at a crucial time, given
the high program demand and the poor condition of farmworker-occupied
housing. The current funding levels for these programs are not nearly
enough to address the tremendous need for decent, affordable housing.
                               conclusion
    Providing adequate funding for USDA Rural Housing programs is
essential to efforts to improve the quality of life and economic
opportunity in rural America. These programs are all part of the
toolbox that USDA employs address the shortfall in decent, clean, and
affordable housing in these communities. For a very small fraction of
the USDA's budget, Congress can provide affordable rental and
homeownership opportunities to thousands of rural families with limited
means and boost flagging economies in small communities. Thank you for
the opportunity to submit testimony.

    [This statement was submitted by Robert A. Rapoza, Executive
Secretary, National Rural Housing Coalition.]
                                 ______

 Prepared Statement of the National Sustainable Agriculture Coalition
                                 (NSAC)
    Thank you for the opportunity to present our fiscal year 2014
funding requests. NSAC is a national alliance of over 90 organizations
that advocates for policies that support the economic, social, and
environmental sustainability of agriculture, natural resources, and
rural communities. Our USDA requests are as follows, in the order they
appear in the appropriations bill:
  --Departmental Administration, Office of Advocacy and Outreach, $1.2
        million;
  --NASS and AMS, Organic Market Reporting, $1.5 million;
  --NIFA, Sustainable Agriculture Research and Education, $30 million;
  --NIFA, Organic Transitions Program, $5 million;
  --NIFA, National Food Safety Training and Technical Assistance, $10
        million;
  --AMS, Federal-State Market Improvement Program, $1.4 million;
  --FSA, Direct Farm Ownership and Operating Loans, $575 million plus
        $1,223.7 million;
  --NRCS, Conservation Technical Assistance, $735 million;
  --RBCS, Value-Added Producer Grants, $30 million;
  --RBCS, Rural Microentrepreneur Assistance Program, $3.4 million;
  --RBCS, Appropriate Technology Transfer for Rural Areas, $3 million;
  --General Provisions, Mandatory Conservation Programs, including the
        Conservation Stewardship Program, no limitation on direct
        spending.
  --General Provisions, no policy riders to curtail enforcement of the
        Packers & Stockyards Act or to limit the review of
        biotechnology products.
    We hope that the Congress will finalize the farm bill by the end of
fiscal year 2013 and in it will provide mandatory funding for the
Beginning Farmer and Rancher Development Program, Conservation Reserve
Program--Transition Incentives Program, Farmers Market Promotion
Program, National Organic Certification Cost Share Program, Organic
Agriculture Research and Extension Initiative, Outreach and Assistance
to Socially Disadvantaged Farmers and Ranchers program, and Specialty
Crop Research Initiative. However, if the authorizers do not complete a
farm bill providing mandatory money by the end of the fiscal year, we
urge you to explore alternative mechanisms for funding these critical
programs, which are currently without funding.
                      departmental administration
    Office of Advocacy and Outreach (OA&O).--The Office of Advocacy and
Outreach coordinates policy and outreach in two vital areas--small and
beginning farmers, and socially disadvantaged or minority farmers. We
urge that $1.2 million be provided for the OA&O, consistent with the
USDA request.
                national agricultural statistics service
    Organic Market Reporting.--NSAC requests funding at $1 million for
NASS to conduct the data collection on organic agriculture that is
urgently needed by RMA to inform the development of adequate organic
crop insurance options, and to coordinate with AMS (see below) on
enhanced and consistent reporting on organic production, marketing, and
pricing data. As the organic industry surpasses $30 billion a year in
sales, this multi-agency initiative is vital to maintaining markets,
creating risk management tools, and negotiating equivalency agreements
with foreign governments.
               national institute of food and agriculture
    Sustainable Agriculture Research and Education Program (SARE).--
SARE is the only NIFA competitive grant program dedicated to economic,
social, and environmental sustainability. We urge you to fund this
innovative, highly oversubscribed competitive grants program at $30
million, divided among research and education grants, extension and
professional development grants, and Federal-State matching grants.
SARE has helped turn farmer-driven research, education, and extension
initiatives into profitable and environmentally sound practices for 25
years. Unlike in previous years, the President's fiscal year 2014
budget request proposes to combine research, education, and extension
into a single line item request. We do not oppose the proposed
consolidation, so long as overall funding is increased, adequate
funding is provided for all functions, and report language clarifies
the intent that all three authorized program functions are included in
the single line item.
    Organic Transitions Integrated Research Program.--We request $5
million to invest in innovative organic research with strong farmer
delivery mechanisms built in. Organic research continues to lag well
behind its fair share of the overall research budget. Without this
level of funding, organic research will fall further behind, especially
in light of the current absence of mandatory funding for organic
research because of the farm bill delay.
    National Food Safety Training, Education, Extension, Outreach, and
Technical Assistance.--We request $10 million to help small and mid-
size farms and small processing facilities comply with new proposed
food safety regulations. This training program, authorized in the Food
Safety Modernization Act of 2010, is one of the best, quickest, and
least costly ways to improve food safety outcomes without resorting to
excessive farm regulation. While it has not yet been funded, we urge
you to start it this year, as farmers will very soon be facing the new
FSMA regulations. It is high time to get USDA involved in funding cost
effective training and education.
                     agricultural marketing service
    Federal-State Market Improvement Program (FSMIP).--FSMIP provides
matching funds to State departments of agriculture to help grantees
increase marketing efficiency and innovation and support local and
regional food marketing opportunities. We request $1.4 million.
    Organic Market Reporting.--We request $0.5 million for this price
data collection and reporting initiative. AMS coordinates its data
collection and reporting with NASS (see above) to address data needs
for organic agriculture and organic crop insurance.
                          farm service agency
    Direct Farm Ownership and Operating Loans.--Direct loans provide a
crucial source of capital for beginning farmers and others not well
served by commercial credit. Since fiscal year 2010, direct farm
ownership loans, the single most critical program for beginning farmers
trying to get started in agriculture, has been cut 33 percent. Both
direct loan programs are severely oversubscribed. In light of the
increasing age of farmers and the challenges faced by beginning
farmers, it is critical that we fund these direct loan programs in the
most effective way possible. We request program levels of no less than
the USDA request of $575 million for Direct Farm Ownership loans and
$1,223.7 million for Direct Operating Loans in fiscal year 2014.
                 natural resources conservation service
    Conservation Technical Assistance (CTA).--CTA, a subset of
Conservation Operations, supports farmers enrolling in financial
assistance programs and helps farmers with conservation planning and
implementation. CTA also funds assessment of conservation practices and
systems that underpin the conservation programs, as well as NRCS
collection, analysis, and dissemination of information on the condition
of the Nation's natural resources. We urge you to provide $735 million
for CTA, but to reject the administration's user fee proposal.
                 rural business and cooperative service
    Value-Added Producer Grants (VAPG).--VAPG offers grants to farmers
and ranchers developing new farm and food-related businesses that boost
farm income, create jobs, and increase rural economic opportunity. VAPG
grants encourage the kind of entrepreneurship in agriculture that
enables farms and communities to survive economically. Moreover,
growing interest in local and regional foods is generating greater
demand for mid-tier value chains and enterprises that aggregate local
production, exactly the kind of rural development strategy VAPG is
designed to support. We request VAPG funding of $30 million, a
significant increase, but still 25 percent less than the program
received a decade ago.
    Rural Microentrepreneur Assistance Program (RMAP).--RMAP provides
business training, technical assistance, and loans to owner-operated
businesses with up to 10 employees. Small businesses make up 90 percent
of all rural businesses, and micro-businesses are the fastest growing
segment in many areas. RMAP creates jobs and local markets and
alleviates poverty. We request $3.4 million for RMAP in fiscal year
2014. The President's fiscal year 2014 request includes $1.4 million in
discretionary funding for loans, and a non-delineated discretionary sum
for micro training and technical assistance grants as part of a
consolidated Rural Business and Cooperative Grants program. We support
retaining RMAP as a coherent, integrated program with grants and loans
in a single program and account.
    Appropriate Technology Transfer for Rural Areas (ATTRA).--The ATTRA
program, also known as the National Sustainable Agriculture Information
Service and reauthorized by the 2008 farm bill, provides critical
support to farmers, Extension agents, and conservation and energy
specialists throughout the country. We urge $3 million for ATTRA for
fiscal year 2014.
                           general provisions
    Repeated annual ``changes in mandatory program spending'' cuts to
the Conservation Stewardship Program (CSP), Environmental Quality
Incentives Program (EQIP), Wetland Reserve Program (WRP) and other
mandatory farm bill conservation programs have created enormous
backlogs among highly qualified producers and made it more difficult
for farmers to maintain healthy, productive soil and to protect water
and other natural resources. These programs provide critical public
benefits such as clean water, drought mitigation, and carbon
sequestration. We strongly oppose cuts to these critical farm bill
conservation programs.
    We oppose the inclusion of policy riders that limit full
implementation of the Packers and Stockyards rule on fair competition
or adequate enforcement of the PSA, or that strip Federal courts of the
authority to halt the sale or planting of biotechnology products that
have not been adequately reviewed for their economic and environmental
impacts.
    Finally, we oppose sequestration as a deficit reduction mechanism
and urge you to revoke it and to restore the funding.

                                                       SUMMARY OF NSAC'S FISCAL YEAR 2014 REQUESTS
                             [Dollars in millions. Fiscal year 2013 levels are inclusive of sequestration and rescissions.]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                              Fiscal year 2013                        USDA 2014 request                      NSAC 2014 request
--------------------------------------------------------------------------------------------------------------------------------------------------------
Departmental Administration:       $1.3..................................  $1.2..................................  $1.2
 Office of Advocacy and Outreach.
National Agricultural Statistics   Agency discretion due to lack of        ......................................  $1.0
 Service: Organic Market            detail in bill.
 Reporting (see also Agricultural
 Marketing Service).
National Institute of Food and
 Agriculture:
    Sustainable Agriculture        $13.4 (research & education) + $4.3     $22.7 for research, education, and      $30.0 (research, education, matching
     Research and Education         (extension) = $17.7.                    extension \1\.                          grants, and extension)
     Program.
    Organic Transitions Program..  $3.7..................................  $4.0..................................  $5.0
    National Food Safety           ......................................  ......................................  $10.0
     Training, Education,
     Extension, Outreach and
     Technical Assistance
     (Authorized by Congress to
     assist farmers as part of
     the Food Safety
     Modernization Act of 2010).
Agricultural Marketing Service:
    Federal-State Marketing        $1.2..................................  $1.4..................................  $1.4
     Improvement Program.
    Organic Market Reporting (see  $0.3..................................  ......................................  $0.5
     also National Agricultural
     Statistics Service).
Farm Service Agency: Direct Farm   $438.6 + $969.6.......................  $575.0 + $1,223.7.....................  $575.0 + $1,223.7
 Ownership and Operating Loans--
 (Program Levels).
Natural Resources Conservation     $676.1................................  $735.0 (includes $22 million in user    $735.0 (no user fees)
 Service: Conservation Technical                                            fees).
 Assistance (within Conservation
 Operations).
Rural Business and Cooperative
 Service:
    Value-Added Producer Grants..  $13.8.................................  $15.0.................................  $30.0
    Rural Microentrepreneur        ......................................  $1.4 for $22 in loans + non-delineated  $3.4 (loans and grants)
     Assistance Program.                                                    sum for grants \2\.
    National Sustainable           $2.1..................................  $2.3..................................  $3.0
     Agriculture Information
     Service (ATTRA).
General Provisions: Conservation   $1,036.2 (no limitation + $63.8         $1,299.0 ($70 approx. CHIMP; permanent  No CHIMP/limitation on farm bill
 Stewardship Program.               sequester cut).                         cut of 777,780 acres).                  direct spending
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Unlike in previous years, the President's fiscal year 2014 budget request proposes to combine research, education, and extension into a single line
  item request. We do not oppose the proposed consolidation, so long as overall funding is increased, adequate funding is provided for all functions,
  and report language clarifies the intent that all three authorized program functions are included in the single line item.
\2\ The President's fiscal year 2014 request includes $1.4 million discretionary funding for loans, and a non-delineated discretionary sum for micro
  training and technical assistance grants as part of a consolidated Rural Business and Cooperative Grants program. We support retaining RMAP as a
  coherent, integrated program with grants and loans in a single program and account.

    We also oppose changes in mandatory program spending (CHIMPS) for
other directly funded farm bill conservation programs.
    We oppose policy riders that curtail enforcement of the Packers &
Stockyards Act or to limit the review of biotechnology products.
    We oppose sequestration as a deficit reduction mechanism and urge
you to revoke it and restore the funding.
                                 ______

 Prepared Statement of the National Water Resources Association (NWRA)
    On behalf of the membership of the National Water Resources
Association, I am writing in support of continued funding for the
Department of Agriculture's EQIP program and in particular funding for
the Colorado River Basin Salinity Control program.
   u.s. bureau of reclamation--colorado river basin salinity control
Fiscal Year 2014 Request: $15.4 Million DOI, $1.4 Billion (EQIP
        Finding) USDA
    Waters of the Colorado River are used by approximately 40 million
people and used to irrigate approximately 4 million acres in the United
States. Higher salinity water creates environmental and economic
damages. Present quantifiable damages are estimated by Reclamation to
be several hundred million dollars with projections that they would
climb to more that $500 million annually by 2030 without continued
aggressive implementation of the Program.
    Congress has authorized implementation of the Colorado River Basin
Salinity Control Program through the Colorado River Basin Salinity
Control Act (Public Law 93-320) as amended. Implementation is
accomplished through Department of the Interior and Department of
Agriculture programs. In recognition of U.S. water quality commitments
to Mexico and the fact that the majority of the salt load of the
Colorado River comes from federally administered lands, the act directs
that 70 percent of the Program is funded via appropriations with the
remaining 30 percent basin States cost-share coming from the Basin
Funds. The Program's Plan of Implementation identified in the 2011
Review, Water Quality Standards for Salinity, Colorado River System, as
adopted by the basin States and EPA calls for approximately 650,000
tons of additional annual salinity control by 2030. The fiscal year
2014 funding level requirements are: $15.4 million in Reclamation's
Basinwide Program, $1.5 million for salinity specific projects in BLM's
Soil Water and Air Program, and $17.3 million under USDA's (NRCS)
Environmental Quality Incentives Program (EQIP), total EQIP funding
being $1.4 billion. The DOI funding levels are specific in line-item
programs whereas USDA's EQIP is funded under the farm bill.

    [This statement was submitted by Thomas F. Donnelly, Executive Vice
President, National Water Resources Association.]
                                 ______

   Prepared Statement of the New Mexico Interstate Stream Commission
                                summary
    This statement is submitted in support of appropriations for the
U.S. Department of Agriculture's Environmental Quality Incentives
Program (EQIP) and the Colorado River Basin Salinity Control Program
(Program). The Program is funded through EQIP, the U.S. Bureau of
Reclamation's Basinwide Program, and cost-sharing provided by the Basin
States. I request that at least $17.3 million in EQIP funds be
designated for the Colorado River Basin Salinity Control Program in
fiscal year 2014. I request that adequate funds be appropriated for
technical assistance and education activities directed to Program
participants.
                               statement
    Congress authorized the Colorado River Basin Salinity Control
Program in the Colorado River Basin Salinity Control Act of 1974.
Congress amended the act in 1984 to give new responsibilities to the
U.S. Department of Agriculture (USDA). While retaining the Department
of the Interior as the lead coordinator for the Program, the amended
act recognized the importance of USDA efforts in meeting the objectives
of the Program. Many of the most cost-effective salinity control
projects to date have occurred since implementation of the USDA's
authorization for the Program.
    With the Federal Agricultural Improvement and Reform Act of 1996
(FAIRA), Congress directed that the Program be implemented as a
component of EQIP. However, until 2004, the Program was not funded at
an adequate level to protect the Basin State-adopted and Environmental
Protection Agency approved water quality standards for salinity in the
Colorado River. Appropriations for EQIP prior to 2004 were insufficient
to adequately control salinity impacts from water delivered to the
downstream States and Mexico.
    EQIP subsumed the salinity control program without giving adequate
recognition to the responsibilities of the USDA to implement salinity
control measures per section 202(c) of the Colorado River Basin
Salinity Control Act. The EQIP evaluation and project ranking criteria
targeted small watershed improvements and did not recognize that water
users hundreds of miles downstream are significant beneficiaries of the
salinity control program. Proposals for EQIP funding were ranked in the
States of Utah, Wyoming and Colorado under the direction of the
respective State Conservationists without consideration of those
downstream, particularly out-of-State, benefits.
    Following recommendations of the Basin States to address the
funding problem, the USDA's Natural Resources Conservation Service
(NRCS) designated the Colorado River Basin an ``area of special
interest'' and earmarked funds for the Program. The NRCS concluded that
the salinity control program is different from the small watershed
approach of EQIP. The watershed for the Program stretches more than
1,400 miles from the headwaters of the river through the salt-laden
soils of the entire basin to the river's termination at the Gulf of
California in Mexico. NRCS is to be commended for its efforts to comply
with the USDA's responsibilities under the Colorado River Basin
Salinity Control Act, as amended.
    With the enactment of the Farm Security and Rural Investment Act in
2002, an opportunity to adequately fund the salinity control program
now exists. The NRCS State Conservationists for Utah, Wyoming, and
Colorado now prepare a 3-year funding plan for the salinity efforts
under EQIP. I support this plan, including the request for $17.3
million in fiscal year 2014. State and local cost-sharing will be
triggered by and indexed to the Federal appropriation.
    USDA salinity control projects have proven to be a cost-effective
component of the salinity control program. The Basin States have cost-
sharing dollars available to participate in on-farm salinity control
efforts. The agricultural producers in the Upper Basin are willing to
cost-share their portion and are awaiting funding for their
applications to be considered.
    Bureau of Reclamation studies show that quantified damages from
Colorado River salinity to United States water users are about
$376,000,000 per year, with these damages rising to $577,000,000 per
year by 2030 if the Program was discontinued. Continued funding of USDA
salinity control projects is important to protect the quality of
Colorado River Basin water delivered to the Lower Basin States and
Mexico. Also, irrigated agriculture in the Upper Basin realizes
significant local benefits of improved irrigation practices.
    I urge the Congress to designate at least $17.3 million in EQIP
funds for the Colorado River Basin Salinity Control Program in fiscal
year 2014.

    [This statement was submitted by Estevan R. Lopez, Director, New
Mexico Interstate Stream Commission.]
                                 ______

 Prepared Statement of the Northwest Regional Housing Authority (NWRHA)
    Since 2010, U.S. Department of Agriculture (USDA) Rural Housing
programs have been cut by nearly $400 million. Further cuts to Rural
Housing programs proposed by the administration's budget request are
unwise and unwarranted. Funding for these programs needs to set at the
higher of the President's fiscal year 2014 budget request or fiscal
year 2013 levels, prior to sequestration, including: (1) $900 million
for Section 502 Direct Homeownership Loans; and (2) $30 million for
Section 523 Self-Help Housing Program.
    The 502 Direct Program is the only Federal homeownership program
that is exclusively targeted to very low- and low-income rural
families. In the past 60 years, this program has helped more than 2.1
million families build wealth and achieve the American dream of
homeownership. By law, 40 percent of 502 Direct Loan funds must be used
to assist families earning less than 50 percent of area median income.
15,000 loan applications are currently on a waiting list for section
502 loan funding.
    The section 523 program helps organizations to provide training,
supervision and technical assistance to families. Families work nights
and weekends providing construction labor on their own and each other's
homes to decrease construction costs increase equity and build wealth.
Every 100 homes built on this program results in 324 jobs, $21.1
million in local income and $2.2 million in tax revenue. Even though
Self-Help families have lower income, default rates are significantly
lower than other borrowers. More than 50,000 families are currently on
Self-Help Housing waiting lists. Each family that builds a Self-Help
home makes many sacrifices.
    Throughout the process and after all the hard work they will say,
yes, it was worth it. It does not make sense to let these programs
deteriorate to the point of extinction. Thank you for the opportunity
to address these issues today.

    [This statement was submitted by Neal Gibson, Assistant Executive
Director, Northwest Regional Housing Authority.]
                                 ______

             Prepared Statement of NSF International (NSF)
                              introduction
    NSF International (NSF) is pleased to have the opportunity to
submit this statement regarding the Food and Drug Administration's
(FDA) fiscal year 2014 appropriations.
    NSF is an independent, not-for-profit organization that provides
consensus national standards development, accredited product
certification, third party auditing, training and risk management in
the areas of public health and the environment.
    Founded at the University of Michigan School of Public Health in
1944, NSF International is committed to protecting human health and the
environment. Manufacturers, regulators, and consumers alike look to NSF
to independently help protect the world's food, water, and health
science and consumer products. We conduct more than 100,000 facility
audits worldwide and certify products from more than 30,000 companies
in over 100 countries. NSF is the leading global provider of accredited
Global Food Safety Initiative audits that may qualify as recognized
regulatory audits under section 805 and 808 of the Food Safety
Modernization Act (FSMA).
    NSF has maintained long and cooperative relationships with U.S.
Federal agencies, including FDA, whose staff participate in NSF
voluntary consensus national standards committees that cover commercial
foodservice equipment, as an example. We believe our relationship with
FDA has been mutually beneficial and supportive of public health.
    In an era of limited resources, budget deficits, and the impact of
the sequester, we are pleased to say that we can present the
subcommittee with ways to save the U.S. taxpayer money through public-
private partnerships that leverage FDA's resources in a most cost-
effective manner.
                               discussion
    Specific areas where NSF can help mitigate FDA's existing resource
constraints, while helping the agency achieve its public health
mission, include:
  --Facilitating Compliance with Dietary Supplements Good Manufacturing
        Practices (GMPs).--NSF has validated test methods for detection
        of known adulterants in dietary supplements as part of its
        agreements with major league sports organizations and with
        national anti-doping agencies. This detailed analytical work is
        conducted at NSF's ISO 17025-accredited laboratories in
        Michigan by experienced chemists. Testing is routinely
        performed for various known contaminants such as Sibitrumine,
        steroids, PDE 5 Inhibitors, DMAA, APIs, heavy metals,
        pesticides, and other substances. Through a pilot program with
        FDA, this effort can be formalized to meet FDA priorities and
        be utilized by the agency to facilitate its enforcement burden
        and conserve agency resources. The cost of commencing a pilot
        program through a cooperative agreement or other means in
        fiscal year 2014 would range from $500,000 to $1,000,000.
  --Providing GMP Training and Auditing Support for Compounding
        Pharmacies.--NSF has the capability to develop training
        standards for compounding pharmacies producing specialized
        pharmaceuticals for use in the hospital environment. Ensuring
        that such products are not adulterated has traditionally fallen
        on State agencies with sometimes tragic results. FDA has not
        focused adequate resources on what has traditionally been
        considered a State regulated activity. NSF can develop a model
        Federal program that could be implemented by the States to
        ensure that compounding pharmacies employ qualified technicians
        that are trained to follow best practices. NSF also has
        programs for auditing Compounding Pharmacies GMPs.
  --Providing Support of Excipients in the Manufacture of Drugs and
        OTCs.--FDASIA specifies new expectations with regard to supply
        chain, drug quality and expectations for the pharmaceutical
        industry. NSF has partnered with FDA and IPEC to develop ANSI/
        NSF Standard 363 for excipient GMPs. We recognize that FDA does
        not have all the resources it needs to inspect excipient
        manufacturers and NSF can help in this area through auditing
        and third party certification.
  --Providing Quality and Safety Support for Pharma Manufacturers.--NSF
        has also developed a program for certifying Quality
        Professionals (QP) in the pharmaceutical industry for the
        European Union. While there is no ``QP'' requirement in the
        United States as there is in Europe, we believe that proper
        education of the industry, beyond the quality unit, enables
        personnel to make appropriate risk-based decisions that satisfy
        patient needs without sacrificing quality or safety.
  --Providing Support for OTC Manufacturers.--NSF has also developed a
        program to focus on auditing and qualifying OTC drug
        manufacturers. We understand that FDA does not have the
        resources it needs to inspect all the facilities and this
        program can help protect consumers. The program incorporates
        elements of CFR, ICHQ10 and elements of FDASIA to ensure that
        OTC manufacturers are complying with all necessary
        requirements.
  --Support for Oversight of Asian Manufacturers.--Assisting FDA with
        oversight of drug manufacturing and research in Asia by
        providing audit/inspection support and GMP training.
                               conclusion
    As the FDA seeks to cope with resource issues, NSF can align its
programs with FDA's strategic goals in a manner that best supports the
agency's public health mission. Such steps will allow the FDA to do
more with less and at the end of day help reduce our Nation's budget
deficit. We urge the committee to direct the FDA to consider such
measures.
    We would be pleased to work with the subcommittee and FDA in this
regard.
    Thank you for considering our views.

    [This statement was submitted by Kevan P. Lawlor, President and
CEO, NSF International.]
                                 ______

    Prepared Statement of the Oregon Water Resources Congress (OWRC)
    The Oregon Water Resources Congress (OWRC) strongly supports the
U.S. Department of Agriculture's (USDA) Natural Resources Conservation
Service (NRCS) and is deeply concerned about reductions to programs
important to our members for fiscal year 2014. OWRC is requesting that
funding for NRCS' Environmental Quality Incentives Program (EQIP) be
increased for fiscal year 2014 and that additional funding be dedicated
to drought planning and assistance. Specifically, OWRC is requesting
that funding for the Agricultural Watershed Enhancement Program (AWEP)
portion of EQIP funded at a minimum of $70 million annually. Also, we
request that the ``Bridging the Headgates'' MOU between NRCS and the
Bureau of Reclamation be reactivated and expanded to include other
Federal agencies to maximize Federal resources.
    OWRC is a nonprofit trade association that represents irrigation
districts, water control districts, drainage districts, water
improvement districts, and other local government entities that provide
water for agricultural use. These water stewards operate complex water
management systems, including water supply reservoirs, canals,
pipelines, and hydropower production, and deliver water to roughly one-
third of all irrigated land in Oregon. OWRC has been promoting the
protection and use of water rights and the wise stewardship of water
resources on behalf of agricultural water suppliers for over 100 years.
           need for increased fiscal year 2014 appropriations
    OWRC strongly supports USDA's strategic goal of ensuring ``our
national forests and private working lands are conserved, restored, and
made more resilient to climate change, while enhancing our water
resources.'' Federal support of water conservation activities funded
through NRCS programs like EQIP, which includes the Agricultural
Watershed Enhancement Program (AWEP), Conservation Innovation Grant
(CIG), and several other important programs are essential to the
conservation of our natural resources and critical to protecting our
food, energy and water supply. Financial assistance for AWEP and other
EQIP programs has been declining over the past several years while the
need for financial assistance to carry out conservation activities has
only increased, particularly in regards to addressing endangered and
threatened species, drought and potential impacts from climate change.
We worry that a further decline of funding for fiscal year 2014 will
severely impact districts and other agricultural water suppliers.
    While we recognize that the administration has increased funding
for some of the NRCS programs, the need for additional financial
assistance with conservation projects still far outweighs the budget.
NRCS programs are essential to irrigation districts in developing and
implementing conservation projects that benefit not only the individual
farmers they serve but also the entire watershed and community as a
whole. Furthermore, conservation projects also benefit the economy
through job creation and ensuring the future viability of American
agriculture.
    Increased fiscal year 2014 appropriations for NRCS programs will
yield benefits nationally and in Oregon. Conversely reduced funding
will have hamper existing conservation efforts and potentially have
dire consequences for water and land conservation efforts. The need and
demand for EQIP funded programs far outstrips the availability of funds
in previous years and we are deeply concerned about the impacts of
further reductions.
    For example, in 2012, Oregon NRCS requested approximately $3.1
million for project funding, but only received $2.4 million for
existing AWEP approved projects and also requested approximately $3.2
million of CCPI funds, but received $3 million. In fiscal year 2013
Oregon requested $2.7 million for AWEP funding, but received $1.78
million and requested $1.3 million for CCPI, but received $1.03
million. Funding requests for NRCS overall are not being met. For
fiscal year 2013 Oregon requested $24.7 million in financial assistance
for NRCS funding, but received approximately $20 million. We are
concerned that this declining trend will hamper not only existing
conservation efforts but the ability of new projects to be implemented.
                benefits of awep and other eqip programs
    OWRC strongly supports AWEP and other EQIP programs that are
critical tools for districts and other agricultural water suppliers in
developing and implementing water and energy conservation projects in
Oregon. AWEP has been highly successful in developing cooperative
approaches on a basin-wide scale. This program allows districts and
other agricultural water suppliers to partner with farmers to address
regional water quantity and quality issues in local watersheds.
    The Cooperative Conservation Partnership Initiative (CCPI) is a
valuable program that allows eligible owners and operators of
agricultural and nonindustrial private forest lands agricultural users
to enter into multiyear agreements with NRCS to implement conservation
measures using EQIP programs and other NRCS conservation programs
authorized under the 2008 farm bill. CCPI is not a grant program, and
therefore does not have a budget allocation, but we strongly support
the continuance of this valuable program. CCPI allows partnerships to
be formed with Federal, State and local interests to address Endangered
Species Act (ESA) and Clean Water Act (CWA) issues in watershed basins
and sub basins. We believe that water supply issues in Oregon and
elsewhere in the Nation can be resolved best locally in cooperative
partnership efforts that promote conservation with a more aggressive
Federal funding partnership as defined in AWEP and CCPI.
    AWEP and CCPI help fill a funding void for multi-partner
conservation projects. Often large conservation projects do not include
individual on-farm projects which limits the effectiveness of the
project. AWEP and CCPI allow farmers to pool together and leverage the
dollars invested in the off-farm project with the addition of EQIP on-
farm projects. Due to the large number of successful project
applications for AWEP, USDA will have to obligate a large amount of the
proposed annual $60 million appropriation to existing multiyear
projects. It is important that the funding for these projects not be
interrupted so that they may be completed. However, it is equally
important to have funding available for new eligible AWEP and CCPI
projects that simultaneously benefit the environment and economy.
    Additionally, CIG is another important component of EQIP and NRCS'
conservation efforts. CIG helps support the development of innovative
methods to address natural resources challenges that are critical to
having success on the ground. Additional assistance is also needed to
help farmers and other agricultural users plan for and adapt to
potential impacts from climate change and ongoing drought and CIG is a
viable method to spur creative solutions.
             examples of successful awep projects in oregon
    Oregon has had several successful AWEP applicants over the past
several years, three from our member districts (described below). The
full list of Oregon projects can be found on the Oregon NRCS website
at: http://www.or.nrcs.usda.gov/programs/awep/index.html.
  --The Whychus Creek/Three Sisters Irrigation District Collaborative
        Restoration Project focuses on irrigation water efficiency with
        irrigation improvements in the Upper Division of the Three
        Sisters Irrigation District, which is the project partner. The
        effort will improve stream flows and water quality for native
        fish while providing farmers a reliable supply of water. Fiscal
        year 2013 funding: $180,000; fiscal year 2012 $251,300.
  --The Talent Irrigation District Project works with agricultural
        producers to install conservation practices that will properly
        utilize limited surface water resources, improve water quality
        on flood irrigated land by converting to more efficient
        irrigation systems, and apply irrigation water management to
        eliminate irrigation runoff. Fiscal year 2013 funding: $0;
        fiscal year 2012 funding: $4,470.
  --The Willow Creek Project helps landowners in the Lower Willow Creek
        Watershed portion of Malheur County convert to water-saving
        irrigation systems, reduce irrigation runoff, and improve water
        quality in Willow Creek and Malheur River. The project partner
        is the Vale Oregon Irrigation District. Fiscal year 2013
        funding: $180,000; fiscal year 2012: $251,300.
    Additionally, Oregon NRCS is helping develop the Save Water, Save
Energy Initiative, a multi-agency cooperative effort to develop a
clearinghouse of information on financial incentives and technical
expertise to assist districts and their water users in implementing
conservation measures. Additional innovative projects like the ones
above could be developed and implemented in Oregon if more funding is
made available.
             bridging the headgates mou and planning needs
    There is also a need for continued coordination among Federal
agencies like NRCS, the Bureau of Reclamation (BOR), Bureau of Land
Management (BLM), Environmental Protection Agency (EPA), NOAA
Fisheries, U.S. Fish and Wildlife Service, and Army Corps of Engineers
(ACOE), and planning assistance to address and plan for various water
challenges. Reactivating and expanding the ``Bridging the Headgates''
MOU presents an opportunity to leverage shared Federal resources. With
the loss of watershed planning funding, reactivating and expanding this
program to other Federal agencies would be a very cost-effective
alternative. In the past, Oregon NRCS used a watershed resources
planning team to conduct Rapid Watershed Assessments throughout Oregon.
This planning program helped prioritize projects to bring about the
most benefit in critical watersheds and getting on-the-ground
conservation projects completed in a timely manner. A number of NRCS
funded district projects have been implemented using the data from this
program.
    Following in the vein of the Rapid Watershed Assessments, Oregon
has adopted a Strategic Approach to Conservation. The goal is to invest
technical and financial resources to strategically solve natural
resource problems and be more effective, efficient, and accountable for
staffing, funding and partnerships. This strategy is intended to
accelerate the conservation implementation and leverage technical and
financial resources required to solve the problem. These types of
program activities are effective tools that need a consistent funding
source.
    Furthermore, reactivating and expanding the ``Bridging the
Headgates'' program is a viable option to leverage scarce Federal
resources to help plan for and address drought, other natural
disasters, and potential impacts from climate change. There is no USDA
budget item or program to address drought yet it is imperative that
farmers and other agricultural users have Federal assistance to help
not only deal with the current drought conditions but be able to plan
for and address future shortages. A coordinated effort between Federal
agencies will not only be fiscally prudent, but also an effective use
of time, institutional knowledge, and respective authorities.
                               conclusion
    Ensuring adequate water supplies for agriculture is of paramount
importance to the continued economic, environmental, and cultural well-
being of not only Oregon but all of America. Oregon's agricultural
community is actively committed to developing and implementing
innovative water conservation projects, but the continued success of
these efforts requires Federal participation and meaningful investment
in valuable programs like EQIP. Our member districts, the farms and
other water users they serve, and the communities in which they are
located benefit greatly from the NRCS programs described in our
testimony. Increasing the budget for NRCS programs is a strategic
investment that will pay both environmental and economic dividends to
Oregonians and America as a whole. We urge you to increase funding for
AWEP and related EQIP programs for fiscal year 2014. Thank you for the
opportunity to provide testimony for the record on the proposed fiscal
year 2014 budget for the U.S. Department of Agriculture.

    [This statement was submitted by April Snell, Executive Director,
Oregon Water Resources Congress.]
                                 ______

    Prepared Statement of the Pew Charitable Trusts--Kids' Safe and
                     Healthful Foods (KSHF) Project
    Mr. Chairman, Ranking Member Blunt, and members of the
subcommittee: I am pleased to provide testimony to this subcommittee on
behalf of the Pew Charitable Trusts' Kids' Safe and Healthful Foods
(KSHF) Project. The Kids' Safe and Healthful Foods Project provides
nonpartisan analysis and evidence-based recommendations to policymakers
to ensure that all foods and beverages sold in U.S. schools are as safe
and healthful as possible. The following testimony details our support
for the President's request for $35 million in new funding for the U.S.
Department of Agriculture's (USDA) Food and Nutrition Service (FNS) to
provide competitive equipment grants in support of local schools'
efforts to upgrade and modernize their kitchens and cafeterias to
prepare more nutritious foods and comply with new school nutrition
standards.
    Today, in particular, I would like to draw your attention to the
urgent challenges facing school districts and administrators who often
lack the modern, high-quality kitchen equipment necessary to prepare
and serve healthful, nutritious foods. Consider having only a deep-fat
fryer or a microwave in your own kitchen for preparing meals. This is
the reality for the countless schools that feed America's children each
day. The foods served by schools are an important source of the
nutrients our children need to grow, learn and succeed, yet many
schools are unable to provide safe and balanced menus because of
broken, outdated or absent kitchen equipment.
    The USDA, which administers school meal programs, has updated its
nutrition standards to reflect the expert recommendations that children
should eat more fruits, vegetables and whole grains. To meet these
standards, schools need sufficient funds to replace outdated equipment
and to train their staff in order to prepare safe, healthy meals.
Unfortunately, many school kitchens were built decades ago and were
designed with only the minimal capacity required to reheat and hold
food. From the beginning of the National School Lunch Program (NSLP) in
1946 to the early 1980s, the Federal Government periodically provided
grant funding for school kitchen equipment. After a 25-year period
without financial support, through this subcommittee's leadership, in
2009 Congress provided $100 million for competitive assistance grants
to States to support school kitchen equipment. Applications totaling
more than $600 million poured in (see Appendix A)--a stark
demonstration of the unmet need in schools eager to replace their
antiquated equipment with steamers, ovens and salad bars. Research has
shown that Government grants for kitchen upgrades and training can
significantly improve the nutritional quality of school meals.
    Two recent examples illustrate the strong arguments for targeted
investments in new kitchen equipment:
                              mississippi
    Already a national leader in school nutrition standards, in 2009,
Mississippi schools engaged in a statewide obesity prevention campaign
and received $1.7 million in Federal funds to purchase kitchen
equipment. Under the leadership of Governor Haley Barbour and the
Governor's Taskforce on Childhood Obesity, the Healthy Kids, Healthy
Mississippi initiative identified a wide range of policy options to
help State leaders improve child health and reduce obesity in
Mississippi, ranking school kitchen equipment upgrades among the top
three priorities for State action. Replacing deep-fat fryers with
combination oven-steamers enabled schools to serve baked chicken
tenders and whole-grain rolls instead of fried chicken and other higher
fat foods. Such changes have resulted in a significant reduction in the
calories and saturated fat in school meals, and the healthier baked
products received an overwhelmingly positive response from students and
staff. And these changes may be paying off. Recent data suggests that
rates of childhood obesity in Mississippi have started to decline.
                           madison, wisconsin
    The Whole Kids Foundation, a charitable arm of Whole Foods,
recently donated 15 salad bars to Madison, Wisconsin-area elementary
schools, a small investment that school administrators highly value.
According to Steve Youngbauer, director of food services for the
Madison Metropolitan School District, ``offering a salad bar option for
students may be the most impactful change that school districts can
make within a child nutrition program.'' The school district
appreciates the healthier choices, but adding salad bars is not without
cost to the district's budget. According to news reports, most Madison
schools lack adequate kitchen infrastructure to fully support the
fresh-prep salad bars. They may not have the appropriate refrigeration
for fresh vegetables, or regulation sinks to wash tongs and trays.
Targeted, competitive Federal grant funding is still needed in order to
fully modernize basic kitchen and cafeteria infrastructure to help
school districts meet the USDA's new nutritional standards for school
meals, and ultimately, to help schools and parents improve kids' health
and reduce the incidence of childhood obesity in the United States.
    Research co-funded by the Pew Charitable Trusts and the Robert Wood
Johnson Foundation (RWJ), in cooperation with the School Nutrition
Foundation (SNF), further underscores the need for stable, robust
competitive grant funding for school food infrastructure and equipment.
In 2011, USDA finalized regulations to update nutrition standards for
the National School Lunch and School Breakfast Programs for the first
time in 15 years. The updated regulations raised the bar for school
nutrition and challenge schools to prepare healthier, lower calorie
meals for children during the school day. Our pilot study explored the
type of equipment and training necessary for schools to successfully
meet USDA's updated nutrition standards. The results of this initial
study represent only a small sample of schools, and Pew is currently
finalizing its analysis of a comprehensive national survey to evaluate
these trends in more detail. However, the vast majority of respondents
indicated that they lack adequate funds to repair and/or purchase the
kitchen equipment or provide the staff training needed to prepare and
serve healthier meals that meet USDA's proposed nutrition standards. In
addition, the expected costs of updating kitchen equipment needed to
meet new USDA standards varied widely, with a median estimate of over
$50,000 per school district. Our very preliminary analysis of data from
Pew's upcoming national survey confirms that schools clearly need, and
would value, additional funding to support kitchen infrastructure and
equipment upgrades to meet the new USDA nutrition standards.
    Anecdotally, I can tell you that the majority of educators,
parents, and school food service professionals I've been privileged to
encounter over this first school year of the new nutrition standards
are eager to provide healthy, nutritious, inviting meals to students,
despite the equipment and infrastructure deficiencies facing our
schools. I strongly urge the subcommittee to meet the President's
request for $35 million for school equipment competitive grant funding
in the fiscal year 2014 Agriculture Appropriations legislation. The
Congress was extraordinarily generous and foresighted in committing $10
million to fund this account in fiscal year 2013--schools use these
investments wisely and your continued support will help educators and
parents to stay focused on improving the health and well-being of our
Nation's children. Today's economic austerity is an obstacle to
providing funds for this effort, but I know that the subcommittee
recognizes the importance of undertaking every possible strategy to
reduce childhood obesity. You also know of the tremendous dividends
this strategy will pay in our children's future. Thank you for your
consideration.

     APPENDIX A--2009 ARRA FUNDING FOR NSLP EQUIPMENT ASSISTANCE \1\
------------------------------------------------------------------------
                  State/Territory Name                   Amount of Award
------------------------------------------------------------------------
Alabama................................................       $1,956,100
Alaska.................................................          286,227
Arizona................................................        2,208,964
Arkansas...............................................        1,274,260
California.............................................       12,864,683
Colorado...............................................        1,034,538
Connecticut............................................          785,878
DC.....................................................          215,765
Delaware...............................................          233,284
Florida................................................        5,403,280
Georgia................................................        4,420,793
Guam...................................................          215,764
Hawaii.................................................          348,600
Idaho..................................................          481,315
Illinois...............................................        3,657,300
Indiana................................................        1,937,595
Iowa...................................................          823,633
Kansas.................................................          849,759
Kentucky...............................................        1,769,888
Louisiana..............................................        2,069,399
Maine..................................................          307,008
Maryland...............................................        1,231,398
Massachusetts..........................................        1,404,025
Michigan...............................................        2,555,174
Minnesota..............................................        1,270,655
Mississippi............................................        1,720,968
Missouri...............................................        1,838,222
Montana................................................          224,981
Nebraska...............................................          532,209
Nevada.................................................          679,103
New Hampshire..........................................          215,765
New Jersey.............................................        1,859,763
New Mexico.............................................          924,743
New York...............................................        5,990,474
North Carolina.........................................        3,313,727
North Dakota...........................................          215,764
Ohio...................................................        2,957,271
Oklahoma...............................................        1,519,638
Oregon.................................................        1,030,828
Pennsylvania...........................................        2,872,047
Puerto Rico............................................        1,532,183
Rhode Island...........................................          268,131
South Carolina.........................................        1,836,195
South Dakota...........................................          255,465
Tennessee..............................................        2,275,738
Texas..................................................       11,517,159
Utah...................................................          721,186
Vermont................................................          215,765
Virgin Islands.........................................          215,764
Virginia...............................................        1,891,294
Washington.............................................        1,588,047
West Virginia..........................................          649,800
Wisconsin..............................................        1,316,711
Wyoming................................................          215,674
                                                        ----------------
      Totals...........................................      100,000,000
                                                        ================
National Totals:
    Total Amount Awarded...............................      100,000,000
    Total Amount Requested.............................      639,328,915
                                                        ----------------
      Difference.......................................     -539,328,915
------------------------------------------------------------------------
\1\ Data source: USDA, 2012.


    [This statement was submitted by Jessica Donze Black, RD, MPH,
Director, Kids' Safe and Healthful Foods (KSHF) Project, the Pew
Charitable Trusts.]
                                 ______

        Prepared Statement of Pickle Packers International, Inc.
     concern for sustained and increased research funding usda/ars
Summary
    Sustained and increased funding is desperately needed to maintain
the research momentum built over recent years and to defray rising
fixed costs at laboratory facilities. Companies in the pickled
vegetable industry generously participate in funding and performing
short-term research, but the expense for long-term research needed to
insure future competitiveness is too great for individual companies to
shoulder on their own.
Additional Budget Requests for Fiscal Year 2014
    Funding needs for USDA/ARS laboratories are as follows:

          REQUESTS FOR PROGRAM ENHANCEMENT--PICKLED VEGETABLES
------------------------------------------------------------------------
                                                              Amount
------------------------------------------------------------------------
Emerging Disease of Crops...............................        $500,000
Quality and Utilization of Agricultural Products and             500,000
 Food Safety............................................
Applied Crop Genomics...................................         500,000
Specialty Crops.........................................         550,000
                                                         ---------------
      Total Program Enhancements Requested--Pickled            2,050,000
       Vegetables.......................................
------------------------------------------------------------------------

    USDA/ARS research provides:
  --Consumers with over 150 safe and healthful vegetable varieties
        providing vitamins A, C, folate, magnesium, potassium, calcium,
        and phytonutrients such as antioxidant carotenoids and
        anthocyanins.
  --Genetic resistance for many major vegetable diseases, assuring
        sustainable crop production with reduced pesticide residues--
        valued at nearly $1 billion per year in increased crop
        production.
  --Classical plant breeding methods combined with bio-technological
        tools, such as DNA markers, genetic maps, and genome sequence
        to expedite traditional breeding and increase efficiency.
  --New vegetable products with economic opportunities amidst
        increasing foreign competition.
  --Improved varieties suitable for machine harvesting, assuring post
        harvest quality and marketability.
  --Fermentation and acidification processing techniques to improve the
        efficiency of energy use, reduce environmental pollution, and
        reduce clean water intake while continuing to assure safety and
        quality of our products.
  --Methods for delivering beneficial microorganisms in fermented or
        acidified vegetables, and produce reduced sodium, healthier
        products.
  --New technology and systems for rapid inspection, sorting and
        grading of pickling vegetable products.
Health and Economical Benefits
    Health agencies continue to encourage increased consumption of
fruits and vegetables, useful in preventing heart disease, cancer,
stroke, diabetes, and obesity.
    Vegetable crops, including cucumbers, peppers, carrots, onions,
garlic, and cabbage (sauerkraut), are considered ``specialty'' crops
and not part of commodity programs supported by taxpayer subsidies.
    Current farm value for just cucumbers, onions and garlic is
estimated at $2.4 billion with a processed value of $5.8 billion. These
vegetables are grown and/or manufactured in all 50 States.
                              introduction
    The pickled vegetable industry strongly supports and encourages
your committee in its work of maintaining and guiding the Agricultural
Research Service. To accomplish the goal of improved health and quality
of life for the American people, the health action agencies of this
country continue to encourage increased consumption of fruits and
vegetables in our diets. Accumulating evidence from the epidemiology
and biochemistry of heart disease, cancer, diabetes and obesity
supports this policy. Vitamins (particularly A, C, and folic acid),
minerals, and a variety of antioxidant phytochemicals in plant foods
are thought to be the basis for correlation's between high fruit and
vegetable consumption and reduced incidence of these debilitating and
deadly diseases.
    As an association representing processors that produce over 85
percent of the tonnage of pickled vegetables in North America, it is
our goal to produce new products that increase the competitiveness of
U.S. agriculture as well as meet the demands of an increasingly diverse
U.S. population that is encouraged to eat more vegetables. The profit
margins of growers continue to be narrowed by foreign competition. This
industry can grow by meeting today's lifestyle changes with reasonably
priced products of good texture and flavor that are high in nutritional
value, low in negative environmental impacts, and produced with assured
safety from pathogenic microorganisms and from those who would use food
as a vehicle for terror. With strong research to back us up, we believe
our industry can make a greater contribution toward reducing product
costs and improving human diets and health for all economic strata of
U.S. society.
    Many small to medium sized growers and processing operations are
involved in the pickled vegetable industry. We grow and process a group
of vegetable crops, including cucumbers, peppers, carrots, onions,
garlic, cauliflower, cabbage (sauerkraut) and brussels sprouts, which
are referred to as ``minor'' crops. None of these crops are in any
``commodity program'' and do not rely on taxpayer subsidies. However,
current farm value for just cucumbers, onions and garlic is $2.4
billion with an estimated processed value of $5.8 billion. These crops
represent important sources of income to farmers and rural America.
Growers, processing plant employees and employees of suppliers to this
industry reside in all 50 States. To realize its potential in the
rapidly changing American economy, this industry will rely upon a
growing stream of appropriately directed basic and applied research
from four important research programs within the Agricultural Research
Service. These programs contribute directly to top research priorities
that the Research, Education, and Economics Mission Area (REE) of the
USDA has identified in that they develop vegetable crop germplasm and
preservation technology that contributes to improved profitability with
reduced pesticide inputs in a safer, higher quality product grown by
rural farm communities across the United States, consequently improving
food security and food safety. Improved germplasm, crop management
practices and processing technologies from these projects have
measurably contributed to the profitability, improved nutritional value
and increased consumption of affordable vegetable crops for children
and adults in America and around the world.
                         applied crop genomics
    The USDA/ARS has the only vegetable crops research unit dedicated
to the genetic improvement of cucumbers, carrots, onions and garlic.
ARS scientists account for approximately half of the total U.S. public
breeding and genetics research on these crops. Their efforts have
yielded cucumber, carrot and onion cultivars and breeding stocks that
are widely used by the U.S. vegetable industry (i.e., growers,
processors, and seed companies). These varieties account for over half
of the farm yield produced by these crops today. All U.S. seed
companies rely upon this program for developing new varieties, because
ARS programs seek to introduce economically important traits (e.g.,
pest resistances and health-enhancing characteristics) not available in
commercial varieties using long-term high risk research efforts. The
U.S. vegetable seed industry develops new varieties of cucumbers,
carrots, onions, and garlic and over 20 other vegetables used by
thousands of vegetable growers. Their innovations meet long-term needs
and bring innovations in these crops for the United States and export
markets, for which the United States has successfully competed.
    ARS scientists have developed genetic resistance for many major
vegetable diseases that are perhaps the most important threat to
sustained production of a marketable crop for all vegetables. Genetic
resistance assures sustainable crop production for growers and reduces
pesticide residues in our food and environment. Value of this genetic
resistance developed by the vegetable crops unit is estimated at $670
million per year in increased crop production, not to mention
environmental benefits due to reduction in pesticide use. New research
has resulted in cucumbers with improved disease resistance, pickling
quality and suitability for machine harvesting. New sources of genetic
resistance to viral and fungal diseases, tolerance to environmental
stresses, and higher yield have recently been identified along with
molecular tools to expedite delivery of elite cucumber lines to U.S.
growers. A new genetic resistance to nematode attack was found to
almost completely protect the carrot crop from one major nematode.
Carrots provide approximately 30 percent of the U.S. dietary vitamin A.
New carrots have been developed with tripled nutritional value, and
nutrient-rich cucumbers have been developed with increased levels of
provitamin A. The genetic bases of onion flavor, as well as compounds
that enhance cardiovascular health and have anti-carcinogenic effects
have been determined and are being used to develop onions that are more
appealing and healthier for consumers.
    There are still serious vegetable production problems which need
attention. For example, losses of cucumbers, onions, and carrots in the
field due to attack by pathogens and pests remains high, nutritional
quality needs to be significantly improved and U.S. production value
and export markets should be enhanced. Genetic improvement of all the
attributes of these valuable crops are at hand through the unique USDA
lines and populations (i.e., germplasm) that are available and the new
biotechnological methodologies that are being developed by the group.
The achievement of these goals will involve the utilization of a wide
range of biological diversity available in the germplasm collections
for these crops. Classical plant breeding methods combined with bio-
technological tools such as DNA markers, genetic maps, and genome
sequences to expedite traditional cucumber, carrot and onion breeding
and increase its efficiency. With this, new high-value vegetable
products based upon genetic improvements developed by our USDA
laboratories can offer vegetable processors and growers expanded
economic opportunities for United States and export markets.
    quality and utilization of agricultural products and food safety
    The USDA/ARS maintains a food science research unit that our
industry looks to for new scientific information on the safety of our
products and development of new processing technologies related to
fermented and acidified vegetables. ARS scientists have consistently
provided innovative solutions to processing challenges which have
helped this industry remain competitive in the current global trade
environment. Major accomplishments include: pasteurization treatments
currently used for most acidified vegetables; the preservation
technology used for manufacturing shelf stable sweet pickles; and
fermentation technology (purging) used to prevent the formation of air
pockets within fermented pickles. These innovations have improved
processing and product quality and yielded significant savings
industry-wide. Furthermore, with the advent of the Food Safety
Modernization Act, commercial producers of acidified foods must meet
critical limits established for the microbial safety. Microbial studies
to meet safety requirements may be a significant financial burden to
industry. USDA/ARS is uniquely positioned to generate data that will
aid industry and FDA with determining safe processing parameters for
these products. The pickling industry in the United States relies on
USDA/ARS for the development of new and improved technologies that will
increase the economic value of processed vegetable products, provide
consumers with safe, high quality, healthful vegetable products, and
reduce the environmental impact of industrial activities. Additional
funding is needed to support important new research initiatives.
    First, nearly all retail pickled vegetables are pasteurized for
safety and shelf stability. Current steam and water bath pasteurizers
rely on technology from the 1940s and 50s. Promising new technologies
include continuous flow microwave technology and ``hot-fill-and-hold''
pasteurization. The objective is to reduce water use and significantly
improve energy efficiency with new, scientifically validated thermal
processing technology.
    Second, additional research that offers significant economic and
environmental advantages to the U.S. industry includes the reduction or
replacement of salt in commercial vegetable fermentations. Calcium
substitution of salt in commercial vegetable fermentations has the
potential to eliminate salt disposal problems and create opportunities
to manufacture calcium enriched, reduced sodium, healthier vegetable
products. Reducing environmental impact and production costs for the
manufacture of healthier products is essential to the sustainability of
the U.S. industry.
    Third, there is a growing body of research indicating that certain
beneficial microorganisms (probiotics) improve human health by
remaining in the intestinal tract after they are consumed. New
processing technology is needed to develop high value probiotic
vegetable products, opening new markets in the United States and
improving the health benefits derived from consumption of fermented and
acidified vegetables.
                            specialty crops
    The USDA/ARS has research programs that focus on the development of
innovative engineering technologies for rapid, nondestructive
measurement and grading of tree fruits and pickling vegetables to
enhance product quality and marketability and achieve labor cost
savings. ARS scientists apply state-of-the-art optical and computer
technologies, coupled with advanced mathematical, statistical and
pattern recognition methods, for automatic, intelligent classification
of fruits and pickling vegetables based on important quality
attributes. In recent years, the research program has developed several
imaging- and spectroscopic-based sensors and sensing technologies for
rapid detection of the texture, flavor, and quality defects of pickling
vegetables and fruits. USDA/ARS is nationally and internationally
recognized for its pioneering research and development and technology
transfer effort in spectral imaging-based inspection technology, which
has found wide applications in food quality and safety inspection.
Currently, ARS researchers are developing a spectral imaging-based
common inspection platform and other related sensing technologies with
substantially improved capabilities for quality evaluation and grading
of pickling vegetables and fruits at the processing facility and in the
field. The outcome of the research would greatly improve the current
pickle inspection technology, reduce labor cost and enhance final
product quality.
    Quality inspection and assurance of pickling vegetables and other
horticultural products is critical to growers and processors and
ultimately consumers. Moreover, labor required for harvest and
postharvest handling and processing operations represents a significant
portion of the total production cost for specialty crops. While
automatic systems are currently used in many vegetable and fruit
processing facilities, they are only for inspecting product surface
quality characteristics. Research is thus needed for developing more
efficient and effective automated inspection technologies for internal
quality assessment and grading of harvested pickling vegetables and
other horticultural products. New and/or improved inspection
technologies can help growers and processors assess, inspect and grade
pickling vegetables and horticultural products rapidly and accurately
for internal and external quality characteristics so that they can be
directed to, or removed from, appropriate processing or marketing
avenues. This will minimize postharvest losses of food that has already
been produced, ensure high quality, consistent final product and end-
user satisfaction, and reduce production cost. Expanded effort should
also be directed at developing cost-effective, readily deployable
sensors and sensing systems for real-time monitoring and measurement of
the maturity and health or condition of pickling vegetables and fruits
during growth and harvest, so that optimal production and harvest
management schemes can be implemented to achieve cost savings and
enhance product postharvest quality.
                       emerging disease of crops
    USDA/ARS vegetable research addresses national problems confronting
the vegetable industry of the southeastern United States. The mission
of the laboratory is to develop disease and pest resistant vegetables,
and also new, reliable, environmentally sound disease and pest
management practices that do not rely on conventional pesticides.
Programs currently address 14 crops, including those in the cabbage,
cucumber, and pepper families, all of major importance to the pickling
industry. USDA/ARS research is recognized worldwide, and its
accomplishments include over 150 new vegetable varieties and many
improved management practices.
    Expansion of this program would directly benefit the southeastern
vegetable industry. Vegetable growers depend heavily on synthetic
pesticides to control diseases and pests. Cancellations of many
effective pesticides directly impacts future vegetable crop production.
Without the use of certain pesticides, producers will experience crop
failures unless other effective, non-pesticide control methods are
readily identified. In this context, the research on improved, more
efficient and environmentally compatible vegetable production practices
and genetically resistant varieties continues to be absolutely
essential. Research like this can help provide U.S. growers with a
competitive edge they must have to sustain and keep their industry
vibrant, allowing it to expand in the face of increasing foreign
competition. Current cucumber varieties are highly susceptible to a new
strain of the downy mildew pathogen; this new strain has caused
considerable damage to commercial cucumber production in some South
Atlantic and Midwestern States during the past 5 years, and a new plant
pathologist position could address this critical situation.
                      funding needs for the future
    It remains critical that funding continues the forward momentum in
pickled vegetable research that the United States now enjoys and to
increase funding levels as warranted by planned expansion of research
projects to maintain U.S. competitiveness. We also understand that
discretionary funds are now used to meet the rising fixed costs
associated with each location. Additional funding is needed for genetic
improvement of crops essential to the pickled vegetable industry, and
for development of environmentally sensitive technologies for improved
safety and value to the consumer of our products. The fermented and
acidified vegetable industry is receptive to capital investment in
order to remain competitive, but only if that investment is
economically justified. The research needed to justify such capital
investment involves both short-term (6-24 months) and long-term (2-10
years or longer) commitments. The diverse array of companies making up
our industry assumes responsibility for short-term research, but the
expense and risk are too great for individual companies to commit to
the long-term research needed to insure future competitiveness.
Donations of supplies and processing equipment from processors and
affiliated industries have continued for many years.
    It is important to note that fiscal year 2013 continuing resolution
funding for USDA/ARS laboratories totaled $11,005,000. However, funding
for all cucurbits equaled just $3,939,000 with only $1,718,000 directed
toward pickled vegetable research. For fiscal year 2014, PPI is
requesting an additional $2,050,000 in program enhancements that will
provide needed research for pickled vegetables.
                       emerging disease of crops
    There is a critical need to establish and fund a plant pathology
position to address cucumber diseases, especially the disease caused by
a new strain of the downy mildew pathogen responsible for recent
extensive damage to cucumber production in South Atlantic and
Midwestern States. The pathologist is needed to characterize pathogen
strains and to develop new management approaches, as well as resistant
cucumber varieties, to combat the disease. Ultimately, this proposed
plant pathologist would accomplish research that results in effective
protection of cucumbers from disease without the use of conventional
pesticides.

------------------------------------------------------------------------
                                                    Amount
------------------------------------------------------------------------
Fiscal year:
    2012/2013 continuing resolution.  $456,100 (pickled vegetables)
    2014 (budget)...................  To be determined
    2014 Additional Request (Plant    $500,000
     Pathologist and support).
------------------------------------------------------------------------

    quality and utilization of agricultural products and food safety
    The current funding includes research and development for a variety
of vegetable products, including fermented and acidified vegetables.
For new research initiatives to reduce energy and water use, reduce
environmental impact from commercial fermentations, and develop new
health-promoting food (probiotic) technology, we request additional
support of $500,000. This will provide support for Post-Doctoral or
Pre-Doctoral research associates along with necessary equipment and
supplies.

------------------------------------------------------------------------
                                                    Amount
------------------------------------------------------------------------
Fiscal year:
    2012/2013 continuing resolution.  $647,800 (pickled vegetables)
    2014 (budget)...................  To be determined
    2014 Additional Request (Post-    500,000
     doctoral and Pre-doctoral
     Research Associate and support)
------------------------------------------------------------------------

                         applied crop genomics
    Emerging and persisting diseases, such as downy mildew, southern
root knot nematode, and angular leaf spot of cucumber, threaten
production of the crop in all production areas. We request an
additional $500,000 to fully fund the scientists and support staff,
including graduate students and post-doctorates for identifying and
researching new sources of genetic resistance to emerging diseases.

------------------------------------------------------------------------
                                                    Amount
------------------------------------------------------------------------
Fiscal year:
    2012/2013 continuing resolution.  $456,600 (pickled vegetables)
    2014 (budget)...................  To be determined
    2014 Additional Request (Post-    500,000
     doctoral and Pre-doctoral
     Research Associate and support)
------------------------------------------------------------------------

                            specialty crops
    The current funding is far short of the level needed to carry out
research on inspection, sorting and grading of pickling cucumbers and
other vegetable crops to assure the processing and quality of pickled
products. An increase of $550,000 in the current base funding level
would be needed to fund the research engineer position.

------------------------------------------------------------------------
                                                    Amount
------------------------------------------------------------------------
Fiscal year:
    2012/2013 continuing resolution.  $157,500 (pickled vegetables)
    2014 (Proposed budget)..........  To be determined
    2014 Additional Request           550,000
     (Research Engineer and support).
------------------------------------------------------------------------

    Thank you for your consideration and expression of support for the
USDA/ARS.
                                 ______

 Prepared Statement of the Rural Housing Development Corporation (RHDC)
    On behalf of Rural Housing Development Corporation (RHDC), I would
like to thank the subcommittee for the opportunity to submit testimony
on fiscal year 2014 appropriations for two of Department of Agriculture
(USDA) Rural Housing Programs.
    Since 2010, USDA Rural Housing programs have been cut by nearly
$400 million. Further cuts to Rural Housing programs proposed by the
administration's budget request are unwise and unwarranted. As such, I
strongly urge this subcommittee to fund USDA Rural Housing programs at
the higher of the President's fiscal year 2014 budget request or fiscal
year 2013 levels, prior to sequestration, including: (1) $900 million
for Section 502 Direct Homeownership Loans; and (2) $30 million for
Section 523 Mutual Self-Help Housing Program.
    RHDC is a nonprofit affordable housing organization in Utah. Since
1998, RHDC has promoted affordable housing opportunities to low-income
families living in Central Utah. Over 300 single family homes have been
built through USDA's Mutual Self-Help Housing program using the 502
loan in Central Utah and over 1,300 homes have been built across the
State of Utah.
               about the mutual self-help housing program
    The Mutual Self-Help Housing program takes the rural tradition of
barn-raising and puts it to use for families who, after working all day
and all week, spend their nights and weekends building their own home.
It is a model of how low-income families help themselves through sweat
equity. Without the opportunity, many of these families would never own
their own home. Consider the West family in Utah, a low-income family
of five (three children ages 5, 3 and 1), who have lived in a two-room
log cabin built in the 1880's. The cabin measures 21 by 26 feet, which
is very similar to a two-car garage. In their own words:

``While we enjoy the `coziness' of our home, it does present some
challenges. The cabin is not well insulated. We can feel the wind
through the single-paned windows and cracks throughout the house. Big
rainstorms cause leaks. Other than weather problems, we are not sure
which we have the most of living in the walls of our home: bees,
spiders or mice. Our home is on a cinderblock basement built into a
dike constructed to control the flooding of the river in the 1980's.
Because of our close proximity to the river and lake we have had to
face additional challenges. This year the ground water is so high it
fills the septic tank causing the sewer to back up. The high water flow
in the river also caused the water to seep through the cracks in our
basement floor. At the highest point we had almost 2 inches of standing
water. Even though the water level has recently dropped, we are left
with the challenge of the profuse growth of mold. Every summer we have
a mold problem in the basement. However, this year with the flooding,
the mold is 100 percent worse. This makes us concerned for our family's
health.
``Unfortunately for us, moving is not an option at this time. For these
reasons we are telling you our story--not to complain, but to ask you
for the much needed financial assistance in purchasing a new healthy
home for our family under the Self-Help Housing Program. We cannot
better our situation without your help.''

    Families like the West family have found refuge in building their
own home and for that reason, take great care in the homes they have a
major stake in. Of the 1,300+ homes built in Utah, there is a
foreclosure rate of around 1 percent. The 502 Direct Loans used to
finance these homes are paid back with interest and are perpetuated for
future families.
                            economic impact
    The economic impact in Utah has been substantial; it is anticipated
that during 2012 and 2013, the Self-Help Housing program would bring
Utah's economy approximately $40,335,444. The program also creates
employment opportunities in rural areas; each year in Utah, over 400
jobs are created for subcontractors, suppliers, realtors, land
developers, etc.
    The section 502 program provides loans to low- and very-low income
families at a low cost to the Government, and as mentioned, has a very
low foreclosure rate. Sixty percent of the families borrowing direct
loans from USDA have incomes at or below 60 percent of the area median
income.
    Some contend that the 502 Guarantee Loan program can assist
families who are now receiving direct loans. There is ample evidence to
the contrary; including an Economic Research Service report indicating
that the guarantee loan program does not work as well in smaller, more
isolated communities. Nor does the Guarantee Loan product have a track
record of serving households with incomes at 60 percent AMI or less,
while the direct loan program does. Only the Section 502 Direct Loan
program can provide homeownership opportunities for many of the current
work force in rural areas, who struggle to find affordable rental
housing that is both safe and adequate for their family size. The loss
of this program will also destabilize rural workers, negatively
impacting rural employers.
    I ask that the subcommittee look at ways to fund USDA Rural Housing
programs at the higher of the President's fiscal year 2014 budget
request or fiscal year 2013 levels, prior to sequestration, including:
(1) $900 million for Section 502 Direct Homeownership Loans; and (2)
$30 million for Section 523 Mutual Self-Help Housing Program.
    I appreciate your consideration of this request.

    [This statement was submitted by Brad Bishop, Executive Director,
Rural Housing Development Corporation.]
                                 ______

           Prepared Statement of Self-Help Enterprises (SHE)
    Self-Help Enterprises is a regional nonprofit housing and community
development organization serving eight expansive counties in
California's agricultural San Joaquin Valley. Founded in 1965, Self-
Help Enterprises has developed nearly 6,000 Self-Help Homes and 1,200
units of multifamily rental housing for farmworkers and other low-wage
earners. In partnership with local governments, SHE has rehabilitated
or replaced 6,000 homes, assisted 1,500 first-time homebuyers, and
provided planning and technical assistance to dozens of small,
unincorporated communities to help meet the needs for safe drinking
water and wastewater treatment.
    Since 2010, U.S. Department of Agriculture (USDA) Rural Housing
programs have been cut by nearly $400 million. Further cuts to Rural
Housing programs proposed by the administration's budget request are
unwise and unwarranted. USDA's Rural Housing Service programs continue
to be the most effective, and in many cases, the only, Federal
resources to address the critical housing needs of rural America. As
such, Self-Help Enterprises strongly supports an appropriation to fund
USDA Rural Housing programs at the higher of the President's fiscal
year 2014 budget request or fiscal year 2013 levels, prior to
sequestration, including: (1) $900 million for Section 502 Direct
Homeownership Loans; (2) $28 million for Section 504 Very-Low Income
Rural Housing Repair Loans; (3) $29.5 million for Section 504 Very-Low
Income Rural Housing Repair Grants; (4) $26 million for Section 514
Farm Labor Housing Program Loans; (5) $9 million for Section 516 Farm
Labor Housing Program Grants; (6) $1.015 billion for Section 521 Multi-
Family Rental Housing Rental Assistance Program; (7) $30 million for
Section 523 Self-Help Housing Program; (8) $3.6 million for Section 533
Housing Preservation Grants Program; (9) $150 million for Section 538
Guaranteed Multi-Family Housing Loans; (10) $32.6 million for the
Multi-Family Housing Preservation and Revitalization Program; and (11)
$6.12 million for the Rural Community Development Initiative. We
recommend that the (12) Section 515 Rural Rental Housing Program be
funded at fiscal year 2012 levels of $64.5 million.
              section 523 mutual self-help housing program
    No other program combines the unique features which make the Self-
Help program a success. The section 523 grants provide support to Self-
Help sponsors who provide technical assistance, recruiting, training,
and supervising to families to earn ``sweat equity.'' This unique
construction method also promotes strong communities by building close
bonds among future neighbors. (PART review, www.expectmore.gov)
    Created by the Housing and Community Development Act of 1968, the
USDA Rural Development Section 523 Mutual Self-Help Housing Program is
one of the best and most successful avenues to sustainable
homeownership for low-income rural Americans.
    With its roots in the tradition of barn raising, Mutual Self-Help
Housing gives hardworking rural families the opportunity to work
together to achieve the dream of homeownership which individually could
not be attained. Mutual Self-Help Housing programs, which still retain
a style reminiscent of pioneer barn raisings, provide the
organizational structure that allows low-income families to build the
homes they so desperately want and need. This includes the capital,
training and supervision, coordination, accounting, and myriad of other
technical skills necessary to any successful housing development
effort.
    The concept is straightforward: groups of 6-12 low-income families
join together to pool their labor to build each other's homes, in the
process building a neighborhood for their community, for their
children, and for themselves. The future homeowners commit to
completing 65 percent of the work necessary to build the homes. At
Self-Help Enterprises, these families pour the concrete, frame the
walls, and install electrical wiring, heating ducts, roof framing, as
well as all finish, tile, paint, and trim. Reducing the labor cost of
the home reduces the total cost of the home, enabling lower income
households to become homeowners and earn equity at the same time.
    The economic benefits extend far beyond the individual homeowners.
As contractors are hired to turn raw land into subdivisions, local
vendors provide building materials, and subcontractors complete
technical work such as plumbing. Local governments receive building
permit fees, and in the long term, property taxes from proud
homeowners. Rural communities, often plagued with an abundance of
substandard housing, gain an expanding stock of good housing and the
stability that comes to a community of homeowners.
    In the San Joaquin Valley each year, as many as 120 hardworking
families each commit 1,400 hours, 40 hours per week, week after week,
through the heat of summer and the cold of winter, sharing the labor
necessary to build homes for their neighbors, their children and
themselves.
    It is popular today to talk about the importance for homebuyers to
have ``skin in the game'' as protection against failed mortgages.
Mutual Self-Help Housing families have more than skin in the game. They
have skin, sweat, and occasionally a bit of blood as they invest
themselves in the home of their dreams. And does it work? With 47 years
of experience behind us, those of us at Self-Help Enterprises say
``YES'' unequivocally. Self-Help homebuilders achieve remarkable
stability. Despite being the lowest income of the section 502
borrowers, our self-help homebuilders have lower delinquency rates and
very low foreclosure rates.
    No other path to homeownership for low-income families has proven
to be as successful.
                   section 502 direct lending program
    The Section 502 Direct Loan program is an equally important element
of Mutual Self-Help Housing, affording well-underwritten construction-
to-permanent mortgages that finance the home from the start of
construction to the final mortgage payment. But the reach of this model
mortgage program goes far beyond self-help households.
    Since the Housing Act of 1961, the USDA 502 Direct Loan Program has
been a cornerstone of homeownership opportunity in rural America, with
over 2 million homeowners seizing the opportunity for an affordable
mortgage which would enable them to be homeowners in the town where
they live and work. For a surprisingly low Federal budget cost, the 502
Direct mortgage is a well underwritten, affordable, no gimmicks
financing for rural families who want to invest in homes and in their
communities.
    No other Federal home ownership program can match the profile of
the families served by the section 502 direct loan program. The average
income for families receiving direct loans is $27,000. By law, 40
percent of families participating in the program have incomes that do
not exceed 50 percent of the median income. For the past 2 years at
Self-Help Enterprises, fully 60 percent of the borrowers have incomes
below 50 percent of median.
    Despite serving families with limited economic means, the section
502 direct loan program is the most cost effective affordable housing
program in the Federal Government. In fiscal year 2011, the total per
unit cost for a homeownership loan to a low income family was about
$3,000. There are a number of reasons for this overall low cost to the
Government. First, a low interest rate environment reduces the cost of
borrowing. Less well known is a longstanding requirement to recapture
subsidy when a house financed under section 502 is sold. Essentially a
family and the Government share in the appreciation on a home, taking
into account how long a family has lived in the house. Recapture
provides a substantial return to the Government.
    Although the Section 502 Direct Loan Program lends to families with
limited incomes, the program has a record of success not only in
creating affordable homeownership opportunity, but also protecting the
Federal investment. For example, in 2010, USDA Rural Development in
California foreclosed on a mere 57 mortgages out of a loan portfolio of
nearly 10,000 loans. This is a foreclosure rate of just over 0.5
percent and stands in stark contrast to what is happening in the
conventional market in California.
    It has been stated that the section 502 guarantee program is an
alternative for families eligible for direct loans. It is not. The
average annual income for families receiving the guarantee is $48,000.
The majority of the loan guarantees go to households with incomes at or
above 100 percent of the median, and only about 5 percent of families
receiving guarantees make between 60-70 percent of the median. With the
inevitable end of the current low interest rate environment, interest
rates on 502 guarantee loans will once again rise, and the number of
qualifying low income borrowers will drop, if not disappear altogether.
                                summary
    USDA's Rural Housing Service and the resources it delivers
represent vital resources to the people and the economies of rural
American communities so desperate for jobs. As the recession seems
finally to be fading in some areas of the country, its grip on rural
America is still devastatingly strong. This is no time to reduce the
investment so important to the recovery of rural America.

    [This statement was submitted by Peter Carey, CEO, Self-Help
Enterprises.]
                                 ______

   Prepared Statement of the Self-Help Housing Corporation of Hawaii
    Since 2010, U.S. Department of Agriculture (USDA) Rural Housing
programs have been cut by nearly $400 million. Further cuts to Rural
Housing programs proposed by the administration's budget request are
unwise and unwarranted. As such, the Self-Help Housing Corporation of
Hawaii is requesting that this subcommittee fund USDA Rural Housing
programs at the higher of the President's fiscal year 2014 budget
request or fiscal year 2013 levels, prior to sequestration, including:
(1) $900 million for Section 502 Direct Homeownership Loans; and (2)
$30 million for Section 523 Mutual Self-Help Housing Program.
    With the average sales price for a single-family house in Hawaii
over $600,000, there would be no affordable homeownership opportunities
in Hawaii without the USDA Rural Housing Programs. Because of the
extreme gap of income levels for low-income families in Hawaii and the
average housing prices, even the ``workforce'' of Hawaii cannot afford
homeownership without subsidies offered by these programs.
    Through the recent development of its 72-lot subdivision in a
rural, low-income neighborhood, SHHCH is able to offer homeownership
opportunities to 72 very-low and low-income families who will build
their own houses through the Section 523 Mutual Self-Help Housing
program. In turn, this will create more than 200 jobs through the
construction of infrastructure, materials and equipment from building
supply houses, and services from title companies, appraisers, insurance
companies, lenders, etc. With the Federal funding of these programs
acting as a catalyst, SHHCH has been able to leverage another $11
million in private financing to undertake this development.
Additionally, very-low and low-income families, who presently live in
substandard and severely crowded housing, not only improve their
housing situations, but also gain equity, thereby continuing to improve
their lives.
    The Self-Help Housing Corporation has built 591 Self-Help Housing
units throughout Hawaii for our State's firemen, policemen, teacher's
aides, hospital workers, hotel workers, laborers, and those considered
the ``workforce'' of Hawaii.
    Currently, in a remote rural area of Maui, SHHCH is assisting
Native Hawaiian low-income families to build three- and four-bedroom
houses through the Section 523 Mutual Self-Help Housing and Section 502
Direct Loan Programs. This is the first affordable housing program in
Hana in 35 years. Some of these Self-Help Housing families have no
electricity or potable water in their existing houses. Without these
programs, these families--and thousands of rural, low-income families
across the country--would continue to live in severely substandard
conditions, similar to conditions I saw as a Peace Corps volunteer in
third-world countries!
    In the past 3 years, more than 3,500 low income families in more
than 37 States have built their own houses through the Section 523
Mutual Self-Help Housing program, working in tandem with the Section
502 Direct Loan program. Each Section 502 Direct Loan costs on average
$7,200 over the entire 33 year amortization period. These programs are
less expensive than rental subsidy programs.
    Through these programs, families can improve their living
situation, gain equity, and learn invaluable skills in leadership, team
work, and building skills. In addition, the community benefits with a
broadening of the tax base, an enhancement of property values, and an
establishment of stable neighborhoods with well maintained houses.
Every 100 homes built in this program results in 324 jobs, $21.1
million infused in the local economy, and $2.2 million paid in for tax
revenues. These significant housing programs are assisting to rebuild
the economy in rural areas.
    I urge you, as at the leaders of our country, to consider funding
such valuable community development programs at the higher of the
President's fiscal year 2014 budget request or fiscal year 2013 levels,
prior to sequestration, including: (1) $900 million for Section 502
Direct Homeownership Loans; and (2) $30 million for Section 523 Mutual
Self-Help Housing Program.

    [This statement was submitted by Claudia Shay, Executive Director,
Self-Help Housing Corporation of Hawaii.]
                                 ______

  Prepared Statement of the Society for Women's Health Research (SWHR)
    SWHR is pleased to submit written testimony to urge the committee
to prioritize and provide an increase to the fiscal year 2014 budget
authority (BA) appropriations (non-user fees) for the Food and Drug
Administration (FDA) of $2.6 billion, and allocate $7 million for the
Office of Women's Health for fiscal year 2014. This appropriation
follows the President's request and is in line with the Alliance for a
Stronger FDA, of which SWHR is represented on the Board of Directors.
These recommended allocations will allow the agency to implement
critical improvements in infrastructure, address resource shortages,
and support needed investment into the Office of Women's Health (OWH),
the focal point on women's health within the Agency.
    While SWHR recognizes the need for responsible discretionary
spending, proper and sustained funding of the FDA must remain a public
priority. Fiscal year 2014 appropriations must reflect the FDA's
increased responsibilities and workload mandated by Congress. Americans
rely on the FDA every day, from promoting wellness and meeting
healthcare needs to ensuring the safety of our food and keeping drugs
safe and effective. In total, 25 percent of every consumer dollar spent
in America is on products regulated by the FDA.
    The FDA must meet the demands of American consumers and patients
that expects proactive scientific and research leadership while
assuring the safety and effectiveness of food, drugs and cosmetics.
These demands result in the majority of FDA's budget, over 80 percent,
already being allocated toward the salary of its scientists and staff;
thus making needed investments in infrastructure, technology, and human
collateral all but impossible. Each year brings new congressional
mandates in addition to the increased globalization and complexity of
our scientific research world. These challenges cannot be met without
additional resources. Appropriate budgetary allocation must be provided
to allow FDA to react acting in a proactive manner against emerging or
known threats to food and drug security.
    SWHR recognizes that Congress is focused on reducing our Federal
deficit; however, proper and sustained investment in the FDA is
important to the health, economic and national security of the Nation.
As the thought leader in research on biological differences in disease
SWHR is dedicated to transforming women's health through science,
advocacy, and education and believes that sustained funding for the FDA
and its regulatory responsibilities is absolutely essential if the
United States is to meet the needs of its citizens, especially women.
    In the past two decades, scientists have uncovered significant
biological and physiological differences between men and women.
Physiological differences and hormonal fluctuations may play a role in
the rate of drug absorption, distribution, metabolism, elimination as
well as ultimate effectiveness of response in females as opposed to
males. However, information about the ways drugs may differ in various
populations (e.g., women may require a lower dosage because of
different rates of absorption or metabolism) are often unexplored, or
female enrollment in studies is too low to adequately power
statistically significant results. America's biomedical development
process, while continuing to advance in delivering new and better
targeted medications to combat disease, does not routinely analyze and
reported sex differences. Though, recently the FDA did take the
appropriate steps to inform the public about important sex differences
finding in the dosing for sleep medications, however, FDA's requirement
that the data acquired during research of a new drug or device's safety
and efficacy be reported and analyzed as a function of sex is not
universally enforced.
    Under section 907 of the Food and Drug Administration Safety and
Innovation Act of 2012 (FDASIA) the FDA now must prepare a
congressional report and publish on the FDA website on the inclusion of
demographic subgroups in clinical trials and data analysis in drugs,
biologic and device applications submitted to the agency. The official
response to this mandate is being coordinated by the Office of Women's
Health (OWH) and the Office of Minority Health (OMH) and the FDA has
established a Clinical Trials Data Workgroup to compile and share
inclusion data from across the FDA. SWHR believes this important
report, the publication on the website and internal FDA actions will
help to rapidly transform our medical knowledge.
    Sex differences data discovered from clinical trials can be
presented to the medical community and to patients through education,
drug labeling and packaging inserts, and other forms of alerts directed
to key audiences. The FDA must assure accurate, sex-specific drug and
device labeling to better serve male and female patients, as well as to
ensure that appropriate data analysis of post-market surveillance
reporting for these differences is placed in the hands of physicians
and ultimately the patient.
    The FDA must have the information technology to meet the daily
demands of increased scientific complexity, globalization, the American
public and Congress in order to guard the safety, efficacy, and
security of human drugs, biological products, and medical devices. It
was only 6 years ago in a Science Board Report review of the FDA,
requested by then Commissioner von Eschenbach, that it was found that
FDA's information technology (IT) systems were inefficient and
incapable of handling the current demands placed on the Agency (2007).
We do not want the FDA to fall behind again. Through advocacy efforts
and appropriations increases, tremendous advances have been made
throughout the Agency to modernize in the 6 years since that Science
Board's report; however, it still remains a challenge for the Agency to
access and maintain the information technology needed to meet the
growing expectations from the American public and to fulfill its
mission. FDA IT systems and infrastructure must be given the dedicated
resources needed from appropriated dollars and user fees to meet the
complex global and scientific world in which it operates.
                      fda office of women's health
    OWH like the Agency that houses it, requires steady and sustained
investment to remain a key resource in advancing regulatory science and
reporting of sex differences. OWH's programs endeavor to ensure that
sex and gender differences in the efficacy of drugs (such as metabolism
rates), devices (sizes and functionality) and diagnostics are taken
into consideration in reviews and approvals. OWH seeks to correct sex
and gender disparities within FDA jurisdiction and monitors women's
health priorities, providing both leadership and an integrated approach
to problem solving across the FDA.
    OWH provides women with invaluable tools for their health. Each
year, OWH exhausts its budget as its consumer pamphlets are the most
requested of any documents at the Government printing facility in
Colorado. More than 8 million OWH pamphlets were distributed to women
across America, including target populations such as Hispanic
communities, seniors and low-income citizens on topics such as breast
cancer screening, diabetes, menopause hormone therapy, and medication
use during pregnancy. OWH also partnered with the Federal Citizen
Information Center and Usa.gov to conduct outreach promotions to
disseminate OWH consumer publications to targeted minority groups and
other special populations such as college students. During National
Women's Health Week, May 2012, FDA OWH collaborated with the nationally
syndicated Dear Abby advice column and the Federal Citizen Information
Center to distribute 1.7 million OWH publications and 35,000
publications downloads as a part of OWH's ``Healthy Women Action Kit''.
Such important outreach will be repeated this year. Further, OWH's
intramural research program funded over 21 new and 17 continuing
research studies conducted by FDA scientists in 2012 and 14 out of 22
concept papers have been selected in 2013.
    Women across our great Nation rely on the high quality, timely
information they need by OWH to make medical decisions on behalf of
themselves and their families. OWH's website is regarded as a vital
tool for consumers and physicians, providing free, downloadable fact
sheets on over 100 different illnesses, diseases, and health related
issues for women, as well as web trainings and online courses for
medical professionals. OWH has created medication charts on several
chronic diseases, listing all the medications that are prescribed and
available for each disease. These are vital functions that our
healthcare professionals and the public understand and utilize daily to
make healthcare decision and must be maintained.

    [This statement was submitted by Martha Nolan, Vice President,
Public Policy, Society for Women's Health Research.]
                                 ______

  Letter From the Southern Nevada Water Authority (SNWA) and Colorado
                   River Commission of Nevada (CRCN)
                                                    April 25, 2013.
Hon. Mark Pryor,
Chairman, Subcommittee on Agriculture, Rural Development, Food and Drug
        Administration, and Related Agencies,
Washington, DC.

RE: Continued Funding for the Colorado River Basin Salinity Control
        Program Under USDA's Environmental Quality Incentives Program
        (EQIP)
    Dear Senator Pryor: As Congress continues work on the fiscal year
2014 budget, we urge you to support as a priority the continued funding
for the Colorado River Basin Salinity Control Program (Program) under
USDA's Environmental Quality Incentives Program (EQIP). This includes
fiscal year 2014 Federal funding of $17 million to $18 million for
salinity-specific projects to prevent further degradation of the
quality of the Colorado River and increased downstream economic
damages.
    Salinity concentrations of Colorado River water are lower by more
than 100 milligrams per liter (mg/L) since the initiation of the
Program. The concentrations of salts in the Colorado River cause
approximately $376 million in quantified damages in the Lower Basin
each year and significantly more immeasurable damages. Modeling by the
U.S. Bureau of Reclamation (Reclamation) indicates that quantifiable
damages will rise to approximately $577 million per year by the year
2030 without the Program's continuation.
    Colorado River water salinity increases from about 50 mg/L at its
headwaters to more than 700 mg/L in the Lower Basin. High salt levels
in the water cause significant economic damages downstream. For
example, damages occur from:
  --increased use of imported water and cost of desalination and brine
        disposal for recycling water in the municipal sector;
  --a reduction in the useful life of water pipe systems, water
        heaters, faucets, garbage disposals, clothes washers, and
        dishwashers, and increased use of bottled water and water
        softeners in the household sector;
  --an increase in the cost of cooling operations and the cost of water
        softening, and a decrease in equipment service life in the
        commercial sector;
  --an increase in the use of water and the cost of water treatment,
        and an increase in sewer fees in the industrial sector;
  --a decrease in the life of treatment facilities and pipelines in the
        utility sector;
  --a reduction in the yield of salt sensitive crops and increased
        water use to meet the leaching requirements in the agricultural
        sector; and
  --difficulty in meeting wastewater discharge requirements to comply
        with National Pollutant Discharge Elimination System permit
        terms and conditions, and an increase in desalination and brine
        disposal costs due to accumulation of salts in groundwater
        basins.
    The Program reduces salinity by preventing salts from dissolving
and mixing with the Colorado River's flow. The Program benefits
Colorado River water users in both the Upper Basin through more
efficient water management, and the Lower Basin through reduced
salinity concentration of Colorado River water.
    To deal with salinity level concerns, the Colorado River Basin
Salinity Control Act (Act) was signed into law in 1974. The Act
provides for the Secretary of the Interior to develop a comprehensive
program for minimizing salt contributions to the Colorado River from
lands administered by the Bureau of Land Management. Geological
conditions and past management practices have led to human-induced and
accelerated erosion processes from which soil and rocks, heavily laden
with salt, are deposited in various stream beds or flood plains. As a
result, salts are dissolved into the Colorado River system causing
water quality problems for Lower Basin water users.
    In enacting the Act, Congress directed that the Program be
implemented in the most cost-effective way. The Program is currently
funded under EQIP through the Natural Resources Conservation Service
and under Reclamation's Basinwide Program. The Act has a cost-share
requirement with all basin states through the Basin States Program
(BSP). The BSP provides 30 percent of the total amount that is spent
each year by the combined EQIP and BSP effort. To foster interstate
cooperation and coordinate the basin states' efforts on salinity
control, the seven basin states formed the Colorado River Basin
Salinity Control Forum.
    The Program has proven to be a very cost-effective approach to help
mitigate increased salinity impacts on the Colorado River. Continued
Federal funding of this Basinwide Program is essential to the Southern
Nevada Water Authority and the Colorado River Commission of Nevada.
    Again, we urge you to support continued funding of $17 million to
$18 million for the Colorado River Basin Salinity Control Program under
USDA's Environmental Quality Incentives Program for fiscal year 2014 to
prevent further degradation of Colorado River water and increased Lower
Basin economic damages, and to provide improved drinking water quality
to nearly 40 million Americans.
            Sincerely,
                                   Patricia Mulroy,
                                           General Manager, Southern
                                               Nevada Water Authority.
                                   Jayne Harkins, P.E.,
                                            Executive Director,
                                               Colorado River
                                               Commission of Nevada.
                                 ______

 Prepared Statement of the Southern Nevada Water Authority (SNWA) and
               Colorado River Commission of Nevada (CRCN)
    Waters from the Colorado River are utilized by approximately 40
million people for municipal and industrial purposes, and also are used
to irrigate approximately 4 million acres in the United States. Natural
and man-induced salt loading of the Colorado River creates
environmental and economic damages. The U.S. Bureau of Reclamation
(Reclamation) has estimated the current quantifiable damages at about
$376 million per year. Modeling by Reclamation indicates that the
quantifiable damages will rise to approximately $577 million per year
by the year 2030 without continuation of the Colorado River Basin
Salinity Control Program (Program). Congress authorized the Program in
1974 to offset increased damages caused by continued development and
use of the waters of the Colorado River. The United States Department
of Agriculture (USDA) portion of the Program, as authorized by Congress
and funded and administered by the Natural Resources Conservation
Service (NRCS) under the Environmental Quality Incentives Program
(EQIP), is an essential part of the overall effort. A funding level of
$17 million to $18 million annually is required to prevent further
degradation of the quality of the Colorado River and increased
downstream economic damages.
    In enacting the Colorado River Basin Salinity Control Act in 1974,
Congress directed that the Program should be implemented in the most
cost-effective way. The Program is currently funded under EQIP through
NRCS and under Reclamation's Basinwide Program. The act requires that
the seven basin States (Basin States) cost-share 30 percent of the
overall effort (Basin Funds). Historically, recognizing that
agricultural on-farm improvements were some of the most cost-effective
strategies, Congress authorized a program for the USDA through
amendment of the act in 1984. With the enactment of the Federal
Agriculture Improvement and Reform Act of 1996, Congress directed that
the Program should continue to be implemented as part of the newly
created Environmental Quality Incentives Program. Since the enactment
of the Farm Security and Rural Investment Act in 2002, there have been,
for the first time in a number of years, opportunities to adequately
fund the Program within EQIP. In 2008, Congress passed the Food,
Conservation and Energy Act (FCEA), which addressed the cost-sharing
required from the Basin Funds. In so doing, the FCEA named the cost-
sharing requirement as the Basin States Program (BSP). The BSP will
provide 30 percent of the total amount that will be spent each year by
the combined EQIP and BSP effort.
    The Program, as set forth in the act, is to benefit Lower Basin
water users hundreds of miles downstream from the sources of salinity
in the Upper Basin. The salinity of Colorado River waters increases
from about 50 mg/L at its headwaters to more than 700 mg/L in the Lower
Basin. There are very significant economic damages caused downstream by
high salt levels in the water. EQIP is used to improve upstream
irrigation efficiencies, which in turn reduce leaching of salts to the
Colorado River. There also are local benefits from the Program in the
form of soil and environmental benefits, improved water efficiencies,
reduced fertilizer use, and lower labor costs. Local producers submit
cost-effective applications under EQIP in Colorado, Utah and Wyoming
and offer to cost-share in the acquisition of new irrigation equipment.
The mix of funding under EQIP, cost-share from the Basin States, and
efforts and cost-share brought forward by local producers has created a
most remarkable and successful partnership.
    After longstanding urgings from the Basin States and directives
from Congress, NRCS has recognized that this Program is different from
small watershed enhancement efforts common to EQIP. In the case of the
Colorado River salinity control initiative, the watershed to be
considered stretches more than 1,400 miles from the Colorado River's
headwaters in the Rocky Mountains to the terminus in the Gulf of
California in Mexico. Each year, the NRCS State Conservationists for
Colorado, Utah and Wyoming prepare a 3-year funding plan for the
salinity efforts under EQIP. The Colorado River Basin Salinity Control
Forum (Forum) supports this funding plan which recognizes the need for
$17.3 million in fiscal year 2014. This includes the funds needed for
both farm and technical assistance. State and local cost-sharing is
triggered by the Federal appropriation. The States and local producers
are able and anxious to participate in the Program. The Forum
appreciates the efforts of NRCS leadership and the support of this
subcommittee in implementing the Program.
    The Forum is composed of gubernatorial appointees from Arizona,
California, Colorado, Nevada, New Mexico, Utah and Wyoming, and is
charged with reviewing the Colorado River's water quality standards
every 3 years. In so doing, it adopts a Plan of Implementation
consistent with these standards. The level of appropriation requested
in this testimony is in keeping with the adopted Plan of
Implementation. If adequate funds are not appropriated, significant
damages from the higher salinity concentrations in the water will be
more widespread in the United States and Mexico.
    Concentration of salt in the Colorado River causes approximately
$376 million in quantified damages and significantly more in
immeasurable damages in the United States and results in poor water
quality for United States users. Damages occur from:
  --a reduction in the yield of salt sensitive crops and increased
        water use to meet the leaching requirements in the agricultural
        sector;
  --increased use of imported water and cost of desalination and brine
        disposal for recycling water in the municipal sector;
  --a reduction in the useful life of water pipe systems, water
        heaters, faucets, garbage disposals, clothes washers, and
        dishwashers, and increased use of bottled water and water
        softeners in the household sector;
  --an increase in the cost of cooling operations and the cost of water
        softening, and a decrease in equipment service life in the
        commercial sector;
  --an increase in the use of water and the cost of water treatment,
        and an increase in sewer fees in the industrial sector;
  --a decrease in the life of treatment facilities and pipelines in the
        utility sector; and
  --difficulty in meeting wastewater discharge requirements to comply
        with National Pollutant Discharge Elimination System permit
        terms and conditions, and an increase in desalination and brine
        disposal costs due to accumulation of salts in groundwater
        basins.
    Over the years, NRCS personnel have developed a great working
relationship with farmers within the Colorado River basin. Maintaining
salinity control achieved by implementation of past practices requires
continuing education and technical assistance from NRCS personnel.
Additionally, technical assistance is required for planning and design
of future projects. Last, the continued funding for the monitoring and
evaluation of existing projects is essential to maintaining the
salinity reduction already achieved.
    In summary, implementation of salinity control practices through
EQIP has proven to be a very cost effective method of controlling the
salinity of the Colorado River and is an essential component to the
overall Colorado River Basin Salinity Control Program. Continuation of
EQIP with adequate funding levels for salinity control within this
program will assist in preventing further degradation of the water
quality of the Colorado River and significant increases in economic
damages to municipal, industrial and irrigation users. A modest
investment in source control pays huge dividends in improved drinking
water quality to nearly 40 million Americans.
    As Congress continues work on the fiscal year 2014 budget, we urge
you to support as a priority the continued funding for the Colorado
River Basin Salinity Control Program (Program) under USDA's
Environmental Quality Incentives Program (EQIP). This includes fiscal
year 2014 Federal funding of $17 million to $18 million for salinity-
specific projects to prevent further degradation of the quality of the
Colorado River and increased downstream economic damages.
    Salinity concentrations of Colorado River water are lower by more
than 100 milligrams per liter (mg/L) since the initiation of the
Program. The concentrations of salts in the Colorado River cause
approximately $376 million in quantified damages in the Lower Basin
each year and significantly more immeasurable damages. Modeling by the
U.S. Bureau of Reclamation (Reclamation) indicates that quantifiable
damages will rise to approximately $577 million per year by the year
2030 without the Program's continuation.
    Colorado River water salinity increases from about 50 mg/L at its
headwaters to more than 700 mg/L in the Lower Basin. High salt levels
in the water cause significant economic damages downstream. For
example, damages occur from:
  --increased use of imported water and cost of desalination and brine
        disposal for recycling water in the municipal sector;
  --a reduction in the useful life of water pipe systems, water
        heaters, faucets, garbage disposals, clothes washers, and
        dishwashers, and increased use of bottled water and water
        softeners in the household sector;
  --an increase in the cost of cooling operations and the cost of water
        softening, and a decrease in equipment service life in the
        commercial sector;
  --an increase in the use of water and the cost of water treatment,
        and an increase in sewer fees in the industrial sector;
  --a decrease in the life of treatment facilities and pipelines in the
        utility sector;
  --a reduction in the yield of salt sensitive crops and increased
        water use to meet the leaching requirements in the agricultural
        sector; and
  --difficulty in meeting wastewater discharge requirements to comply
        with National Pollutant Discharge Elimination System permit
        terms and conditions, and an increase in desalination and brine
        disposal costs due to accumulation of salts in groundwater
        basins.
    The Program reduces salinity by preventing salts from dissolving
and mixing with the Colorado River's flow. The Program benefits
Colorado River water users in both the Upper Basin through more
efficient water management, and the Lower Basin through reduced
salinity concentration of Colorado River water.
    To deal with salinity level concerns, the Colorado River Basin
Salinity Control Act was signed into law in 1974. The act provides for
the Secretary of the Interior to develop a comprehensive program for
minimizing salt contributions to the Colorado River from lands
administered by the Bureau of Land Management. Geological conditions
and past management practices have led to human-induced and accelerated
erosion processes from which soil and rocks, heavily laden with salt,
are deposited in various stream beds or flood plains. As a result,
salts are dissolved into the Colorado River system causing water
quality problems for Lower Basin water users.
    In enacting the act, Congress directed that the Program be
implemented in the most cost-effective way. The Program is currently
funded under EQIP through the Natural Resources Conservation Service
and under Reclamation's Basinwide Program. The act has a cost-share
requirement with all basin States through the Basin States Program
(BSP). The BSP provides 30 percent of the total amount that is spent
each year by the combined EQIP and BSP effort. To foster interstate
cooperation and coordinate the basin States' efforts on salinity
control, the seven basin States formed the Colorado River Basin
Salinity Control Forum.
    The Program has proven to be a very cost-effective approach to help
mitigate increased salinity impacts on the Colorado River. Continued
Federal funding of this Basinwide Program is essential to the Southern
Nevada Water Authority and the Colorado River Commission of Nevada.
    Again, we urge you to support continued funding of $17 million to
$18 million for the Colorado River Basin Salinity Control Program under
USDA's Environmental Quality Incentives Program for fiscal year 2014 to
prevent further degradation of Colorado River water and increased Lower
Basin economic damages, and to provide improved drinking water quality
to nearly 40 million Americans.

    [This statement was submitted by Patricia Mulroy, General Manager,
Southern Nevada Water Authority, and Jayne Harkins, P.E., Executive
Director, Colorado River Commission of Nevada.]
                                 ______

            Prepared Statement of The Wildlife Society (TWS)
    The Wildlife Society appreciates the opportunity to submit
testimony concerning the fiscal year 2014 budgets for the Animal and
Plant Health Inspection Service, National Institute of Food and
Agriculture, Natural Resources Conservation Service, and Farm Service
Agency. The Wildlife Society was founded in 1937 and is a nonprofit
scientific and educational association representing nearly 11,000
professional wildlife biologists and managers, dedicated to excellence
in wildlife stewardship through science and education. Our mission is
to represent and serve the professional community of scientists,
managers, educators, technicians, planners, and others who work
actively to study, manage, and conserve wildlife and habitats
worldwide. The Wildlife Society is committed to strengthening all
Federal programs that benefit wildlife and their habitats on
agricultural and other private land.
               animal and plant health inspection service
    Wildlife Services, a unit of APHIS, is responsible for controlling
wildlife damage to agriculture, aquaculture, forest, range, and other
natural resources, monitoring wildlife-borne diseases, and managing
wildlife at airports. Its activities are based on the principles of
wildlife management and integrated damage management, and are carried
out cooperatively with State fish and wildlife agencies. In fiscal year
2014, the budget proposal includes a proposal to implement a national
feral swine control program, which are a growing problem causing
billions of dollars in damages nationwide, working cooperatively with
the 38 States currently experiencing issues with feral swine. The
President's request is a $13 million increase from fiscal year 2013. In
recognition of the important work that Wildlife Services performs
regarding methods development and wildlife damage management, we
request that Congress support the President's request of $104 million
to Wildlife Services in fiscal year 2014.
    A key budget line in Wildlife Service's operations is Methods
Development, which funds the National Wildlife Research Center (NWRC).
Much of the newest research critical to State wildlife agencies is
being performed at NWRC. In order for State wildlife management
programs to be the most up-to-date, the work of the NWRC must continue.
We recommend funding Methods Development at $18 million in fiscal year
2013.
               national institute of food and agriculture
    The Renewable Resources Extension Act (RREA) provides an expanded,
comprehensive extension program for forest and rangeland renewable
resources. RREA funds, which are apportioned to State Extension
Services, effectively leverage cooperative partnerships at an average
of four to one, with a focus on private landowners. The need for RREA
educational programs is greater than ever because of continuing
fragmentation of land ownership, urbanization, diversity of landowners
needing assistance, and increasing societal concerns about land use and
increasing human impacts on natural resources. The Wildlife Society
recommends that the Renewable Resources Extension Act be funded at $10
million.
    The McIntire-Stennis Cooperative Forestry Program is essential to
the future of resource management on non-industrial private forestlands
while conserving natural resources, including fish and wildlife. As the
demand for forest products grows, privately held forests will be
increasingly needed to supplement supplies obtained from national
forest lands. However, commercial trees take many decades to produce.
In the absence of long-term research, such as that provided through
McIntire-Stennis, the Nation might not be able to meet future forest-
product needs as resources are harvested. We appreciate the $33 million
in fiscal year 2013 and urge that amount to be continued in fiscal year
2014, per the President's request.
                 natural resources conservation service
    Farm bill conservation programs are more important than ever, given
the huge backlog of qualified applicants, increased pressure on
farmland from biofuels development, urban sprawl, and the concurrent
declines in wildlife habitat and water quality. The Natural Resources
Conservation Service (NRCS), which administers many farm bill
conservation programs, is one of the primary Federal agencies ensuring
our public and private lands are made resilient to climate change. NRCS
does this through a variety of programs that are aimed at conserving
land, protecting water resources, and mitigating effects of climate
change.
    One key program within the overall NRCS discretionary budget is
Conservation Operations. The total fiscal year 2014 request for
Conservation Operations is $808 million, down from $833 million in
fiscal year 2013. Conservation Operation's Technical Assistance (TA)
subactivity provides funding for NRCS to support implementation of the
various farm bill programs. The fiscal year 2014 budget recommends $713
million in funding for TA, a decrease of $21 million from the fiscal
year 2013 level of $734 million. The Wildlife Society encourages you to
return funding for TA to the fiscal year 2011 level of $755 million.
    Overall, The Wildlife Society believes more attention to TA
delivery is needed. Changes in the 2008 farm bill greatly increased the
number of conservation programs NRCS was required to support through
delivery of TA. In addition, Congress expanded TA eligible activities
in the 2008 farm bill to include conservation planning, education and
outreach, assistance with design and implementation of conservation
practices, and related TA services that accelerate conservation program
delivery. TA will require funding levels from OMB that are more than
what was historically allocated if NRCS is to fulfill congressional
intent as expressed in the 2008 farm bill. Recently, Congress allowed
the use of mandatory funds for TA and, under current economic
conditions, The Wildlife Society believes that such funds must continue
to be utilized for effective delivery to occur. The Wildlife Society
urges Congress to authorize up to 30 percent of each mandatory
program's funding for Technical Service Provider provisions as mandated
by the 2008 farm bill and additional technical assistance to provide
resources necessary to help meet NRCS TA shortfalls. Similarly, we
strongly encourage Congress to explore new ways of funding technical
assistance in fiscal year 2014 and beyond.
    The Wildlife Society also supports the continuation of funding for
the Conservation Effects Assessment Project. Information gathered from
this effort will greatly assist in monitoring accomplishments and
identifying ways to further enhance effectiveness of NRCS programs.
    The Wildlife Society recommends farm bill conservation programs be
funded at levels mandated in the 2008 farm bill. Demand for these
programs continues to grow during this difficult economic climate at a
time when greater assistance is needed to address natural resource
challenges and conservation goals, including climate change, soil
quality deficiencies, declining pollinator health, disease and invasive
species, water quality and quantity issues, and degraded, fragmented
and lost habitat for fish and wildlife.
    We would like to specifically highlight the Wildlife Habitat
Incentive Program (WHIP), a voluntary program for landowners who want
to improve wildlife habitat on agricultural, non-industrial, and Indian
land. WHIP plays an important role in protecting and restoring
America's environment, and is doubly important because it actively
engages public participation in conservation. We urge Congress to fully
fund WHIP at $85 million.
    The Voluntary Public Access and Habitat Incentives Program was
first authorized in the Food, Conservation, and Energy Act of 2008
(2008 farm bill) for $50 million for fiscal year 2008-2012, and was
administered by the Farm Service Agency. This funding has expired, and
the fiscal year 2014 budget includes $5 million for the program within
the NRCS budget. The Wildlife Society commends the administration for
continuing to fund this program in fiscal year 2014. These funds will
assist State and Tribal governments with needed resources to provide
the public with additional outdoor opportunities. In addition,
increased public access opportunities will help create jobs and
stimulate rural economies. Continuity of program funding is critical to
these programs that rely on landowner interest across multiple years.
                      farm service administration
    The administration's request would increase funding for the
Conservation Reserve Program (CRP) to $2.16 billion in fiscal year
2014, up from $2.107 billion in fiscal year 2013. This increase assumes
a CRP enrollment of about 2.8 million acres in 2013. The Wildlife
Society applauds FSA efforts to have a general sign-up in 2013 and each
year in the foreseeable future, and to more fully utilize CRP
enrollment authority to address conservation needs. Lands enrolled in
CRP are important for the conservation of soil on some of the Nation`s
most erodible cropland. These lands also contribute to water quantity
and quality, provide habitat for wildlife that reside on agricultural
landscapes, sequester carbon, and provide a strategic forage reserve
that can be tapped as a periodic compatible use in times when other
livestock forage is limited due to drought or other natural disasters.
We strongly encourage Congress to fund CRP at a level that fully
utilizes program enrollment authority through CRP general sign-up. We
are pleased with and support the coming general sign-up. However, we
are concerned about the proposed reduction in the acreage cap from 32
million to 25 million by 2018.
    Thank you for considering the views of wildlife professionals. We
look forward to working with you and your staff to ensure adequate
funding for wildlife conservation.
                                 ______

             Prepared Statement of the USA Rice Federation
    Dear Chairman Pryor and Ranking Member Blunt: This is to convey the
rice industry's requests for fiscal year 2014 funding and related
policy issues for selected programs under the jurisdiction of your
subcommittee. The USA Rice Federation appreciates your assistance in
making this statement a part of the hearing record.
    The USA Rice Federation is the global advocate for all segments of
the U.S. rice industry with a mission to promote and protect the
interests of producers, millers, merchants, and allied businesses. USA
Rice members are active in all rice-producing States: Arkansas,
California, Florida, Illinois, Kentucky, Louisiana, Mississippi,
Missouri, Tennessee, and Texas. The USA Rice Producers' Group, the USA
Rice Council, the USA Rice Millers' Association, and the USA Rice
Merchants' Association are members of the USA Rice Federation. The rice
industry annually supports about 128,000 jobs and more than $34 billion
of economic output nationally.
    USA Rice understands the budget constraints the subcommittee faces
when developing the fiscal year 2014 appropriations bill. We appreciate
past support for initiatives that are critical to the rice industry and
look forward to working with you to meet the continued needs of
research, food aid, and market development in the future.
    A healthy U.S. rice industry is also dependent on the program
benefits offered by the farm bill. Therefore, we oppose any attempts to
modify the farm-safety-net support levels provided by this vital
legislation through more restrictive payment limitations or other means
and encourage the subcommittee and committee to resist such efforts
during the appropriations process, especially given that the 2008 farm
bill has been extended for 1 year, is paid for, and represents a
contract with America's producers. In addition, the House and Senate
Agriculture Committees are working currently to reauthorize the farm
bill this year. USA Rice also strongly opposes reducing the farm-safety
net to appropriate funds for other Federal programs. We urge that the
President's fiscal year 2014 legislative proposals be rejected that
would eliminate direct payments and change crop-insurance provisions.
We also urge that the planned submission of legislation for a user fee
to help cover the costs of conservation planning services by the
Natural Resources Conservation Service be rejected.
    A list of the programs the USA Rice Federation supports for
appropriations in fiscal year 2014 are as follows:
                             market access
    Exports are critical to the U.S. rice industry. About 50 percent of
the U.S. crop is exported annually in a highly competitive world-rice
market. Those directly involved in U.S. rice exports contributed $6
billion in output and supported more than 14,000 jobs. The Market
Access Program (MAP) and Foreign Market Development (FMD) Program play
key roles in helping to promote U.S. rice overseas. USA Rice Federation
industry members spend $5 in matching funds for each $1 of FAS funds
received. The USA Rice Federation currently is using MAP and FMD
funding in 30 markets to conduct successful export-market-development
initiatives.
    The Foreign Market Development Program allows USA Rice to focus on
importer, foodservice, and other non-retail promotion activities around
the world. This program should be fully funded for fiscal year 2014 at
$34.5 million.
    The Market Access Program (MAP) allows USA Rice to concentrate on
consumer promotion and other activities for market expansion around the
world. This program should also be fully funded for fiscal year 2014 at
$200 million.
    In addition, the Foreign Agricultural Service should be funded to
the fullest degree possible to ensure adequate support for trade-policy
initiatives and oversight of export programs. These programs are
critical for the economic health of the U.S. rice industry.
                                food aid
    Food-aid sales historically account for an important portion of
U.S. rice exports.
    For Public Law 480 Title II/Food for Peace, we strongly support
funding title II up front at $2.5 billion, which would help to make
possible satisfying the 2.5 million MT amount required by statute. We
encourage the subcommittee to fund title II at the higher level to
ensure consistent tonnage amounts for the rice industry. We strongly
oppose the shifting of any title II funds to USAID, which the
President's budget proposes. Title II funds have traditionally been
contained within USDA's budget.
    We believe all U.S. food-aid funds should continue to be used for
food-aid purchases of rice and other commodities from only U.S. origin.
    The McGovern-Dole International Food for Education and Child
Nutrition Program is a proven success and it is important to provide
steady, reliable funding for multiyear programming. USA Rice supports
funding for this education initiative because it efficiently delivers
food to its targeted group, children, while also encouraging education,
a primary stepping-stone for populations to improve economic
conditions.
                                research
    U.S. agricultural-research needs are great and the challenges are
plentiful. USA Rice strongly supports funding for the core-capacity
programs at land-grant institutions, USDA's intramural-research
activities, and the National Institute of Food and Agriculture and its
Agriculture and Food Research Initiative at levels that would continue
the commitment to strong agricultural research by and through USDA.
    Specifically, we support the President's request of $1.124 billion
for the Agricultural Research Service (ARS), which includes the
National Rice Research Center at Stuttgart, Arkansas, where key rice
research is conducted. The research areas include important and
emerging issues, such as sustainability, water-use efficiency, and
arsenic-related issues in rice. Adequately funding these research
priorities is critical to the competitiveness and long-term viability
of the U.S. rice industry.
  farm service agency, risk management agency, and natural resources
                          conservation service
    We encourage the subcommittee to provide adequate funding so the
agencies can deliver essential programs and services, including for
improved computer hardware and software. Our members fear a serious
reduction in service if sufficient funds are not allocated,
particularly because USDA could be called on in 2013 to implement a new
farm bill, with implementation extending into fiscal year 2014.
    Please feel free to contact us if you would like further
information about the programs we have listed. Additional background
information is available for all of the programs we have referenced;
however, we understand the volume of requests the subcommittee receives
and have restricted our comments accordingly.
    Thank you for your consideration of our recommendations.

    [This statement was submitted by Reece Langley, Vice President,
Government Affairs, USA Rice Federation.]


       LIST OF WITNESSES, COMMUNICATIONS, AND PREPARED STATEMENTS

                              ----------
                                                                   Page

Agriculture and Food Research Initiative (AFRI) Coalition,
  Prepared Statement of the......................................   197
Alexander, Senator Lamar, U.S. Senator from Tennessee, Questions
  Submitted by...................................................    40
Alliance for a Stronger FDA, Prepared Statement of the...........   198
American:
    Farm Bureau Federation (AFBF), Prepared Statement of the.....   200
    Forest:
        And Paper Association (AF&PA), Prepared Statement of the.   203
        Foundation (AFF), Prepared Statement of the..............   204
    Heart Association, Prepared Statement of the.................   207
    Honey Producers Association, Inc. (AHPA), Prepared Statement
      of the.....................................................   209
    Indian Higher Education Consortium (AIHEC), Prepared
      Statement of the...........................................   212
    Nursery & Landscape Association (ANLA) and the Society of
      American Florists (SAF), Prepared Statement of the.........   214
    Society:
        For:
            Microbiology (ASM), Prepared Statements of the
            Nutrition (ASN), Prepared Statement of the...........   220
            The Prevention of Cruelty to Animals (ASPCA),
              Prepared Statement of the..........................   221
        Of:
            Clinical Oncology (ASCO), Prepared Statement of the..   224
            Plant Biologists (ASPB), Prepared Statement of the...   226
Animal Welfare Institute (AWI), Prepared Statement of the........   227
Avalos, Ed, Under Secretary, Marketing and Regulatory Programs,
  Department of Agriculture......................................   115
    Prepared Statement of........................................   118
    Questions Submitted to.......................................   146
    Summary Statement of.........................................   117

Blunt, Senator Roy, U.S. Senator from Missouri:
    Prepared Statement of........................................   158
    Questions Submitted by

    Statements of

Choose Clean Water Coalition, Letter From the....................   231
Coalition Against Forest Pests, Prepared Statement of the........   232
Coats, Senator Daniel, U.S. Senator from Indiana, Questions
  Submitted by...................................................    42
Cochran, Norris, Deputy Assistant Secretary for Budget,
  Department of Health and Human Services........................     1
Cochran, Senator Thad, U.S. Senator from Mississippi:
    Questions Submitted by.......................................   152
    Statements of
Collins, Senator Susan M., U.S. Senator from Maine, Questions
  Submitted by
Colorado River:
    Basin Salinity Control Forum, Prepared Statement of the......   234
    Board of California, Prepared Statement of the...............   236
Concannon, Kevin, Under Secretary, Food, Nutrition, and Consumer
  Services, Department of Agriculture............................   115
    Prepared Statement of........................................   131
    Questions Submitted to.......................................
      153........................................................
    Summary Statement of.........................................   130
Cystic Fibrosis Foundation (CFF), Prepared Statement of the......   237

Ellis, Karen, Assistant Inspector General for Investigations,
  Office of Inspector General, Department of Agriculture.........    82

Federation of American Societies for Experimental Biology
  (FASEB), Prepared Statement of the.............................   239
Florida Home Partnership, Inc. (FHP), Prepared Statement of the..   240
Fong, Hon. Phyllis K., Inspector General, Office of Inspector
  General, Department of Agriculture.............................    82
    Prepared Statement of........................................    82
    Questions Submitted to.......................................   108
Friends of Agricultural Research--Beltsville, Inc. (FAR-B),
  Prepared Statement of the......................................   242

Global Health Technologies Coalition (GHTC), Prepared Statement
  of the.........................................................   243

Hagen, Dr. Elisabeth, Under Secretary, Food Safety, Department of
  Agriculture....................................................   115
    Prepared Statement of........................................   127
    Questions Submitted to.......................................   150
    Summary Statement of.........................................   125
Hamburg, Hon. Dr. Margaret A., Commissioner, Food and Drug
  Administration, Department of Health and Human Services........     1
    Prepared Statement of........................................     6
    Statement of.................................................     4
Harden, Gil, Assistant Inspector General for Audit, Office of
  Inspector General, Department of Agriculture...................    82
Hoeven, Senator John, U.S. Senator from North Dakota, Questions
  Submitted by...................................................   154
Housing:
    Assistance Council (HAC), Prepared Statement of the..........   246
    Development Alliance, Inc. (HDA), Prepared Statement of the..   248
Humane Society of the United States (HSUS), Prepared Statement of
  the............................................................   249
    Equine Protection, Prepared Statement of the.................   253

Izaak Walton League of America (IWLA), Prepared Statement of the.   256

Johnson, Senator Tim, U.S. Senator from South Dakota, Statement
  of.............................................................    48

Little Dixie Community Action Agency, Inc. (LDCAA), Prepared
  Statement of the...............................................   257

Metropolitan Water District of Southern California (MWD),
  Prepared Statement of the......................................   257
McConnell, Senator Mitch, U.S. Senator from Kentucky, Questions
  Submitted by...................................................    37
Mills, Ann, Acting Under Secretary, Natural Resources and
  Environment, Department of Agriculture.........................   157
    Prepared Statement of........................................   164
    Questions Submitted to.......................................   190
    Summary Statement of.........................................   164
Moran, Senator Jerry, U.S. Senator from Kansas, Questions
  Submitted by...................................................   107

National:
    Affordable Housing Management Association (NAHMA), Prepared
      Statement of the...........................................   258
    Association of:
        County and City Health Officials (NACCHO), Prepared
          Statement of the.......................................   260
        State Energy Officials (NASEO), Prepared Statement of the   261
    Coalition for Food and Agricultural Research (National C-
      FAR), Prepared Statement of the............................   262
    Commodity Supplemental Food Program Association (NCSFPA),
      Prepared Statement of the..................................   263
    Council of State Housing Agencies (NCSHA), Prepared Statement
      of the.....................................................   265
    Rural Housing Coalition (NRHC), Prepared Statement of the....   267
    Sustainable Agriculture Coalition (NSAC), Prepared Statement
      of the.....................................................   269
    Water Resources Association (NWRA), Prepared Statement of the   273
New Mexico Interstate Stream Commission, Prepared Statement of
  the............................................................   273
Northwest Regional Housing Authority (NWRHA), Prepared Statement
  of the.........................................................   274
NSF International (NSF), Prepared Statement of...................   275

O'Brien, Doug, Acting Under Secretary, Rural Development,
  Department of Agriculture......................................   157
    Prepared Statement of........................................   160
    Questions Submitted to.......................................   183
    Summary Statement of.........................................   159
Oregon Water Resources Congress (OWRC), Prepared Statement of the   276

Pew Charitable Trusts--Kids' Safe and Healthful Foods (KSHF)
  Project, Prepared Statement of the.............................   279
Pickle Packers International, Inc., Prepared Statement of the....   281
Pryor, Senator Mark L., U.S. Senator from Arkansas:
    Opening Statements of

    Questions Submitted by


Rural Housing Development Corporation (RHDC), Prepared Statement
  of the.........................................................   286

Self-Help:
    Enterprises (SHE), Prepared Statement of the.................   288
    Housing Corporation of Hawaii, Prepared Statement of the.....   290
Society for Women's Health Research (SWHR), Prepared Statement of
  the............................................................   291
Southern Nevada Water Authority (SNWA) and Colorado River
  Commission of Nevada (CRCN):
    Letter From the..............................................   293
    Prepared Statement of the....................................   294

The Wildlife Society (TWS), Prepared Statement of................   296
Tyler, James, Chief Financial Officer, Food and Drug
  Administration, Department of Agriculture......................     1

Udall, Senator Tom, U.S. Senator from New Mexico, Questions
  Submitted by


USA Rice Federation, Prepared Statement of the...................   298

Vetter, Darci L., Acting Under Secretary, Farm and Foreign
  Agricultural Services, Department of Agriculture...............   157
    Prepared Statement of........................................   169
    Questions Submitted to.......................................   192
    Summary Statement of.........................................   168
Vilsack, Hon. Thomas J., Secretary, Office of the Secretary,
  Department of Agriculture......................................    45
    Prepared Statement of........................................    51
    Questions Submitted to.......................................    92
    Summary Statement of.........................................    48
Woteki, Dr. Catherine, Under Secretary, Research, Education, and
  Economics, Department of Agriculture...........................   115
    Prepared Statement...........................................   122
    Questions Submitted to.......................................   150
    Summary Statement of.........................................   121

Young, Michael, Budget Officer, Department of Agriculture


                             SUBJECT INDEX

                              ----------

                       DEPARTMENT OF AGRICULTURE

                                                                   Page

Additional Committee Questions


                 Farm and Foreign Agricultural Services

China Policy on Dehydrated Poultry Products......................   178
Farm:
    And Foreign Agricultural Services (FFAS).....................   169
    Loan Programs................................................   194
    Service Agency (FSA).........................................   170
        MIDAS....................................................   195
Foreign Agricultural Service


McGovern-Dole Program............................................   194
Ractopamine Trade Barrier........................................   177
Risk Management Agency (RMA).....................................   171
Trade:
    Barriers.....................................................   173
    Discussions..................................................   176

                 Food, Nutrition and Consumer Services

Child Nutrition Programs

Commodity:
    Assistance Program...........................................   135
    Supplemental Food Program (CSFP).............................   153
Food:
    And Nutrition Service Oversight and Review...................   155
    Waste........................................................   154
Impact of Sequestration on WIC...................................   137
Improving the Way Federal Dollars Are Spent......................   132
Local and State Income Eligibility Discretion....................   155
Nutrition Programs Administration................................   135
Preventing Hunger and Supporting Healthy Eating..................   133
Public Health Information System (PHIS)..........................   153
Supplemental Nutrition Assistance Program (SNAP).................   134
    Contingency Reserve..........................................   143
Women, Infants, and Children (WIC)...............................   134
    Budget.......................................................   137
    Contingency Reserve..........................................   137
    Enrollment Trends............................................   154
    Participation................................................   137

                              Food Safety

Catfish Inspections..............................................   145
Cooperative Interstate Shipment Program..........................   150
Food Safety and Inspection Service (FSIS) Furloughs..............   136
Implementation of New Poultry Inspection Rule....................   151
Leveraging Resources.............................................   129
Mechanically Separated Poultry Meat..............................   152
Modernization To Improve Food Safety.............................   128
Poultry:
    Inspector Positions..........................................   142
    Slaughter Modernization......................................   141
Preventing Foodborne Illness.....................................   127
Salmonella.......................................................   128
Targeting Resources..............................................   129

                   Marketing and Regulatory Programs

Agricultural Marketing Service (AMS).............................   119
Animal and Plant Health Inspection Service (APHIS)...............   120
Aquaculture......................................................   142
Avian Health.....................................................   147
Country of Origin Labeling.......................................   139
Feral Swine......................................................   146
Fresh Produce Import Protocols...................................   148
Grain Inspection, Packers and Stockyards Administration (GIPSA)..   120
    Employees, Sequestration and Furloughs of....................   148
National Poultry Improvement Plan................................   140
Plant and Animal Pests and Diseases..............................   146
Resource Flexibilities...........................................   147

                   Natural Resources and Environment

Conservation Delivery Streamlining Initiative (CDSI).............   190
Emergency Watershed Protection (EWP) Program.....................   182
Fiscal Year 2014 Budget..........................................   167
Looking Ahead--Innovations in Conservation.......................   166
Mississippi River Basin Initiative (MRBI)........................   182
Natural Resources and Environment (NRE)..........................   164
Plant Materials Centers (PMCs)
Resource Accomplishments.........................................   165
Staff Cuts.......................................................   191
Watershed Projects...............................................   175

                      Office of Inspector General

Agricultural Management Assistance (AMA).........................   106
Alfalfa and Forage Research......................................   104
Centralized Servicing Center (CSC)...............................    96
Civil Rights.....................................................    91
Consolidating Business Program Grants............................    94
Farm Service Agency (FSA)--Fiscal Year 2013 Contracts............   101
Federal Milk Marketing Orders--Dairy Price Reform................   106
Implementation of New School Meal Pattern Regulations............   107
Improper Payments................................................    90
National:
    Institute on Food and Agriculture (NIFA).....................    93
    School Lunch Program (NSLP)

Office of Inspector General (OIG):
    Fiscal Year 2014 Budget Request..............................    87
    Goal:
        1: Strengthen USDA's Safety and Security Measures for
          Public Health..........................................    83
        2: Strengthening Program Integrity and Improving Benefit
          Delivery...............................................    84
        3: OIG Work in Support of Management Initiatives.........    86
        4: Improving USDA's Stewardship of Natural Resources.....    87
    Oversight of Recovery Act Programs...........................    87
Poultry Slaughter Modernization..................................   107
Reduction in Workforce...........................................    90
Rural Development (RD)...........................................   102
    And Farm Loan Program Contracts..............................    97
    Fiscal Year 2013 Contracts...................................    97
Sequestration....................................................    95
StrikeForce:
    Initiative...................................................    92
    Program......................................................   103
Supplemental Nutrition Assistance Program (SNAP).................    88
Women, Infants, and Children (WIC) Program.......................    89
Wildlife Services................................................   104

                        Office of the Secretary

Agricultural Research

American Agriculture.............................................    62
Bio-Based Market Program.........................................    77
Bioenergy Research and Education.................................    59
Broadband Program................................................    71
Catfish Inspection...............................................    61
Conservation Funding.............................................    79
Country of Origin Labeling Program...............................    59
Crop Insurance Program...........................................    74
Electric Loan Program............................................    66
Farm Service Agency (FSA) Payments...............................    67
Federal Research Grant Programs..................................    67
Furlough of Food Safety Inspectors...............................    57
Genetically Modified Organisms (GMOs)
International Food Aid...........................................    55
Livestock Disaster Program.......................................    68
Modernize and Innovate the Delivery of Agricultural Systems
  (MIDAS)........................................................    57
Plant Breeding...................................................    78
Risk Management..................................................    70
Rural:
    Business Program Consolidation...............................    73
    Housing......................................................    58
    Population Definition........................................    60
School:
    Kitchen Equipment............................................    62
    Lunch Standards
Timber Sales.....................................................    64
Water and Waste Program..........................................    69

                   Research, Education and Economics

Agricultural Research Service (ARS):
    Assessments..................................................   144
    Buildings and Facilities.....................................   150
Dale Bumpers Small Farms Research Center.........................   144
Drought Mitigation Research......................................   139
Research Funding.................................................   135

                           Rural Development

Broadband........................................................   184
Center of Excellence.............................................   176
Changes to the Electric Loan Program.............................   183
Direct Single Family Housing Loan Program........................   187
Effects of Sequestration on Rental Assistance....................   187
Electric Loans
Rental Assistance Program........................................   180
Rural:
    Business and Cooperative Grants..............................   178
    Development (RD).............................................   160
        Programs in New Mexico...................................   189
    Jobs and Innovation Accelerator Challenge....................   185
Single Family Housing Guaranteed Loan Program....................   185
Water and Waste:
    Disposal Loans and Grants....................................   184
    Program......................................................   179

                DEPARTMENT OF HEALTH AND HUMAN SERVICES

                      Food and Drug Administration

Additional Committee Questions...................................    31
Approach to Drug Compounding Regulation..........................    28
Budget Request
Building:
    And Facilities...............................................    25
    Infrastructure Needs.........................................    32
Cosmetic User Fee................................................    16
Cosmetics........................................................    23
Current Budget Requests..........................................    11
Dietary Guidelines for Seafood...................................    34
Drug Compounding.................................................    26
    Funding......................................................    29
    Issue in Missouri............................................    29
    Legislation..................................................    28
Food:
    And Drug Administration (FDA):
        Carries Out Its Far-Reaching Responsibilities With Few
          Taxpayer Dollars.......................................     7
        Is Delivering Results That Help Americans Every Day......     8
        Plays a Vital Role in the Health of Our Citizens and Our
          Regulated Industries...................................     7
    Safety:
        Modernization Act (FSMA)
        User Fee.................................................    13
Genetically Modified:
    Foods........................................................    23
    Organism (GMO) Foods.........................................    30
Highly Compliant Importers.......................................    33
Medical Devices..................................................    17
Menu Labeling
Nanotechnology...................................................    24
National Center for Toxicological Research (NCTR)................    24
Proposed Food Safety User Fees...................................    31
Sequester:
    For Generic Drugs............................................    33
    Implementation...............................................    34
Sequestration
Small Producer/Processors........................................    35
Sunland Peanut Company...........................................    35
Tissue Banks.....................................................    18
User Fees
Virtual Center of Excellence--Nanotechnology.....................    24
White Oak Facility...............................................    14