[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]








    AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION, AND 
                RELATED AGENCIES APPROPRIATIONS FOR 2017

_______________________________________________________________________

                                 HEARINGS

                                 BEFORE A

                           SUBCOMMITTEE OF THE

                       COMMITTEE ON APPROPRIATIONS

                         HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FOURTEENTH CONGRESS

                              SECOND SESSION

                                 _________

      SUBCOMMITTEE ON AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG 
                  ADMINISTRATION, AND RELATED AGENCIES

                  ROBERT B. ADERHOLT, Alabama, Chairman

  KEVIN YODER, Kansas                SAM FARR, California
  THOMAS J. ROONEY, Florida          ROSA L. DeLAURO, Connecticut
  DAVID G. VALADAO, California       SANFORD D. BISHOP, Jr., Georgia
  ANDY HARRIS, Maryland              CHELLIE PINGREE, Maine
  DAVID YOUNG, Iowa
  STEVEN M. PALAZZO, Mississippi

  NOTE: Under Committee Rules, Mr. Rogers, as Chairman of the Full 
Committee, and Mrs. Lowey, as Ranking Minority Member of the Full 
Committee, are authorized to sit as Members of all Subcommittees.

                 Tom O'Brien, Pam Miller, Andrew Cooper,
                   Justin Masucci, and Elizabeth King,
                             Staff Assistants
                                _________

                                  PART 5

                                                                   Page
  Food and Drug Administration.................................       1
  Marketing and Regulatory Programs............................     349
  USDA Farm and Foreign Agricultural Services..................     987




                               _________

          Printed for the use of the Committee on Appropriations

                    U.S. GOVERNMENT PUBLISHING OFFICE

  21-398                    WASHINGTON : 2016























                      COMMITTEE ON APPROPRIATIONS

                                ----------                              
                   HAROLD ROGERS, Kentucky, Chairman


  RODNEY P. FRELINGHUYSEN, New Jersey          NITA M. LOWEY, New York
  ROBERT B. ADERHOLT, Alabama                  MARCY KAPTUR, Ohio
  KAY GRANGER, Texas                           PETER J. VISCLOSKY, Indiana
  MICHAEL K. SIMPSON, Idaho                    JOSE E. SERRANO, New York
  JOHN ABNEY CULBERSON, Texas                  ROSA L. DeLAURO, Connecticut
  ANDER CRENSHAW, Florida                      DAVID E. PRICE, North Carolina
  JOHN R. CARTER, Texas                        LUCILLE ROYBAL-ALLARD, California
  KEN CALVERT, California                      SAM FARR, California
  TOM COLE, Oklahoma                           CHAKA FATTAH, Pennsylvania
  MARIO DIAZ-BALART, Florida                   SANFORD D. BISHOP, Jr., Georgia
  CHARLES W. DENT, Pennsylvania                BARBARA LEE, California
  TOM GRAVES, Georgia                          MICHAEL M. HONDA, California
  KEVIN YODER, Kansas                          BETTY McCOLLUM, Minnesota           
  STEVE WOMACK, Arkansas                       STEVE ISRAEL, New York
  JEFF FORTENBERRY, Nebraska                   TIM RYAN, Ohio
  THOMAS J. ROONEY, Florida                    C. A. DUTCH RUPPERSBERGER, Maryland
  CHARLES J. FLEISCHMANN, Tennessee            DEBBIE WASSERMAN SCHULTZ, Florida
  JAIME HERRERA BEUTLER, Washington            HENRY CUELLAR, Texas
  DAVID G. VALADAO, California                 CHELLIE PINGREE, Maine
  ANDY HARRIS, Maryland                        MIKE QUIGLEY, Illinois
  MARTHA ROBY, Alabama                         DEREK KILMER, Washington
  MARK E. AMODEI, Nevada
  CHRIS STEWART, Utah
  E. SCOTT RIGELL, Virginia
  DAVID W. JOLLY, Florida
  DAVID YOUNG, Iowa
  EVAN H. JENKINS, West Virginia
  STEVEN M. PALAZZO, Mississippi

                William E. Smith, Clerk and Staff Director

                                   (ii)

 
   AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION, AND 
                RELATED AGENCIES APPROPRIATIONS FOR 2017

                              ----------                         

                                       Thursday, February 25, 2016.

                      FOOD AND DRUG ADMINISTRATION

                               WITNESSES

STEPHEN OSTROFF, M.D., ACTING COMMISSIONER, FOOD AND DRUG 
    ADMINISTRATION
JAY TYLER, CHIEF FINANCIAL OFFICER, FOOD AND DRUG ADMINISTRATION
    Mr. Aderholt. Well, good morning. The subcommittee will 
come to order.
    I want to welcome all of you to today's hearing, and the 
intent, of course, of the hearing is to examine the Food and 
Drug administration's fiscal year 2017 budget request.
    And in addition to this committee's review of the budget 
request, the Members of the committee will seek information on 
the agency's use of current and past resources, including 
activities, policies, practices supported with appropriated 
funds.
    Our witness today is Acting Commissioner of the Food and 
Drug administration, Dr. Stephen Ostroff. He is joined by Mr. 
Jay Tyler, the Chief Financial Officer for FDA. I would note 
that we are pleased to see the Senate confirmation of Dr. 
Califf yesterday in the permanent position of the FDA 
Commissioner.
    During the transition period between Dr. Ostroff and Dr. 
Califf, I believe we are in good hands today. So thank you all, 
both you and Mr. Tyler, for being here today and for your 
presence.
    As I mentioned, in previous hearings we have established 
basically four primary goals for this subcommittee as we 
progress through the fiscal year 2017 hearings, which we are 
right in the middle of now.
    The first goal is increasing oversight, efficiency, and the 
need for effective outcomes.
    The second would be keeping rural American vibrant.
    Number 3 would be supporting American farmers, rankers and 
producers.
    And No. 4, protecting the health of people, plants, and 
animals.
    Given the myriad responsibilities assigned to the FDA by 
the Congress, there is a constant need for this body to 
increase our oversight. Our oversight not only covers the 
expenditure of resources, but also the corresponding 
activities, the efficiency in delivering those services, and 
the degree in which the agency delivered or failed to deliver 
meaningful outcomes.
    At the end of the day, our constituents demand that limited 
resources are spent wisely. For example, the fiscal year 2016 
Omnibus bill provided FDA's full funding request to continue 
the implementation of the Food Safety Modernization Act, which 
we call FSMA.
    Your fiscal year 2017 budget request proposes a total 
increase of $212 million for food safety, yet the committee is 
still in need of the proper accounting for food safety 
expenditures for the current and past years.
    While you have provided us with more detail on your 
spending plans than in the past, we will continue to require 
regular updates on your use of these funds and what you are 
accomplishing.
    FDA's fiscal year 2017 request includes a modest increase 
in budget authority, and that actually more closely reflects 
the debt crisis that is facing our nation. Our Nation is over 
$19 trillion in debt, as most of us know, and it requires us to 
trim government spending where we can and to decrease the 
growth of government at a minimum.
    FDA is proposing discretionary increase of $31.2 million 
and reductions in the amount of $21.1 million, for a net 
increase of $10.1 million.
    It is worth noting that the total resources in this request 
represent a 21 percent increase above the fiscal year 2012 
budget request.
    In looking at the proposed user fees, FDA is, again, 
proposing to collect and spend $202 million for new, 
unauthorized programs. While there is a time and certainly 
there is a place for user fees as demonstrated by the success 
of most of FDA's user fee programs, FDA provides no evidence to 
demonstrate that current efforts are effective in assisting the 
intended beneficiaries and that the resources requested for the 
new user fees will actually result in better service for the 
customers.
    In addition to the President's fiscal year 2017 budget 
request, Congress received the administration's request for 
approximately $1.9 billion in emergency appropriations in 
response to the spread of the Zika virus. I want to echo the 
remarks made by Chairman Rogers of this committee and also two 
of our other subcommittee chairmen that the most expeditious 
way to respond to the disease is by the use of unobligated 
funds that were previously provided for the Ebola response in 
fiscal year 2015.
    In fact, in January of 2016, FDA had far more unobligated 
funds left over from the Ebola appropriation than the total 
request for the Zika virus. This is yet another example of a 
situation in which the administration should utilize existing 
resources rather than coming to Congress for more money, which 
in the end compounds the nation's debt.
    Another goal for the subcommittee is protecting the health 
of people, plants, and animals, which is also the main mission 
of the Food and Drug administration. The United States has one 
of the safest medical product markets and one of the safest, 
most highly productive food and agriculture sectors in the 
entire world.
    The United States Government plays a unique role in 
ensuring that all of these sectors maintain their current 
vitality. We must continue to explore ways in which the FDA can 
fulfill its public health mission successfully, but do so in a 
way that gives regulated industry clarity on the rules of the 
road and they are not burdened with unnecessary regulation.
    Since FDA is informing Congress that the food safety, the 
medical product safety, and rent and infrastructure needs are 
the highest priorities this year, it is incumbent upon FDA to 
prove to Congress that such priorities cannot be funded out of 
the base resources, first and foremost.
    In addition, the agency must demonstrate that all efforts 
have been made to review current operations for any additional 
savings and efficiencies.
    Lastly, the subcommittee and the American public need 
assurance that the agency is coordinating and not duplicating 
other efforts across Health and Human Services, USDA, and 
elsewhere to ensure the most efficient means of accomplishing 
its mission.
    We hope to touch upon each and all of these issues more in 
detail as we move forward with the questioning portion of this 
hearing.
    The Food and Drug administration must also tighten controls 
for areas subject to large expenditures which have unclear 
results and where performance tasks or milestones are not met, 
such as information technology.
    In closing, I want to note that the work you and your 
colleagues perform at the Food and Drug administration touches 
the lives of every American, and we appreciate your dedicated 
service. Without question, you have no shortage of work to do 
at FDA, and there are many challenges facing your agency, from 
food safety, to opioid abuse, to antimicrobial resistance, and 
that is just to name a few.
    We look forward to hearing from you today as we proceed 
with the remainder of this hearing and about your funding 
proposals for the future and for what you are doing with 
available resources in the current year.
    So with that, let me ask the Ranking Member of this 
subcommittee, Mr. Farr, for any opening remarks that he might 
have at this time.
    Mr. Farr. Well, thank you very much, Mr. Chairman.
    And, Dr. Ostroff, before the new Commissioner takes hold, I 
just want to thank you for your public service and for your 
standing in and doing a great job.
    Dr. Ostroff. Thank you.
    Mr. Farr. I really appreciate it.
    This is my last year in Congress and on this committee, and 
this is one of the areas I think when I came to Congress I knew 
very little about the FDA, and it has probably been one of the 
most fascinating agencies that I have had to deal with because 
I find that the responsibility you have just touches all 
aspects of our life. I had no idea how broad the responsibility 
was, not only from food safety. I always thought the Department 
of Agriculture did food safety, but it is FDA that does food 
safety, except for poultry and meat and eggs.
    Drug development, everything that is out there, all those 
damn television ads on drugs, all of that has to go through 
you; even pet food standards and sun screens and beyond.
    So the mission you have is huge, and I think that 
unfortunately, despite what the Chairman says, I think we give 
you awfully short shrift. We ask a lot and give you very little 
money to do it; big mission, small budget.
    So I would like to explore that today, among others, and I 
really appreciate your help in helping us understand the 
interplay between the FDA mission and available resources 
because I think, again, we are asking a lot without a lot of 
money to be able to do it, and I would like to learn something 
about the backlog.
    So I am ready to move into the questions, Mr. Chairman.
    Mr. Aderholt. Sounds good. Dr. Ostroff, also I want to say 
thank you for your work. In your interim time at FDA, you have 
been certainly a pleasure to work with and always very 
reachable, and thank you for also reaching out to me on many 
occasions as you have done your work over there.
    So without objection, your entire written testimony will be 
included in the record, and we will recognize you for any 
statements that you want to make before we go into the question 
portion of the hearing.
    Dr. Ostroff. Well, thank you so very much, Chairman 
Aderholt and Ranking Member Farr and other Members of the 
committee.
    As you know, for almost all of the past year since our last 
budget hearing in March of 2015, I have served as Acting 
Commissioner of the Food and Drug administration, and I can 
tell you I was also very happy at the confirmation of Dr. 
Califf yesterday, as you mentioned, as the Commissioner of Food 
and Drugs.
    I have had the pleasure to work with Rob for the past year 
and think his selection is really quite an inspired choice, and 
I am thrilled with the bipartisan show of support for him and 
for the agency, and I very much look forward to handing over 
the baton to him in the not too distant future.
    So this particular testimony and hearing will likely be one 
of my last acts as the Acting Commissioner, and I would very 
much like to thank you for giving me the opportunity appear 
before you today to discuss the President's fiscal year 2017 
budget request for FDA.
    Words cannot express how extremely proud and grateful I am 
to have had the distinct honor of being here today to represent 
the thousands of talented and dedicated men and women at FDA 
and the tremendous work that they do. This work occurs day in 
and day out in service to the health and wellbeing of the 
American people. It is an exceptional group of people, 
including the other FDA leadership that is sitting behind me.
    I would also like to very much thank the subcommittee for 
its past support of FDA, most recently through our fiscal year 
2016 appropriation, which is so very helpful in meeting the 
demands of our increasingly complex and diverse mission at home 
and abroad.
    Your commitment recognizes and reaffirms FDA's critical and 
dynamic role in protecting and promoting the public health by 
ensuring that the food we eat is safe and nutritious, our 
medical products are safe and effective, and that we can reduce 
the harms associated with tobacco. Our mutual goal is that 
every American has full confidence in the products that we 
regulate and our ability to respond to new responsibilities, 
new challenges, new science and new opportunities both at home 
and abroad.
    After all, there are few other federal agencies, as you 
mentioned, that touch the lives of Americans every day to the 
degree that FDA's do. It is a great responsibility and it is 
one that we take very seriously and we never forget.
    Our accomplishments over the past year have been as 
substantial and as impactful as at any other time in FDA's 
recent history. My written testimony includes a number of 
examples of our achievements across the range of the products 
that we regulate, and I cannot possibly cover them all in my 
oral statement.
    Suffice it to say that we have continued without missing a 
step to make a substantial and positive difference in the lives 
of those that we serve, even during a period of transition in 
the leadership of the agency.
    Among the accomplishments that I will highlight is that we 
had another banner year in the approval of new drugs and 
biologics for therapeutic indications that range from the 
rarest diseases to the most common diseases to the most severe 
diseases. Some of these drugs have absolutely transformed the 
way that these diseases are treated and provide options that 
were not previously available to those who had little to no 
hope of having their diseases addressed.
    We accomplished this by being able to take advantage of 
innovations in the regulatory process that allow us to get 
these therapies to patients in America faster than any of our 
regulatory counterparts, and we accomplish that without 
sacrificing our high standards that sponsors be required to 
demonstrate safety and efficacy of the products that we review 
and approve.
    Last year we also approved the first biosimilar in the 
agency's history. We continue to take action to identify and 
protect the public from poor quality compounded drugs. We have 
taken major steps to address the growing problem of antibiotic 
resistance in human and agricultural settings, and last year we 
brought all uses of antibiotics in food animals under the 
supervision of veterinarians, and at the end of this year 
growth promotion indications will be voluntarily removed from 
the labels of all medically important antibiotics used in 
veterinary medicine.
    In the last year, we made major contributions to the 
response to international health threats like Ebola in West 
Africa, and today we are working very diligently with our 
federal partners and outside stakeholders to address the 
recently recognized threat from the mosquito transmitted Zika 
virus.
    And in recognition of the growing consequences of the 
opioid epidemic, a problem which has touched the lives of far 
too many families and affects nearly every community in this 
country, we recently completed a comprehensive review of FDA's 
activities and announced a far-reaching action plan to ensure 
that the way we review, approve and oversee these drugs 
contributes to ending this crisis.
    It is a plan that focuses on actions that can help us 
positively impact the epidemic while still providing patients 
in pain access to effective relief.
    It includes such actions as considering ways to widen 
access to antidotes to treat overdose; encouraging development 
of better products with abuse deterrent characteristics, 
including generics; strengthening and expanding warnings; 
expanding input through wider use of advisory committees and 
tapping the expertise of the National Academy of Sciences; 
requiring additional studies by manufacturers of opioids to 
fill very critical scientific gaps in our understanding of 
these products; considering expansion of the REMS for this 
class; and encouraging development of innovative medication 
assisted treatment for dependents.
    It also includes working with and supporting partners 
inside and outside of government to assure a multi-pronged 
approach to this problem.
    FDA's budget in support of our responsibilities remains a 
bargain for every American taxpayer. While the products that we 
regulate account for more than 20 percent of every U.S. 
consumer dollar, individual Americans pay only two cents per 
day to support our oversight and ensure that these products 
work as they are supposed to and are safe.
    It is a small price for lifesaving medicines and for 
medical devices, for confidence in medical products that are 
relied on daily, and for a food supply that is among the most 
diverse and safest in the world.
    FDA's 2017 budget request was constructed to ensure that we 
maintain this level of success while recognizing the tough 
fiscal environment by focusing targeted increases on the most 
urgent needs. The total budget request for fiscal year 2017 is 
$5.1 billion, which represents an overall increase of eight 
percent, or $358.3 million, compared to the fiscal year 2016 
enacted level.
    This includes $2.7 billion for budget authority, a very 
modest increase of one-half of one percent, or $14.6 million, 
compared to the fiscal year 2017 enacted level; $2.3 billion in 
user fees, an increase of 12 percent, or $268.7 million 
compared to the fiscal year 2016 enacted level; and $75 million 
in new mandatory funding to support the White House Moon Shot 
to Cure Cancer Initiative.
    The biggest area of increase, as it was in 2016, is in food 
safety, specifically continued support to implementing the Food 
Safety Modernization Act, or FSMA. The fiscal year 2017 budget 
requests an increase of $211.6 million above the fiscal year 
2016 enacted. This includes an increase of one percent, or 
$18.4 million in budget authority, compared to fiscal year 
2016, and an increase of $193.2 million in user fees compared 
to the fiscal year 2016 enacted.
    Within the overall food safety budget there will be $25.3 
million in new funds to improve food and feed safety through 
the continued implementation of FSMA.
    Congress enacted FSMA to recognize the very significant 
changes that have occurred over the years in the food supply, 
including its globalization and the changing nature of food 
borne disease threats themselves. FSMA quite simply 
fundamentally transforms our approach to food safety from a 
reactive system to one that recognizes that food borne illness 
can and should be prevented and implements the necessary steps 
to accomplish that goal regardless of where the food is grown 
or produced.
    Last year saw the finalization of five of the seven 
foundational rules for FSMA after several years of work by FDA 
and input from many, many stakeholders, and the last two rules 
are set to become final in March and May of this year.
    Now that the rules are final, this is a make or break year 
for FSMA. Now the rubber hits the road. Without full funding, 
FDA will be unable to complete putting in place the necessary 
program, standards and oversight that will bring FSMA from a 
concept to reality and allow American consumers and industry to 
begin to reap the benefits that it was designed to accomplish.
    The additional funding will help implement the Produce 
Safety Rule and provide states with the resources to help 
farmers prepare for it, support our enforcement efforts, and 
further implement the Foreign Supplier Verification Program 
which helps assure an even playing field for domestic and 
foreign products.
    In the area of medical product safety and innovation this 
year's request represents an increase of $116.2 million above 
fiscal year 2016 enacted. We are requesting an increase of 0.2 
percent, or $3.2 million in budget authority compared to fiscal 
year 2016, and an increase of three percent, or $38 million in 
user fees compared to fiscal year 2016.
    In addition, there is the $75 million that was previously 
mentioned in new mandatory funding for the Cancer Moon shot.
    Our focus is on five priorities: leveraging real world data 
on medical devices through the National Medical Device 
Evaluation System; continuing to support the President's 
Precision Medicine Initiative; improving the safety of 
compounded drugs and combatting antibiotic resistant bacteria; 
supporting animal drug and medical device review; and 
harnessing the power of innovation to bring a new generation of 
cancer diagnostics and treatments to market.
    Let me just end my opening statement by once again 
sincerely thanking the subcommittee on behalf of our entire 
workforce for your support, your advice, and your assistance 
over the last year. I can only say that it has been especially 
helpful to me.
    This job is a tough one, as you mentioned, and has its 
share of challenges, but it is without question one of the most 
rewarding opportunities that I have ever had in my long public 
health career. Especially gratifying is the knowledge that our 
actions and the decisions that we have made help people across 
the country each and every day, and in the end that is what 
makes it worthwhile.
    I want to thank you for allowing me to be here today to 
discuss this year's budget and how it helps FDA meet its public 
health responsibilities. Coming at a time of enormous change, 
this budget is a modest request to help us meet the challenges 
of globalization, embrace groundbreaking and potentially 
lifesaving scientific and technological advances, and continue 
to provide American consumers and patients with the confidence 
in the people that work to protect and promote their public 
health.
    So with that I will end my statement, and I look forward to 
being able to answer your questions.
    [The information follows:]
    
    
 [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]   
    
 
    Mr. Aderholt. Thank you, Dr. Ostroff, for your testimony.
    On a lighter note, before we get into some of the issues, 
you mentioned about the transition between you and the new 
Commissioner, Dr. Califf, who has been confirmed. When does 
that transition actually take place officially?
    Dr. Ostroff. The official time and day has not yet been 
established.
    Mr. Aderholt. OK. That is what I wondered, if a time had 
been set. But regardless, as I said in my earlier testimony, we 
are in good hands either way.
    Dr. Ostroff. Well, thank you.
    Mr. Aderholt. We look forward to working with him, but 
certainly we have enjoyed working with you, and as you continue 
in this role, we know you will do a tremendous job.
    Dr. Ostroff. I am not leaving.

                            GE FOOD LABELING

    Mr. Aderholt. Good. My first question deals with the GMO 
safety labeling. When Secretary Vilsack testified in front of 
this subcommittee two weeks ago, we touched upon two critical 
issues relating to GMO foods.
    As background, Secretary Vilsack recently brought the two 
major sides together, those for mandatory labeling and those 
that are against mandatory labeling, and his attempt was to try 
to forge a compromise on the matter.
    Over the past few years each side has shown great passion, 
as I am sure you well know, about their positions, and the 
current state of things, the GMO labeling debate has created 
much confusion on the part of consumers. My question would be, 
and just to the bottom line: does FDA believe that GMO products 
are safe for consumers?
    Dr. Ostroff. Well, thank you for that question, and I would 
totally agree with you that this is a very complicated issue. 
There is a great deal of passion on both sides of this debate, 
and certainly FDA has a very important role in this area.
    So you know, we have assessed from a scientific perspective 
genetically engineered foods, and as we have looked at these 
foods, from a scientific perspective, we have not seen 
differences in the food items in comparison to those which have 
not used genetically engineered production methods.
    And so as a result of that, and again, our criteria for 
issues related to labeling have to do with being able to 
provide the consumer material facts that are important from the 
perspective of their health, and so we are very supportive of a 
voluntary approach to labeling, and as we put out in the 
guidance that we put out in November 2015.
    Mr. Aderholt. Can you give us some reasons why FDA decided 
not to mandate labeling and the agency decision to approve the 
settlement?
    Dr. Ostroff. So, again, our perspective is that we believe 
that it is very important that consumers have information about 
the material that is actually in the foods themselves rather 
than the methods in which those foods are produced, and so that 
has been a very consistent position that we have had now for 
many, many years as it relates to whether something is 
genetically engineered, whether it is produced by free range or 
other types. You know, that is a method of production rather 
than a material fact regarding the material that is actually in 
the product.
    And so that has been the basis for us to determine that 
while we believe that it is very important for consumers to 
have information, that it does not represent a material fact.
    Mr. Aderholt. Vermont's mandatory labeling law goes into 
effect in July, and Secretary Vilsack was quoted yesterday as 
saying that it will, ``create chaotic circumstances,'' for the 
food and agriculture industry.
    As the lead agency for the labeling of 80 percent of the 
food supply, can FDA support preemption of menu labeling and 
not preemption for GMO labeling, especially if we end up with a 
patchwork of laws covering GMOs?
    Dr. Ostroff. So thank you for that question.
    We have not taken a position on those particular laws.
    Mr. Aderholt. What would be the implications for consumers 
and the farmers and the food manufacturers out there with this?
    Dr. Ostroff. Well, again, we can only look at it from the 
perspective of the guidance that we have previously issued in 
November of 2015, and again, we feel that the appropriate 
approach in that guidance, which is voluntary labeling, it is 
voluntary labeling whether there is genetically engineered 
material in a particular product, as well as whether or not 
there is no genetically engineered material in a product, is a 
very reasonable way to go.
    Mr. Aderholt. Well, regarding GMO products, I understand 
the information is important to consumers, and I certainly 
respect that. But if GMO products are safe, then my question 
would be: why are FDA or even sister agencies not doing more to 
educate the consumers that these products are perfectly safe?
    I am concerned, and I think many are concerned that some 
parts of the administration have not done enough to get in 
front of this debate and really use the influence and the 
information that you have to assure the public there is nothing 
to fear about GMO products, which as you know and as you have 
said have been deemed safe for decades.
    So I would hope that would be something that the agencies 
and sister agencies could be more engaged with, and to assure 
the public if they are so concerned.
    Dr. Ostroff. Yes. I think one other thing just to mention, 
as you know, the guidance that was put out in November 2015 was 
draft guidance, and obviously there were many comments that 
have come in, and we continue to review those comments. And 
certainly we will take that information into consideration as 
we work for the guidance to be finalized.
    Mr. Aderholt. Yes. Well, the take-away, like I said, we 
would just encourage you to try to communicate that so the 
public will have an assurance that there are no safety concerns 
with GMOs.
    Mr. Farr.
    Mr. Farr. Thank you, Mr. Chairman, and I appreciate that 
line of questioning.
    I think this is something where we have all, including 
industry and Secretary Vilsack, ought to be taking the lead in 
this. But what I do not understand in your answer to his 
question is that you are protecting the label for medical 
facts, but then you are going to allow it to be voluntarily 
adjusted.
    I mean, how is that protecting the label?
    Dr. Ostroff. Well, again, there are certain facts that we 
feel are necessary to inform consumers of the content of the 
actual product itself. There are many additional pieces of 
information that could be included in the product labeling that 
would not be required to be present, but on a voluntary basis 
to provide additional information to consumers. We would have 
no problem with that.
    Mr. Farr. Well, I guess that would be like the milk cartons 
that say that these cows are not treated with whatever. That is 
voluntary among the industry, right?
    Dr. Ostroff. Right. I mean, it is the same concept.
    Mr. Farr. It does not speak to the health of the milk.
    Dr. Ostroff. Right. It is the same concept, which is that 
it has to do with production methods and not the content of the 
product itself.
    Mr. Farr. Well, Mr. Chairman, I hope sometime we just have 
a separate hearing on this because I know states, and 
California included, who are doing a statewide initiatives on 
this, and here we are. I mean, this is the crown jewel of 
labeling. You know, if this is going to be a whole new 
initiative that everybody decides, each state, about how they 
are going to label products in their state, I think it is going 
to create tremendous confusion and lose confidence of the 
consumer.

                                 BUDGET

    Anyway, I wanted to get back to my original comment about 
how I think your agency has been asked to do a lot and been 
given very little resources to do it. I wondered if you are 
maybe given too big of a mission and too small of a budget.
    Can you tell me what are some of the tasks that might get 
short shrift because of the lack of adequate funding?
    Can you name one or two programs where you wished you had 
more funds to do a better job?
    Dr. Ostroff. Well, what I will say, Congressman, is that we 
are very supportive of the fiscal year 2017 budget request, and 
we believe that the request from the administration will allow 
us to continue the work that we have done, especially in areas 
that we have been especially successful, while in certain areas 
that are our greatest priorities being able to in very targeted 
fashion apply additional resources.
    Mr. Farr. Examples?
    Dr. Ostroff. So, again, within the budget our priority 
requests are in the areas of being able to continue to 
implement the Food Safety Modernization Act, as I mentioned; 
that this, for us, is really a very critical time period and 
that we are moving from developing the rules and regulations 
into implementation.
    And so there are great expectations.

                                PRODUCE

    Mr. Farr. Well, I really appreciate it because 
Congresswoman Pingree and myself are very involved in specialty 
crops, which are essentially fresh vegetables, and my district 
is known as the salad bowl capital of the world, and we grow 
something like 70 percent of all the lettuce in the United 
States.
    There is no kill step in them. You do not cook lettuce. So 
the food safety requirements that these farmers have adopted in 
specialty foods are really keen. California invented this with 
the leafy green marketing order.
    What we are concerned about now is that there is going to 
be a new set of regulations and a whole bunch of bureaucracy 
that farmers are going to have to fill out in order to meet the 
Federal standards.
    You talked about having enough money to implement the 
program and to prepare the farmers. Are you going to put the 
money in the states and really make sure that this is 
integrated with what is going on in the states so that we do 
not have to have another bunch of paperwork and information?
    Dr. Ostroff. The short answer is yes. You know, one of the 
major tenets of our development of the regulations related to 
the Food Safety Modernization Act is this concept of the 
integrated food safety system. The integrated food safety 
system means partnerships at the federal level, at the state 
level and at the local level, and in addition, partnerships 
with industry and partnerships with all of the other 
stakeholders that have a role in assuring food safety.
    And so we have developed these regulations with a great 
deal of discussion with our state counterparts. We fully 
expect----
    Mr. Farr. Well, for example, in California which already 
has a program in place, would you just absorb that as being 
adequate?
    Dr. Ostroff. So, the rules that were developed for FSMA 
were done in a collaborative fashion with the states to assure 
that there is no duplication of efforts.
    In addition to that, a very critical component of what we 
are doing with the resources that we have obtained, 
particularly the 2016 resources and, of course, part of the 
request for 2017, is to make sure that we can provide support 
to all of the states to be the front line interface with 
farmers and with the other small producers that are a critical 
part of the food safety system.
    So we do not look at this as being duplicative at all.
    Mr. Farr. Would it cost them any more money?
    Dr. Ostroff. So when you say will it cost them, are you 
talking the states or are you talking the farmers?
    Mr. Farr. Yes. Will the states and farmers have to pay 
more, like inspection fees for restaurants and things like 
that?
    Dr. Ostroff. Well, you know, to a certain degree it depends 
on where an individual producer happens to be. Very often 
virtually everything that is being required under FSMA, many of 
the farmers particularly in your area have a tremendous head 
start in implementing many of the things that are in FSMA, and 
so they should not be particularly impacted by much of what is 
particularly the Produce Safety Rule.
    Mr. Farr. Thank you.
    Mr. Aderholt. Dr. Harris.

                       LABORATORY DEVELOPED TESTS

    Mr. Harris. Thank you very much, and good to see you again.
    I have a couple of issues and maybe we will get to some 
others in a second round, but I had a visit from some of the 
scientists up at Johns Hopkins, two pathologists who work in 
one of the laboratories, and they are very concerned about the 
laboratory developed test regulation, and they made a fairly 
cogent case to me that they are already regulated. Most 
laboratories are regulated by HHS under CMS, under CLIA, and 
what the FDA is about to bite off is probably a whole lot more 
than it can chew because there are by their estimate could be 
more than 50,000 laboratory developed tests out there.
    And as you know, they mostly have to be treated uniquely. 
That is just a whole lot. Can you just explain to me why the 
CLIA mechanism for regulation just will not do for these 
laboratory regulated tests and why you think a second level of 
regulation will not impede the access of patients, especially 
in oncology treatment, to sometimes lifesaving therapies?
    Dr. Ostroff. Thanks for that question.
    This is an area that I have actually spent a great deal of 
time looking at over the last few years not only while I have 
been the Acting Commissioner, but also in my previous role as 
the Chief Scientist. I think that there are a couple of things 
to point out.
    One of them is that FDA has always had the regulatory 
authority to regulate laboratory developed tests. However, 
since the 1970s we have always used enforcement discretion in 
this area, but I think one of the things that is really 
important to point out is that like so many of the areas that 
we regulate, there have been very significant changes in the 
area of laboratory developed tests from 1976 to the present.
    It has grown considerably. The complexity of the tests that 
are being done has grown considerably, and in some instances, 
and we published a report last fall where we detailed 
circumstances where there are significant problems with the 
quality of laboratory developed tests, particularly laboratory 
developed tests in circumstances where specimens are coming in 
from all over the country. It is a very different paradigm than 
the paradigm that in general has grown up in laboratory 
developed tests where these were tests that were performed in 
one laboratory for use directly in the institution in which the 
laboratory was affiliated, and there is a very substantial 
change.
    And from the standpoint of the patients themselves, they 
are not aware of whether or not something is being run as a 
laboratory developed test or whether it is a commercially 
available test that has been assessed by FDA for the diagnostic 
accuracy and the clinical validity of that readout.
    So that is part of the reason that we have embarked on this 
pathway to bring laboratory developed tests under our review. 
However, we have embarked upon this in a very cautious way. We 
did put out draft guidance approximately a year and a half ago, 
and as you might imagine, we have gotten a great deal of 
comments.
    Dr. Harris. Oh, I got those comments yesterday. I got an 
earful, and I have other questions. So I will just leave it at 
this. There is a great concern with me about this.
    Dr. Ostroff. But the other thing that I would say, you 
know, regarding the role of CLIA, we are in close partnership 
with CMS that oversees CLIA, and I guess the way that I would 
describe it is that our role has to do with the quality of the 
test itself, and CLIA is largely devoted to the systems that 
are in place to actually run the test rather than assessing the 
quality and the interpretation of that test.
    And so we view our role and CLIA's role as being 
complementary. You know, there have been hearings in which CMS 
has testified and indicated that they do not feel that they 
have the necessary technical expertise to actually be able to 
review the test itself for diagnostic accuracy.
    Dr. Harris. Again, my time is running out, but I will get 
around to it in the second round.
    That is true. They do not, but you know, all of these 
tests, and you can correct me if I am wrong, they are all 
ordered by physicians or, you know, advanced health 
professionals; is that right?
    Dr. Ostroff. Yes.
    Dr. Harris. Sure. So they are actually ordered by someone 
who might actually have the training and the certification and 
documentation and degrees and all the rest to be able to make 
that decision.
    And now what I see is FDA stepping in and making what 
traditionally has almost been a practice of medicine decision. 
I really do feel that way. I think that this is too bad because 
as we embark on a new cancer initiative, we are about to throw 
a huge regulatory roadblock and not all laboratory developed 
tests deal with cancer, but a large number of the complex ones 
do. We are about to throw a huge regulatory roadblock in the 
way.
    I yield back.
    Mr. Aderholt. All right. Ms. Pingree.
    Ms. Pingree. Thank you very much, Mr. Chair.
    Thank you for being here today and for the work that you 
have been doing and I know you will continue to do in spite of 
the changes going on, and we will look forward to working with 
the new leader of the organization.

                               FSMA RULES

    But I want to follow up a little bit on what the Ranking 
Member said, and I have another question. So I will just give 
you all my thoughts and will let you answer them. We can follow 
up in writing.
    But just on the FSMA rules, I appreciate the Ranking Member 
bringing up many of the concerns that people have. We have 
worked very closely with you, and we appreciate Mr. Taylor 
coming to Maine. I know you have really focused over the last 
few years on some of the impacts that it is going to have with 
farmers who will be newly introduced to this.
    Mr. Farr talked about the fact that, some of the farmers 
that he works with are very large scale. They have already 
implemented many of these safety procedures, but in my region 
of the country we are going to have a lot of new farmers 
affected by it.
    So just a couple of things. I want to say that in terms of 
this national integrated food safety system that stakeholders 
will have a chance to provide some input on the plans. At some 
point I would just like to see a record and a timeline for the 
record that tells us what the overview of that will be and how 
it will be implemented.
    And secondly, I know you are thinking about and there are 
some increases in the budget about how the training process 
will be, but you can imagine there is tremendous confusion and 
great concern that this is going to be a big challenge, 
particularly with small and medium size farmers who have not 
been experienced in this procedure before and a lot of 
confusion about who qualifies and who is required to do what.
    So on the amount of training money available particularly 
going to the states, we have heard from the National 
Association of State Departments of Agriculture that there is 
not sufficient funding.
    So, again, I know there is increased funding, and I know 
you are thinking about directing a lot of it to the states, but 
I just wanted to reiterate that that is one of the continuing 
concerns as we get into the implementation phase. We care 
deeply about food safety, of course, and that has been a big 
mission of Congress to move forward on that. But on the reverse 
of it, we do not want it to be this cumbersome bureaucracy that 
farmers cannot figure out or that, frankly, reduces some of the 
ability of farmers who have moved into new markets and are 
really having great success with direct to consumer and 
farmers' markets and a whole variety of new marketing 
techniques around the country in everyone's district. So we do 
not want to see that getting in the way.

                                OPIOIDS

    So I am just going to throw that out there. The real 
question I want to get to, because I know we will have a chance 
to follow up on that, is an issue that concerns everyone on 
this committee. I just came from another hearing on this topic, 
and that is the opioid crisis, and I know you are very engaged 
in that and working on plans to deal with it.
    And we have been appreciative of reading some of the things 
that the Department is doing. Obviously the President is making 
it an important initiative. I am sure there is not a state here 
that has not got their own long list of stories about what a 
challenge this is.
    And I just want to talk about one little part of it. In 
thinking about what the FDA can do to improve prescribing 
practices, expanding risk evaluation and mitigation strategy 
requirements for the immediate release of opioids, I know that 
the Department has called the development of non-
pharmacological approaches to pain an urgent priority.
    So I just want to hear: do you think that there is a lack 
of safe and effective alternative treatments for chronic pain?
    And, if so, can you elaborate on some of the efforts 
underway in collaboration with the NIH and industry 
stakeholders to fill that need?
    And would the FDA consider emphasizing non-pharmacological 
treatment options in the continuing medical education component 
of the risk evaluation and mitigation strategy? It just seems 
like that is a good opportunity here available to us.
    Dr. Ostroff. Those are a lot of points that you raise.
    Ms. Pingree. It is a lot to answer in a minute, I know.
    Dr. Ostroff. What I am going to try to do at least let me 
just touch upon the first issue that you raised because one of 
the ways that we have developed and one of the sort of central 
points of FSMA is to educate while we regulate, and I think 
that that is very important.
    In other venues we have also said educate first and 
regulate second, but they actually do go hand in hand. And so 
we are in full agreement with you that it is really, really 
critical that we be able to develop the necessary educational 
programs down to the farm level and also for the small producer 
so that they have a full understanding of what they are 
supposed to do because it is much more important that we come 
there and be able to say, ``You know, you are doing it right,'' 
rather than to come there and say, ``Uh-oh, you did not do it 
right.''
    Ms. Pingree. Absolutely.
    Dr. Ostroff. So we think that that would be a win-win for 
virtually everybody, and it has been from the very beginning 
one of our priorities.
    In the area of opioids, I think that you mentioned a number 
of things. We have taken all of those issues into 
consideration. You know, if you were to distill the action plan 
that we put out a few weeks ago, I would put it into three 
different areas.
    One of them is to reduce abuse.
    The second one is to save lives.
    And the third one is to facilitate treatment and recovery.
    And so that action plan contains items in each of those 
areas. Obviously one of the ways to reduce abuse is to minimize 
the use of opioids when it is not necessary to use them, and 
obviously we have worked very collaboratively with our 
colleagues at the Centers for Disease Control and Prevention 
and their opioid prescribing guidelines.
    You may know I worked there for a long time. So I know 
these folks quite well, and there is a very critical role for 
being able to use other approaches for pain management that do 
not necessarily involve the use of opioids. They should not be 
necessarily the first thing that you turn to.
    And there is a very important research need to be able to 
develop more alternatives to opioids that would be able to 
address the needs of patients.
    Ms. Pingree. Thank you. I have gone over my time. I 
appreciate your coming.
    Mr. Aderholt. Mr. Rooney.
    Mr. Rooney. Thank you, Mr. Chairman.
    I think one of the things you could start with or one of 
the agencies could start with is: this fall my son broke his 
nose playing football, and we went to the emergency room to 
have it reset, and as we left, they gave us a prescription for 
Percocet. He is 13.
    Dr. Ostroff. It is really unfortunate. We hear that a lot.
    Mr. Rooney. Yes. I mean, I did not have that when I got 
hurt playing football when I was younger. It was, you know, 
take some Advil and suck it up.

                            TOBACCO DEEMING

    But anyway, I was shocked. I was shocked, but I am going to 
switch subjects if I could and talk about tobacco.
    I want to talk about the deeming regulations and the 
proposed rule to deem e-cigarettes and cigars under the 
jurisdiction of the Center for Tobacco Products. The FDA 
estimates a number of pre-market tobacco applications that the 
FDA expects to receive is 27, one for cigars and pipes and the 
rest, the remaining 25 for vapor products.
    Congress statutorily mandated that the tobacco industry, 
including cigar manufacturers and importers, pay a user fee to 
fund the Center for Tobacco Products. Each entity share was 
determined by how much each paid into that tobacco buyout.
    Did you consult with the USDA about the number of cigar 
manufacturers and importers that participated in that tobacco 
buyout to determine the number of applications the FDA would 
receive annually?
    And did you consult with the Alcohol and Tobacco Tax and 
Trade Bureau over how many cigar companies would have 
registered with them?
    Dr. Ostroff. If you might indulge me, Mitch Zeller, who 
runs the Center for Tobacco Products, is just behind me and 
since he was very heavily involved in the development of the 
proposed deeming rule at the time that I was not, I will let 
him at least answer that particular question.
    Mr. Rooney. Thank you.
    Mr. Zeller. My name is Mitch Zeller. I am Director of the 
Center for----
    Mr. Aderholt. Hold on just a second. We need to just get 
unanimous consent to allow the testimony.
    Is there any objection?
    [No response.]
    Mr. Aderholt. Proceed on.
    Mr. Zeller. My name is Mitch Zeller, and I am Director of 
the Center for Tobacco Products at FDA.
    Consultation with USDA, in addition to a number of other 
sources of input, went into the calculations that were in the 
proposed rule. I would say in response to the proposed rule, we 
received a number of comments from industry and others on that, 
and unfortunately I cannot talk about what is in the final 
rule, but we received a lot of comment on the numbers.
    The numbers in the proposed rule are our best assessment at 
the time. We have taken all of the comments into consideration 
that we received on this, and when the final rule is published, 
you will be able to see revised numbers principally based upon 
the input that we received as the system is supposed to work 
through the comment and rulemaking process.
    Mr. Rooney. OK. I do not know if this is also for you, but 
industry analysts and trackers estimate the sale of e-
cigarettes in 2015 were more than three billion, and vapor 
shops sell more SKUs than obviously we can probably count.
    And in the 9 years since the February 15, 2007, the 
existing predicate date, tens of thousands of cigars have been 
introduced to the market.
    Given that information, do you think the regulation put out 
to deem electronic cigarettes and tobacco products 
underestimates the number of pre-market tobacco applications 
that manufacturers will have to file?
    Dr. Ostroff. Again, there were numbers that were included 
in the proposed deeming rule. As you are probably aware, we 
received an extraordinary number of comments based on the 
proposed rule, more than 135,000 comments that we had to go 
through as we worked towards finalizing the deeming rule, and 
so you know, I cannot discuss what might be in the final 
version of this, but we have taken all of those comments into 
consideration.
    Mr. Rooney. OK. Thank you, Mr. Chairman. I yield back.
    Mr. Aderholt. Mr. Bishop.
    Mr. Bishop. Thank you very much, Mr. Chairman.
    I apologize for my delinquency. I was at another hearing 
going on at the same time, and I was required to stay there 
until its completion.

                        SECURITY OF FOOD RECORDS

    Let me welcome the witnesses this morning, and let me get 
right into FDA security of food records. Some Members of 
Congress have expressed concerns about whether FDA has taken 
adequate measures to protect additional trade secrets and 
confidential information entrusted to the agency as part of its 
regulatory activities under FSMA.
    In particular, in August of 2015, the House committee on 
Energy and Commerce investigated FDA's security of food 
industry trade secrets and confidential information. The report 
notes that FSMA expanded FDA access to company records 
involving sensitive business information of regulated entities 
in the food industry, and it questioned FDA's ability to 
protect that information.
    In February of this year the committee leadership sent a 
letter to FDA asking for information to allow the committee to 
determine whether FDA has taken adequate measures to protect 
additional trade secrets and confidential information entrusted 
to FDA.
    Can you describe what actions FDA has taken to respond to 
these concerns?
    Dr. Ostroff. What I can say is that I do recall seeing that 
particular letter and we are in the process of developing a 
response to that letter. It is an issue that we take quite 
seriously, and probably what would be best is if we developed a 
response to that letter and provide the information back to you 
in greater detail.
    Mr. Bishop. Thank you. Thank you very much. I look forward 
to that.

                              FSMA FUNDING

    State agriculture officials and representatives of the 
National Association of State Departments of Agriculture have 
continued to push for full FSMA funding so that front line 
State officials can prepare for implementation.
    NASDA further supports the administration's request for an 
additional $25.3 million in budget authority for FDA food 
safety and FSMA implementation for fiscal year 2017.
    Can you describe how FDA's federal staff work with your 
state partners on the ground to ensure that states have 
adequate technical support and resources to implement the 
various regulations under FSMA?
    And what type of support is provided to the state public 
health and agricultural agencies to implement FSMA's 
requirements?
    And what is the level of financial and technical resources 
that is provided to states?
    Dr. Ostroff. Yes. Thank you for that question.
    So as I mentioned before, we have worked very, very closely 
with our state counterparts not only in developing the rules 
and regulations, but also in assuring that, as part of the 
integrated food safety system, there are appropriate resources 
to be able to meet the requirements of these regulations, 
including working very closely with our partners in State 
Departments of Agriculture.
    Three have been funds, including funds in fiscal year 2016 
and part of the request in fiscal year 2017 are prioritized for 
being able to provide support to all of our state partners so 
that they can fulfill the expectations as part of that 
integrated food safety system for the role that they have, 
particularly working with the produce, the farms that are 
producing fruits and vegetables around the country and also the 
small producers.
    So we do know that that is a priority. In the funding that 
we received in fiscal year 2016, $19 million of that funding is 
specifically to go for support to the states, and in the 
request that we have in 2017 an additional proportion of the 
$25.3 million, and I believe the figure is just over $11 
million, is also for funding to go to the states.
    Mr. Bishop. Thank you.

                            CANCER MOONSHOT

    Let me talk about the Cancer Moon Shot Initiative. February 
1st, the White House launched the National Cancer Moon Shot 
Initiative, and according to the President's budget request, 
FDA is requesting $75 million in mandatory resources, a direct 
transfer.
    As part of the initiative, FDA will establish a virtual 
Oncology Center of Excellence to streamline collaboration 
across FDA's human drugs, biologics, and devices and 
radiological health programs. It has also mentioned 
collaboration with NIH.
    Can you explain the collaboration between NIH and FDA, and 
what are the expected deliverables in fiscal year 2016 and from 
what resources?
    Dr. Ostroff. So, again, the Cancer Moon Shot funding is for 
fiscal year 2017, and then it is for a five-year period.
    However, having said that, we have a very close working 
relationship with NIH. As you can imagine, even the development 
of the Moon Shot itself in collaboration with the 
administration and, in particular, the Vice President's Office 
was very, very close.
    You know, if you think about what is necessary for 
successful medical product development, what you have is you 
have the phase of discovery. You have the phase of translating 
those discoveries into medical products, and then you have the 
very critical role of FDA, which is bringing those medical 
products through the approval process so that they can then be 
used by patients.
    All of them are critical, and they have to be done hand in 
glove, and so you know, with all of the discovery work which is 
being done by NIH and NCI, we have worked very closely with 
them in developing this particular proposal.
    As far as the Virtual Center of Excellence is concerned, it 
is a very important concept because one of the main objectives 
of the Moon Shot itself is to be able to break down barriers 
between investigators not only in terms of the way the clinical 
trials are done and doing large scale clinical trials across 
multiple institutions, but in addition to that, being able to 
share data and being able to enhance patient enrollment into 
the various clinical trials.
    Just as breaking down those types of barriers that have 
inhibited some of the work, we need to break down the internal 
barriers within the FDA. You know, we have work that goes on on 
medical devices. We have work that goes on within biologics. We 
have work that goes on within pharmaceutical, and this is an 
opportunity to bring together all of the individuals across the 
agency that are working on cancer related activities, whether 
it is diagnostics or whether it is the therapeutics, and make 
sure that they are all working in the same direction.
    Mr. Bishop. I commend you for that, and as a cancer 
survivor, I certainly appreciate the elimination or the 
proposed elimination of all of the silos that have slowed down 
the collaboration.
    So I wish you the best in that, and any way that we can do 
to be helpful, please let us know.
    Dr. Ostroff. Thank you very much.
    Mr. Aderholt. Mr. Yoder.
    Mr. Yoder. Thank you, Mr. Chairman.
    Commissioner, great to have you back before the committee, 
and we appreciate you sort of being a pinch hitter, to step in 
and be the Acting Commissioner, and you have done a good job. 
You have been easy to work with and responsive, and I 
appreciate that and commend you on your service.
    Dr. Ostroff. Well, thank you very much.
    Mr. Yoder. I want to associate my comments with some of the 
comments my colleagues made, first off, Mr. Bishop's in 
highlighting the important role the FDA plays as it relates to 
NIH. We have discussed before the Moon Shot and certainly 21st 
Century Cures, which I believe had $500 million to support the 
collaboration in moving these products through the FDA so that 
we can realize the goals of the NIH. So with the FDA, the NIH 
does not really ultimately get its drugs to market. So thank 
you for your work there and your making that part of your 
mission.
    I want to associate my comments with Mr. Bishop's comments.
    I also want to associate myself with Dr. Harris' comments 
on LDTs and the concerns he raised, and I think he has raised 
some very legitimate concerns, and I look forward to working 
with FDA and the Energy and Commerce committee, which is 
working on this as well, to ensure that we are not 
overregulating those.
    Then I also want to associate myself with the comments of 
Mr. Rooney, and I wanted to maybe follow up where he had left 
off regarding the predicate date, the February 15, 2007 
predicate date.

                             VAPOR PRODUCTS

    You know how important this predicate date is to Americans 
because it delineates the two pathways that tobacco products or 
nicotine derived from tobacco, how those products can come to 
market. It is a critical date, and a lot of Members of 
Congress, based upon the question Mr. Rooney was asking you, 
believe that the predicate date should be moved forward and 
that it is too early in terms of 2007 and that we need a new 
date.
    So I just want to talk to you a little bit about vapor 
products in particular and how they are impacted by this. You 
know, there is virtually no ability to find an appropriate 
predicate date prior to February 2007 for vapor products. They 
just did not exist on the market at that point.
    So essentially your agency has substantially, hindered the 
equivalence pathway to market for this entire class of product. 
There is no substantial equivalence allowed.
    It seems backwards, I think, that the FDA would have a 
higher bar for a product that maintains the public health. And 
what many, including the government of the United Kingdom, 
believe is significantly less harmful than a conventional 
cigarette. Why we are putting a higher bar there does not 
really make a lot of sense.
    As the proposed rule is written, once the final rule is 
published, manufacturers will have two years to submit an 
application to the FDA for each product, but as Mr. Rooney 
highlighted, it is not just the branded name product. It is an 
application for each variant of the product, including flavor, 
nicotine content, size, FTA.
    Not changing the predicate date would burden smaller 
manufacturers, jeopardizing many small businesses. It would 
take significant resources. Estimates range from 300,000 to 20 
million to achieve the necessary requirements. If the higher 
estimates are correct, only corporations with significant 
assets and resources will be able to get their products through 
the application process.
    The proposed rule has a significant potential to decimate 
the emerging vapor market, as well as driving many small 
manufacturers out of business, causing a significant economic 
impact.
    Additionally, the regulatory burden on the Center for 
Tobacco Products will be enormous. As Mr. Rooney highlighted, a 
number of applications will inundate the center. It could 
potentially number in the tens of thousands, including both 
vapor products and cigars.
    This committee has witnessed the significant problems the 
Center for Tobacco Products has had with substantial 
equivalence applications in years past, and so I guess with all 
of that being discussed and the reasons outlined, would it not 
be better to move the predicate date forward for newly deemed 
products and specifically set standards for vapor products?
    Dr. Ostroff. So there is a lot in your question, obviously. 
Let me just try. It is difficult to address all of those 
issues, but what I would like to sort of focus on is a couple 
of different areas.
    One of them is that everything is a very difficult 
balancing act, as you know, and one of the major concerns and 
the legislation that established the Center for Tobacco 
Products was particularly to reduce the harms of tobacco in 
youth, and so much of the work that gets done has to do with 
youth.
    And one of the major concerns with e-cigarettes, and there 
has been a lot of data that has been published, including from 
the CDC, showing that the rate of use of electronic cigarettes 
in our youth has tripled over the last couple of years and now 
exceeds the use of other types of tobacco products, 
particularly cigarettes, and this is a tremendous concern to 
see that proportion of our youth initiating the use of e-
cigarettes because of the potential public health consequences 
from that.
    And so that has been a very, very strong consideration as 
we developed the proposed rule. And obviously as I mentioned 
previously, we have huge numbers of comments, and as you can 
imagine, those comments are on all sides of the issue, and so 
we have been very carefully considering those comments as we 
move towards the final rule.
    In terms of the backlog of substantial equivalence 
applications, I think it is important to note, and I know that 
we have had multiple discussions with Chairman Aderholt about 
this particular question.
    You know the Center for Tobacco Products itself is only 6 
years old, and so they were started from scratch and have 
significantly expanded based on the resources that are 
available under the Tobacco Control Act, and so they are in a 
considerably different place today than they were even three or 
4 years ago.
    And at this point in terms of the backlog of substantial 
equivalence application, by and large these have been cleared 
up. Seventy-three percent of all of the SE backlog that we 
previously had has been resolved as of December 2015, and the 
vast majority of those that have not been resolved are products 
that are currently on the market.
    So right now for new applications that come into FDA, there 
is no backlog.
    Mr. Yoder. Well, I appreciate your efforts to try to clear 
that backlog. I think it will be ultimately greater than maybe 
we are estimating, and I would just say that having the 
predicate date in the 2000 year for these products essentially 
eliminates their ability to use the substantial equivalence 
route, and I just think that that does not really solve the 
issue with children using these.
    And we would be better, I think, working together to 
specifically set standards for these vapor products and moving 
that date forward, which would achieve your mission, which I 
share, which is setting standards here to ensure that these are 
not getting into the hands of children without totally 
eliminating the product from consideration because it did not 
exist before 2007.
    So I hope in your taking in the comments you will take that 
into consideration.
    Dr. Ostroff. Thanks very much.
    Mr. Yoder. Thanks.
    Mr. Aderholt. Mr. Palazzo.
    Mr. Palazzo. Thank you, Mr. Chairman.
    Dr. Ostroff, thank you for being here today.

                            FOREIGN SEAFOOD

    The number of U.S. rejections of imported shrimp has 
skyrocketed. In 2015, we saw the highest level in history of 
refusals due to banned antibiotics. Foreign organizations and 
producers of shrimp readily acknowledge the use of banned 
antibiotics and other chemicals in their ponds.
    For example, the Vietnamese Association of Seafood 
Exporters and Producers has issued statements warning as 
members that continued use of banned antibiotics will result in 
products being banned from entry into the European Union.
    So my question is: in light of these record number of 
shrimp rejections and the ample evidence of widespread use of 
banned chemicals in foreign shrimp production, why has the FDA 
not instituted a product specific alert to ensure that all 
imported shrimp are free of banned chemicals and antibiotics?
    Dr. Ostroff. Well, as you can imagine, the supply is quite 
diverse in terms of the locations that these come from, and so 
we have a system in place where we evaluate every single import 
line that comes into the country, and we use a risk based 
approach to actually do inspections and to do sampling of those 
products.
    And where we do find problems, we do institute import 
alerts. And so that is a very critical tool that we use when we 
do find problems that exist.
    You know, the idea of doing a wider import alert, you know, 
would depend on the information that is available, but as I 
said, seafood safety is a very big priority of ours, and you 
know, we work very closely through the seafood HACCP, which is 
a critical component of this, to work with the overseas 
producers of these products to assure that they understand what 
is required, and that there is compliance with the seafood 
HACCP requirements.
    Mr. Palazzo. Well, I personally do not know who would want 
to buy shrimp abroad, but you know, America has the best 
shrimp, and the Gulf of Mexico has even the better shrimp. I 
will just put it out there, and I represent a district on the 
Gulf of Mexico, in full disclosure.

                            ARSENIC IN RICE

    I would like to discuss your agency's ongoing health review 
of rice and the possible risk associated with rice consumption. 
Can you give me a status update on this?
    Dr. Ostroff. So this is an issue that we have devoted a lot 
of time and attention to. I actually started at FDA two and a 
half years ago in the role of the Chief Medical Officer on the 
food side of FDA, and so we were in the process of developing a 
risk assessment on the issue of arsenic in rice.
    It is a very complicated issue. We have been working with a 
number of stakeholders inside and outside of government to be 
able to finalize that risk assessment and the associated risk 
management plan.
    Mr. Palazzo. Does that include domestic rice farmers, I 
mean, as the stakeholders?
    Dr. Ostroff. Oh, yes.
    Mr. Palazzo. You are working with them?
    Dr. Ostroff. Actually, you know, we have actually visited 
rice farmers in a number of different states to be able to get 
firsthand input from them. No question about that.
    Mr. Palazzo. Where are we with that? Is it still a review 
process going on?
    Dr. Ostroff. Yes, it is definitely still in the review 
process. I can tell you that it is a very high priority of 
mine, regardless of what role I happen to be in, that we 
finalized that risk assessment. It is an important thing to do.
    Mr. Palazzo. Thank you, Dr. Ostroff. If you could, please 
keep my office informed on it.
    Dr. Ostroff. Absolutely.
    Mr. Palazzo. Thank you.
    Mr. Aderholt. Are you finished?
    Mr. Palazzo. I yield back.
    Mr. Aderholt. OK. At this time I would like to recognize 
the Ranking Member of the full committee on Appropriations, 
Mrs. Lowey.
    Mrs. Lowey. I thank you very much, Mr. Chairman, and I 
apologize, but as you know, Chairman Rogers and I wish we had 
roller skates. There are about three or four hearings going on 
at the same time.
    But this hearing is so very important to me I wanted to be 
sure that I was able to join you, and I thank you, Dr. Ostroff. 
I thank you, Jay Tyler. Thank you for being here today.

                            TOBACCO DEEMING

    I want to focus on the FDA's ability to regulate new 
tobacco products, including e-cigarettes. Now, according to the 
CDC and FDA, the use of e-cigarettes has tripled in just one 
year between 2013 and 2014, and now exceeds youth use of 
regular cigarettes.
    You can tell by the tone of my voice, I am horrified by 
this. Medical studies are clear that nicotine, which is a 
central ingredient in e-cigarettes, is highly addictive and 
that nicotine exposure can harm the adolescent brain, cause 
cognitive impairment, attention deficits and other health 
issues.
    The FDA should have the power and the resources to regulate 
tobacco products, to make sure consumers are aware of the risks 
and that parents do not believe these products are safe for 
children to use.
    The funding level for tobacco review was set many years ago 
in the Family Smoking Prevention and Tobacco Control Act. I am 
concerned that once the tobacco regulations are finalized, 
thousands of tobacco products will have to be reviewed, and 
that the FDA will struggle to regulate these projects quickly.
    First, when will you release the final deeming regulations?
    Will the budget requests adequately provide the FDA with 
the funds necessary to regulate new tobacco products?
    Dr. Ostroff. Thank you for your comments, and it is really 
terrific----
    Mrs. Lowey. As you can see, I feel rather strongly.
    Dr. Ostroff. And you know, if you had been here a few 
minutes ago when I was having a discussion with Congressman 
Yoder, I actually used the same statistic that you just quoted.
    Mrs. Lowey. And I just want to say one of these stores 
opened in my neighborhood, and I walk by and you see Tooty 
Fruity and every kind of cute name for these products.
    Dr. Ostroff. So without question one of the major 
impetuses, and I do not know if ``impetuses'' or ``impeti'' is 
the correct term, of developing the deeming rule was 
specifically for the reason that you cited, which is the 
potential impact that this has in youth initiation of nicotine 
use and tobacco products.
    And so it has been a primary driver as we developed this 
proposed rule, and as you can imagine, there is a great 
diversity of opinion from all sides on this particular issue. 
We received a phenomenal number of comments on the proposed 
rule that came out previously.
    And working through those and working through all of the 
various very technical and difficult issues related to getting 
the deeming rule finalized has been a priority of mine ever 
since I took over as the Acting Commissioner. It was a priority 
for Dr. Hamburg, as you well know, and we are working as hard 
as we can to be able to get this rule to final.
    As far as are we prepared for the implementation of the 
deeming rule when it does go final, we have been working now 
and we proposed this more than a year and a half ago.
    Mrs. Lowey. May I ask you how long you have been working on 
this issue?
    Dr. Ostroff. So the proposed rule came out in late 2014, 
and there were large numbers of comments, more than 135,000 
comments that were received, and the proposed final rule has 
gone through interagency clearance and through the White House. 
We have been working on trying to get all of the aspects of 
this finalized.
    I cannot tell you when it will actually be finalized. All I 
can say to you is that we are as passionate as you are about 
being able to get this to final.
    We have been preparing for the workload that it will 
entail. The Center for Tobacco Products has been evaluating 
that. They are raring to go, and we hope that as soon as the 
rule gets final we can get started.
    Mrs. Lowey. I just want to say that I just find it shocking 
that these stores are opening up in all of our districts, and 
there has been no rule out there and nobody publicly evaluating 
officially as to whether it is safe or not.
    Dr. Ostroff. Well, that is one of the reasons to put the 
deeming rule out there and bring these under our regulatory 
purview as we have with other tobacco products because once 
that occurs, then we will be in a much better position to 
understand what is actually in these products.
    Mrs. Lowey. Well, thank you.

                            SESAME ALLERGEN

    And do I have time for another questions?
    Mr. Aderholt. Certainly.
    Mrs. Lowey. You are very kind.
    Eight major allergens are required to have a label 
displaying their inclusion on a list of ingredients on food 
packaging. This is an issue I worked on many years ago, and I 
am very pleased about that. People with celiac disease, all 
kinds of allergies, are really grateful for the work that we 
all did together.
    Now, sesame is not one of them even though sesame allergies 
are estimated to afflict nearly a half a million Americans and 
growing, making it one of the six or seven most common food 
allergens. And for consumers with a sesame allergy and parents 
of children with the allergies, sesame is particularly 
troublesome because of its derivative ingredients that may not 
even mention sesame in the ingredients at all.
    And for these consumers, it is difficult to know what 
products they can purchase, what they cannot, which could lead 
to significant harm. The FDA does have the ability under the 
Food Allergen Labeling and Consumer Protection Act to add new 
ingredients to the list of major food allergens.
    Has the FDA considered adding sesame to the list of major 
food allergens?
    Dr. Ostroff. So thank you for that question as well, and it 
is one that I am aware of.
    It is our understanding that the law itself stipulates the 
major food allergens, and that FDA itself cannot make changes 
to the list that is in that particular law. However, it does 
not mean that we do not have the regulatory authority to 
address other food allergens.
    Food allergens are a very important issue, particularly for 
consumers who need the information to know whether or not they 
should consume that particular product. It is obviously a 
material fact, and in some instances the label itself may not 
contain or may not list sesame as the particular ingredient. It 
may simply be on there as spice or something like that, and so 
this is something that we are working on.
    Mrs. Lowey. Can you tell me what we can expect and how long 
will it take?
    Now, I should just share with you my colleague who has been 
here probably as long as I have, maybe a little longer remember 
that at one point we did not have labels on food, and it took 
me five years. I could not get anybody on the other side of the 
aisle to sponsor the food labeling.
    Finally Jim Greenwood, and some of you may remember Jim 
Greenwood, joined me on it, and then it passed on a unanimous 
vote of the Congress, which made me very pleased.
    So I never knew about sesame at the time or we would have 
worked to include that, and signs continues to give us more 
information. So I just wonder since people are really 
suffering, getting very ill as a result of this, give me an 
idea of what it would take and how long would it take to 
include sesame and if you agree it should be considered one of 
the food allergens.
    Dr. Ostroff. Well, again, you know, we are assessing all of 
the available information so that we can develop a path 
forward.
    Mrs. Lowey. How long have you been working on this?
    Dr. Ostroff. It is certainly not a new issue, and so you 
know, developing the necessary information to take the 
appropriate regulatory steps, as you can well imagine, takes 
some time. So I cannot give you a very specific answer in terms 
of when our assessment may be completed and when we will move 
forward.
    One of the things to know, and thank you, Jay, for 
reminding me, is that we do have a citizen's petition that has 
been submitted to us on this specific issue, and so we will 
have to develop a response to that citizen's petition.
    Mrs. Lowey. I wish you would get back to me and give me 
some approximate idea how long it will take.
    Dr. Ostroff. We certainly will.
    [The information follows:]

    Please be assured that the issue of the potential allergenicity of 
sesame and the citizen petition on sesame labeling are priorities for 
FDA. The petition contains complex data and information from studies 
published in the scientific literature. FDA has also received over 350 
comments on the petition. FDA will consider the information in the 
sesame petition and any public comments received, together with the 
most recent related scientific data, in determining if any changes to 
the regulations are justified. After completing its review of the 
petition and reaching a decision, FDA will notify the petitioner 
concerning its decision to grant or deny the petition, in whole or in 
part, in accordance with our regulations on citizen petitions (Title 21 
of the Code of Federal Regulations, section 10.30). We estimate that we 
could finish reviewing the information submitted with the sesame 
petition and in the comments as early as the end of this year.
    If FDA decides to consider amending the regulations, as the 
petition has requested, we will need to initiate rulemaking, which will 
involve a longer process. In addition to evaluating the available 
relevant science, FDA must analyze the costs and benefits of the 
potential regulatory change and develop the specific proposed 
regulatory requirements. To amend the regulations, we must publish a 
proposed rule or an interim final rule, receive and respond to comments 
that may be complex and numerous, and then determine whether to publish 
a final rule. This process takes a significant amount of time and 
resources. If we need additional information before proposing changes, 
it may be necessary to publish an advance notice of proposed rulemaking 
in the Federal Register. This will add to the time and resource 
requirements. Generally speaking, the rulemaking process is lengthy and 
complex, and can take several years.

    Mrs. Lowey. Because I am particularly aware having worked 
on these issue for a very long time that this saves lives.
    Dr. Ostroff. Yes.
    Mrs. Lowey. And saves a great deal of suffering.
    Thank you, and thank you, Mr. Chairman.
    Dr. Ostroff. You know, again, there is no question that 
food allergens present in the food supply is a material fact 
that needs everyone needs to understand.
    Mrs. Lowey. Thank you for your work.
    Mr. Aderholt. Mr. Valadao.
    Mr. Valadao. Thank you, Chairman.
    Thank you, Dr. Ostroff, for making some time for us today.
    A couple comments were made here by Congressmen Yoder and 
Rooney, and I want to associate myself with those comments, 
along with the predicate date line of questioning. It is 
something that I have also been following and am very concerned 
with as well.

                            HEALTHY LABELING

    My first question, though, is the FDA has devoted 
significant resources in the past few years towards rulemaking 
to update the nutrition facts panel and related food labeling 
requirements. However, FDA's regulations about nutrient content 
claims for food have not been updated since the early 1990s and 
are based on the dietary guidance and science that is now 
outdated.
    For example, food such as pastries and pudding cups are now 
able to be labeled as healthy while foods such as nuts, 
avocadoes and salmon are not. I understand the FDA is currently 
considering a request to update the healthy nutrient content 
claim regulation and to reevaluate all its nutrient claim 
regulations.
    Does the FDA intend to reevaluate the nutrient content 
claim regulations to ensure consistency with current federal 
dietary guidance?
    And understanding the rulemaking process takes years, what 
are the FDA's plans in the upcoming year to ensure that food 
producers can make truthful statements about the healthfulness 
of their products without fearing FDA enforcement based on 
outdated nutrient content claim regulations?
    Dr. Ostroff. This could well be the shortest answer that I 
have given so far, and the answer is yes. And so as you know, 
the new Dietary Guidelines were just recently issued, and we 
will be looking very closely at the content of the Dietary 
Guidelines as it pertains to the way products are labeled and 
the information that is available on those products, 
particularly around nutrient content claims.
    And so without question, yes, we will be looking at that.
    Mr. Valadao. You found that yes a way to make it a little 
bit longer, did you not?
    Dr. Ostroff. Yes, yes, yes.
    Mr. Valadao. So, no, that is obviously a big issue. My 
district farms quite a bit.
    Dr. Ostroff. I understand completely, yes.
    Mr. Valadao. And this has a huge implication obviously on 
health. When you look at people who are actually mindful of 
their eating habits, and looking for salmon, looking for nuts, 
looking for avocadoes are all things that you would think are 
very healthy.
    Dr. Ostroff. So we think that those nutrient content claims 
ought to be in the context of the totality of the information 
that is in the label.
    Mr. Valadao. Thank you.

                                 SODIUM

    So as FDA contemplates recommendations to reduce sodium 
intake, I would like to emphasize the importance that all data 
and scientific research is considered before making decisions 
regarding sodium recommendations to the American public.
    The National Academy of Medicine identified sodium as just 
one of just four nutrients in need of dietary reference intake 
review. Additionally, the agency continues to expend resources 
on sodium reduction when it regularly reports that it lacks the 
funds needed to focus on issues Congress has asked for it to 
work on, such as implementing the Food Safety Modernization 
Act.
    Can you please comment on why the FDA continues to focus 
resources on sodium reduction while we have outdated DRI and 
the FDA lacks the funds to focus on the issues that are 
currently under Congressional mandate?
    Dr. Ostroff. So what I will start by saying is that I am a 
health care provider. I know Dr. Harris is also a health care 
provider, and we know that one of the most significant 
contributors to cardiovascular disease, other than tobacco, is 
the high levels of sodium in the American diet, and doing 
something about excess sodium consumption has the potential to 
significantly have a positive impact on cardiovascular disease 
in this country.
    There are estimates that the typical American consumes 
about 3.400 grams of sodium per day. That is far in excess of 
what the recommendations that are in the Dietary Guidelines and 
that others have recommended say that they should be, and we 
feel that rational, voluntary approaches, which I will say many 
in the industry are already embarked upon, are a very 
reasonable way to approach this problem in reducing the overall 
sodium content in the diet because most of this is in products 
that the consumers do not really have an option of 
understanding what is there.
    Mr. Valadao. And then I think I have got time for just one 
more.

                      STATE COOPERATIVE AGREEMENTS

    As you know, FDA plans to pursue a cooperative agreement 
with the National Association of State Departments of 
Agriculture and State Agriculture Departments related to FSMA 
Produce Safety Rule. FDA says this agreement will provide 
funding and support necessary to determine the current 
foundation of state law, the resources needed by states to 
implement the Produce Safety Rule as well as help develop a 
time line for successful implementation.
    What are the details of the state cooperative agreements?
    Specifically, how will the FDA partner with states to 
enhance or enforce this partnership?
    Dr. Ostroff. Thanks.
    So, you know, as I mentioned earlier, we consider the work 
that we do with the states in implementing all aspects of FSMA 
is really quite critical. They are a full partner in what we 
refer to as the Integrated Food Safety System, and one of our 
priorities is to assure that we can get resources to all of the 
states for them to be in a better position to fulfill their 
part of the various rules in the Food Safety Modernization Act, 
most importantly as it relates to produce safety.
    And so in 2016, of the additional resources that we 
obtained for FSMA implementation, $19 million of that funding 
goes to the states, and in our request in fiscal year 2017, a 
substantial amount of our request is for funding to the states.
    Mr. Valadao. Thank you.
    Thank you, Chairman.
    Mr. Aderholt. Ms. DeLauro.
    Ms. DeLauro. Thank you very much, Mr. Chairman. My 
apologies to you, Dr. Ostroff, but Secretary Burwell was at 
Labor HHS.

                   FOREIGN FOOD FACILITY INSPECTIONS

    I understand my colleague, Mr. Palazzo, asked about seafood 
and the explosion of seafood that will be coming from Vietnam 
and Malaysia. Let me just ask a quick question there because I 
want to move to a couple of other areas.
    My understanding is that we are going to cut off--and this 
is from the budget--FDA will not increase the number of foreign 
food facility inspections that it will conduct. The budget 
indicates that the percentage of port-of-entry inspections for 
imported food will drop.
    Do we have enough money? Do we have enough capacity to be 
able to deal with this issue? And I am going to ask you for a 
quick answer because I want to get to Essure.
    Dr. Ostroff. I can tell you that among the rules, the 
foreign supplier verification is really a critical aspect of 
what we are doing with FSMA because we need to assure that the 
safety of imported food is equivalent to the safety of food 
that is produced domestically.
    And so part of the funding that we received in 2016, as 
well as a large part of the request in 2017, is specifically 
devoted to be able to address import safety.

                              FSMA FUNDING

    Ms. DeLauro. I want to make a point about FSMA, which I am 
a strong supporter of, et cetera. CBO's original score was for 
$583 million. We have funded--this is our responsibility--a 
total of $267 million. That is less than half. So therefore, 
all of the implementation of FSMA, my view, is at risk, and 
that would include this inspection process that we are dealing 
with with foreign imports.
    I am going to leave it there. But you do not have the 
money. You do not have the money to deal with what FSMA asked 
us to do and to protect the food supply coming in. And that is 
going to increase substantially in tainted food coming from 
Vietnam and from Malaysia.

                                 ESSURE

    Let me move to Essure, which is something I am very 
concerned about. We have 5,000 adverse event reports filed by 
doctors and patients about this contraceptive device. I am not 
going to go into all of the details. We have seen four adult 
deaths related to the device, five fetal deaths that occurred 
in women who became pregnant following the placement of Essure.
    Thousands of women have signed a citizens petition to get 
Essure taken off the market. I wrote to you as well, asking for 
an investigation into this effort and asking that while the 
investigation is pending, that it come off the market in order 
to save lives.
    We put language into the 2016 Omnibus Appropriations Act 
that directs the FDA to issue recommendations on how to address 
concerns raised regarding Essure. The agency has to the end of 
this month to issue them. Are you going to issue them? And I am 
going to ask the other question: Are we going to take this 
product off the market and save women's lives?
    Dr. Ostroff. Let me mention a couple of things. One of them 
is that part of our budget request in 2017 has to do with 
moving forward in something called the National Medical Device 
Evaluation System. And the reason that I think it is pertinent 
to this question is that one of the major objectives of that 
system is to be able to do better monitoring than we currently 
do of products in the postmarketing setting, no question about 
it. And so that would help contribute to being able to address 
issues like this.
    The second thing that I will say is that we are very well 
aware of the language that is in the Omnibus. As you know, we 
took this issue to an advisory committee last fall. We received 
a lot of feedback from the advisory committee. There were a 
large number of patients that participated in that discussion. 
We have taken that feedback. We indicated that we would be 
issuing a report on those findings by March 1st, and we intend 
to do so.
    Ms. DeLauro. Well, but I am asking you again. I do not know 
how much more monitoring needs to get done of a product that so 
far has killed five women and four fetal deaths, and the 
hundreds of thousands of women who have signed a petition 
talking about their specific incidents. And in the meantime, 
while we were going to take some of the 2017 money and look at 
monitoring, this product is there and women are at risk.
    And I do not know how much more data we need in order to be 
able to say, ``let's take it off the market until you collect 
more of your data,'' in the meantime, thereby trying to save 
peoples' lives and pain for women around the country. I 
strongly urge you to take this off the market until you are 
finished with an investigation.
    Do not tell me on March 1 that we are going to continue to 
study this effort to make sure that we have all of these 
various pieces in place while women are suffering out there in 
the hundreds of thousands--not two, three, 10, 12, 100. 
Hundreds of thousands who signed the petition.
    Thank you, Mr. Chairman.
    Mr. Aderholt. Thanks. Mr. Young.
    Mr. Young. Thank you, Mr. Chairman. Doctor and Mr. Tyler, 
thank you for being with us here today.
    As you know, the FDA is moving toward its menu labeling 
final rule. Can you just talk about how that is going with 
stakeholders and where we are on meeting with the industry and 
stakeholders?

                             MENU LABELING

    And also, you are supposed to give some kind of educational 
and technical assistance as well when there are some issues 
that came up in your meetings with stakeholders. And I hope you 
will allow in the end for a certain amount of the use of 
technology and innovations in allowing that to be involved here 
with menu labeling because some folks have concerns it could 
really put a mandate on some of these restauranteurs or grocery 
stores, and the technology and those innovations can be very 
helpful.
    Dr. Ostroff. You are specifically referring to menu 
labeling?
    Mr. Young. Yes.
    Dr. Ostroff. Yes. So obviously, I hate to be redundant, but 
everything is a high priority for us. And I wish that we could 
make progress further. Again, related to what is in the 
Omnibus, we certainly understand the language of this in the 
Omnibus that indicates that until the guidance is finalized 
regarding implementation of the menu labeling requirements, 
that they do not take effect, either, until December of this 
year or 12 months after that guidance is finalized. And so we 
have been working quite hard to get the guidance finalized so 
that we can start moving forward towards implementation.
    As part of finalizing the guidance, obviously we have had a 
lot of input from a variety of stakeholders, and we have been 
working with other stakeholders in terms of the implementation.
    Mr. Young. Give me examples on the stakeholders.
    Dr. Ostroff. Well----
    Mr. Young. I mentioned grocery stores because a lot of the 
grocery stores have delis and they have restaurants within 
them.
    Dr. Ostroff. Yes. So there are a fair number of 
stakeholders that have a role in this, and they range from the 
food marketers to the restaurants themselves, and then the 
various associations. We have talked with all of these 
individuals repeatedly.

                       PHARMACEUTICAL ADVERTISING

    Mr. Young. Thank you. I want to talk about industry usage 
of the internet and social media platforms when it comes to the 
guidance for pharmaceutical advertising. Early this year the 
FDA put out its guidance agenda for 2016, listing new and 
revised guidance. Give us an update on that. How is that going? 
And how is the FDA seeking stakeholder input on this as well?
    Dr. Ostroff. As you know, any time that we issue guidance, 
it goes through a proposal, and we receive a variety of 
comments before we finalize any guidance that we put out or any 
regulations that we put out. And this would be no different 
than that.
    As far as the specifics of this, we would be happy to give 
you a further detailed briefing in terms of where that stands 
and input that we received.
    Mr. Young. And I am not going to spell out the acronym, but 
we are talking about the social media advertising and 
promotional labeling of prescription drugs and medical devices.
    Dr. Ostroff. Yes. And I will not say the acronym, either.

                      REGIONAL FOOD SAFETY CENTERS

    Mr. Young. OK. Food safety training centers. Last week the 
FDA announced a grant for Iowa State University to establish 
the North Central Regional Center for Food Safety Training, 
Education, Extension, Outreach, and Technical Assistance.
    Dr. Ostroff. Another long one.
    Mr. Young. Another one. To comply with the Food Safety 
Modernization Act requirements, last year the FDA estimated it 
was $276 million short of what is needed to roll out the FSMA 
guidelines and regulations. And this time around, the 
administration proposed another $18 million increase in the 
fiscal year 2017 budget.
    I am pleased the FDA selected Iowa State University. But 
can you talk about how funding for the FSMA could impact the 
goals and operations of not only this new center, but also the 
other centers as well?
    Dr. Ostroff. You know the total request on the food side of 
the agency was in two areas. It was direct budget authority as 
well as the proposed user fees that have been put forward 
repeatedly in the last several years. And if again, 
Congresswoman DeLauro mentioned this, that the CBO had made an 
estimate of the total costs of FSMA implementation, and we 
ourselves had put together estimates of what it would take to 
fully implement FSMA.
    And those numbers we have looked at repeatedly. They are 
not that far off from the CBO, and if you put the number of the 
budget authority increases with the user fee increases, it 
would get us a substantial part of the way towards what we need 
to fully implement FSMA.
    As far as the training centers, they are a very important 
part of what we are doing with FSMA because, as I said earlier, 
being able to provide the technical assistance and the 
educational that is required so that all of the stakeholders 
implement FSMA correctly rather than us having to come after 
the fact and say you did not do it quite right is really very 
important.
    And so we have four centers of excellence in technical 
assistance. One of them is Iowa State. One of them is in 
Vermont at the University of Vermont. And the other two, one is 
in Florida and the other is in Oregon.
    Mr. Young. Thank you. I have a few more questions. I will 
wait till the next round. Thank you, Mr. Chairman.
    Mr. Aderholt. Thank you, Mr. Young.

                         GENERIC DRUG LABELING

    During the FDA hearing two years ago, Members on this panel 
raised concerns about the potential negative impacts from an 
FDA proposed rule on label changes to generic drugs that had 
the potential to allow different warning labels in the 
marketplace at one time. Members also raised questions about 
the motivation for this proposed rule after it was revealed 
that FDA met with a trial lawyer group prior to the FDA's 
issuing of the proposed regulation.
    This proposal that we are talking about is against the 
backdrop of an environment, and I know you are well aware of 
it, in which many in the public are concerned about the rising 
cost of prescription drugs. By some estimates, the proposed 
change would increase the cost of the generic pharmaceutical 
industry by as much as $4 billion annually.
    FDA, in spite of receiving more than 23,000 comments on the 
proposed rule, has never met with the industry representatives 
to discuss the rule, nor has the agency made any effort to 
provide a realistic estimate to how the rule would have an 
impact on prescription costs and access.
    My question: How can the administration tell the public 
they are concerned about rising cost of prescription drugs on 
one hand, and then on the other finalize a rule that could add 
another $4 billion to the cost of prescription drugs?
    Dr. Ostroff. What I can say is that this is also an issue 
that I am very well aware of, and it is a very complicated 
issue. What I can say without question is that our primary 
consideration is not related to litigation; it is related to 
being able to assure that the labels contain information that 
is important regarding the safety of products, whether it is 
the reference drug or whether it is the generic.
    And so this very complicated interplay between the licensed 
reference drug and the generic drugs and the safety information 
that is contained on them regarding adverse events is a really 
important issue. And it is a very complicated issue because of 
the way that the regulations and the statutes are written.
    And so we have been looking at this for an extended period 
of time. And as you know, there has been a fair amount of 
feedback that we have received, and we continue to work on 
trying to finalize this.
    Mr. Aderholt. Well, I just want to point out the 
inconsistency because the cost of drugs is a very real concern 
I think that the American public is concerned about. And then, 
of course, adding another $4 billion of costs would be 
something that would be inconsistent with the concerns.
    During Dr. Califf's confirmation hearing over on the Senate 
side, he was asked about the status of finalizing the labeling 
rule. In response to that question, he said that finalizing the 
rule was a top priority, and added that FDA needs to make sure 
that if there are problems with generic drugs that come up 
later, and they do with a better surveillance system, that is a 
way of making sure the labels are up to date and consistent 
across similar products.
    I believe that the pending rule would require the generic 
company that identified the adverse event to unilaterally 
change their drug label information prior to the review and 
approval of the FDA. But it would not require the remaining 
generic companies or brands to change their labeling, this 
continuing to allow for a lack of consistency or a lack of 
sameness.
    In light of your desire to assure consistency and timely 
updates of information across similar products, why do you 
believe this proposed rule is necessary?
    Dr. Ostroff. This is part of the complexity. And part of 
the difficulty is that very often, for many of these products, 
there is just not one generic; there are multiple generics. And 
so we do believe that it is very important, to the degree that 
we possibly can, that there is consistency across all of the 
various forms of a particular drug because it may be that one 
manufacturer has access to information that the others do not. 
And there could be circumstances, for instance, where the 
reference product is not even marketed any more.
    And so the ability to move information back and forth 
between the reference manufacturer and the generics can be very 
challenging. And so getting this correct in a way that we have 
consistency in the information that is available across all of 
the generics for a particular product type is really important.
    Mr. Aderholt. So when do you anticipate making a final 
determination on whether to move forward with this rule?
    Dr. Ostroff. I cannot tell you exactly when we may get to 
that point. But it is something that we are working quite hard 
on.
    Mr. Aderholt. Do you have any evidence or data to suggest 
that generic drug manufacturers are not compliant with the 
current reporting requirements?
    Dr. Ostroff. I would have to get back to you. I am not 
aware of any.
    [The information follows:]

    The proposed rule focuses on the obligation to update labeling to 
reflect newly acquired information, not on the legal duties to report 
adverse drug events to FDA or, more generally, to meet post-market 
surveillance requirements associated with adverse event reporting 
obligations. The proposed rule neither cites, nor is based on, evidence 
that generic drug manufacturers are not submitting to FDA required 
reports of spontaneous adverse event reports that they receive.

    Mr. Aderholt. Thank you.
    Mr. Farr.
    Mr. Farr. Thank you very much, Mr. Chairman. I also share 
that line of questioning on generic labeling. We are concerned 
about the cost increase to them.

                               SUNSCREEN

    Every year this committee talks about the Department doing 
sunscreen labeling, and nothing gets done. Here we are lauding 
the Cancer Moonshot, and yet with sunscreen labeling, we have 
not gotten anything. This has gone on for years. What is the 
delay, and when are we going to get you to deal with it, 
sunscreen labeling?
    Dr. Ostroff. Thank you for that as well. This is, again, a 
very important issue and it has to do with taking action on it.
    Mr. Farr. Do you have a date when you are going to get to 
it?
    Dr. Ostroff. Well, as you know, we looked at all of the 
products that were submitted to us and determined in each 
instance that there was not information to make a final 
determination, and have set out a very clear course that the 
various manufacturers of these products have to use to be able 
to assure us of the safety of these products.
    These sunscreens, when they are used as they are supposed 
to be used, are repeatedly applied to large portions of the 
body. And we feel that it is really, really, really critical to 
be able to determine whether or not there is systemic 
absorption of these materials that might have long-term 
consequences, health consequences, to individuals. We recognize 
that that is a very delicate balancing act in terms of 
prevention.
    Mr. Farr. I know. I just want a simple answer. I just 
remember earlier we were talking about GMOs. You said----
    Dr. Ostroff. Yes. But there is not a simple answer.
    Mr. Farr [continuing]. You do not pay much attention into 
the process. You want to know what the facts are. I think the 
questions we are asking is, the facts are, when are these dates 
going to happen? Is it going to be this year? Is it going to be 
something? Is this going to be back here asking the same 
question again next year as we did the last couple of years?
    Dr. Ostroff. I can say that we have had--including myself, 
have had discussions with the various manufacturers about the 
pathway forward to be able to accumulate the information.
    Mr. Farr. I do not care about process. Give me an answer of 
time.
    Dr. Ostroff. Well, we have set out for the manufacturers 
what they need to do to provide the information to us so that 
we can make a determination.
    Mr. Farr. And when will that be?
    Dr. Ostroff. Well, the manufacturers have to get back to 
us.
    Mr. Farr. Never mind. Never mind.

                              COMPOUNDING

    Compounding. With the additional funds that we gave you to 
assist in the oversight of the pharmacy compounding for human 
and animal health, I am concerned, from the reports that I 
hear--and these are reports that are coming back to our office 
from patients, physicians, veterinarians, pharmacy groups, that 
the FDA is exceeding the authority granted by Congress in 
implementing the guidance for both human and animal drug 
compounding.
    The concern expressed is that these actions will 
unreasonably limit the patient and provider access to 
compounded medications, and will result in the kind of legal 
challenges that Congress sought to prevent when it passed the 
Drug Quality and Security Act of 2013.
    Given the language we included in last year's budget 
agreement, what assurances can FDA provide us that these 
resources are being spent in a way that does not confuse the 
ability of pharmacists to compound human drugs versus 
veterinary drugs?
    Dr. Ostroff. Compounding is an area that we have devoted a 
lot of efforts to, and particularly developing all of the 
necessary guidance to implement DQSA. And the critical aspects 
of this is that compounding go forward in a way that is safe, 
especially as it relates to sterile products. And that is 
precisely what we are doing.
    Mr. Farr. But Dr. Ostroff, I have never had anybody in 
front of this committee that is better at talking bureaucracy 
and not getting--you always talk process. The questions here--
everybody has been asking all day for dates, times, when are we 
going to get decisions. And you talk about, well, we are doing 
stuff, but nothing to answer. I do not know what assurances you 
are giving us. But let me go on to another question. Maybe I 
can get a straight answer.

                             MEDICAL GASES

    Congress required the FDA to promulgate and update 
regulations on medical gases by July 9th of this year. That is 
only three and a half months away. Yet the FDA has not even 
issued a proposed rule on the topic. I know that the FDA has 
issued guidance on the matter, but that guidance is not helpful 
to the industry because inspectors are relying on old 
regulations and ignoring the new guidance. When will FDA issue 
the regulation as the law is intended?
    Dr. Ostroff. This is something that I have also learned a 
lot about.
    Mr. Farr. That is a ``when'' question. When?
    Dr. Ostroff. This is a--well, we understand the deadline. 
And so the requirements that were in FDASIA was to be able to 
assess the situation, to submit a report to Congress about 
things that we considered to be necessary, and it is our 
assessment that most of the changes that need to be done in the 
area of medical gases--and again, we have done this with a lot 
of discussion with industry----
    Mr. Farr. When?
    Dr. Ostroff [continuing]. Including last December, can be 
done through guidance. We did have a proposed rule that was 
issued in 2006, and one of our objectives is to be able to 
finalize that rule by the date----
    Mr. Farr. When?
    Dr. Ostroff [continuing]. By the date that was established.
    Mr. Farr. By July 9th?
    Dr. Ostroff. Yes.

                            TOBACCO DEEMING

    Mr. Farr. All right. Then I want to just follow up on 
Nita's question. Time is out. But this is just a ``when.'' When 
will the tobacco regulations get vaping under control?
    Dr. Ostroff. I cannot give you a specific date as to when 
we may be able to get the final deeming rule out. We have been 
working very hard----
    Mr. Farr. This year?
    Dr. Ostroff [continuing]. In finalizing that rule. I am not 
able to give you a specific date. I certainly was hopeful that 
that rule would be final while I was still in the acting role. 
It is not. But we are working as hard as possible to be able to 
finalize it.
    Mr. Aderholt. Dr. Harris.

                             TRADE SECRETS

    Dr. Harris. Thank you very much. And I am sorry. Like the 
gentlelady from Connecticut, I was next door with Secretary 
Burwell and missed some of the discussion about the trade 
secrets. But I just want to associate myself with the concern 
that we have to address making sure that trade secrets are 
protected when the FDA has access to them.

                                 SODIUM

    Let me follow up a little bit about the sodium discussion 
the gentleman from California started. And you know I have 
indicated my concern in meetings with you. It comes to my 
attention that the National Academy of Medicine has said that 
the DRI for sodium probably needs to be reviewed. I think it 
was last done in 2003 or the early 2000s. It has been a while 
ago.
    Is that something that--do you know, for instance, what 
their time frame is to do their DRI review of sodium?
    Dr. Ostroff. No.
    Dr. Harris. OK. Is that something that you would take into 
consideration as the FDA considers where to go with sodium? I 
would hope you would wait to see what the DRI is.
    Dr. Ostroff. Well, yes. Again, we will take all sources of 
information, including what is in the Dietary Guidelines, into 
consideration as we move forward with this. We think that the 
voluntary approach to reducing the overall amounts of sodium in 
the food supply is the right approach.
    Dr. Harris. All right. And of course you realize as a 
physician what we are probably going to find out a few years 
from now, is that for some people, it makes a difference. For 
some people, it does not. And we have no idea which camp you 
are in right now, but I am sure we will know in a few years.

                              ADDED SUGARS

    With regards to the nutrition facts label, there is just 
some concern I have that adding the added sugars designation is 
probably going to--I think it may confuse some people because, 
in my mind, it is the total sugars that really makes the--I 
mean, you really want to make sure that total sugar stays below 
a certain percent of your diet, and that subdividing it may 
just add confusion.
    So my question is simple. I understand that there are 
studies that look at how consumers process that information, 
and whether it actually helps them in decision-making or not, 
whether it confuses them, because it does distract you from the 
discussion of total sugars in a product.
    Do you plan to do any consumer research to see what the 
consumer understanding of the proposed added sugar addition to 
the nutrition facts label will do?
    Dr. Ostroff. We have done that sort of consumer research, 
and that has helped inform the direction that we feel we should 
go in with the nutrition facts label. And I understand what you 
are saying about the total sugar versus added sugar. And it is 
not the same because in general, when sugar is naturally 
present in many food items, it is present in association with 
many other important parts of the diet for a proper balanced 
diet and health; whereas added sugars are essentially empty 
calories and they do not contribute to a balanced and healthy 
diet.
    And so we feel it is very important that there be a 
distinguishing between total sugars and added sugars. And that 
has been what the proposal was. And we have been working on 
what the best way is to present that to the consumer.
    Dr. Harris. Good, good. Because again, I think there can be 
some confusion. Yes, I understand there may be some other 
benefits of foods that have sugars. But total sugar intake 
would be important.

                            TOBACCO DEEMING

    Finally, with regards to the predicate date for tobacco 
products and the whole idea of regulation, as we talked about 
with some of the e-cigarette regulation, what I hope does not 
get lost is that for some people, there is harm reduction when 
they switch to those products. I remember one of the people on 
my staff, as I think I told you last year, I mean, this guy 
smoked a couple packs a day. And once he went to the e-
cigarette, his use went way down, and I am convinced that his 
risk is lower.
    Again, population-wide, I do not know. But we just should 
not lose sight of the fact that there are some individuals in 
whom harm reduction occurs because of these products. So that 
as you go forward, to make it easier to market a new cigarette 
because of the predicate date, then a new e-vaporization 
product just is one of those unintended consequences that you 
can come up with.
    And I thank you again, and thanks for being before the 
subcommittee. I yield back.
    Mr. Aderholt. Ms. Pingree.
    Ms. Pingree. Thank you, Mr. Chair.

                            HEALTHY LABELING

    I want to associate myself with a couple of my colleagues' 
remarks. Mr. Valadao is gone now, but I do appreciate that he 
brought up some of the concerns. He mentioned nuts, avocados, 
salmon, and I know you said you are close on those guidelines. 
But because there has been so much rethinking about healthy 
fats, I just think it is important that that information is out 
there and that we catch up with the labeling and what the 
public and nutritionists are already telling us.
    And then also Congresswoman DeLauro and Mr. Palazzo both 
mentioned some of the issues around imported shrimp, and the 
challenges with potential contamination are issues. I do want 
to take issue a little bit with Mr. Palazzo, who suggested that 
the Gulf of Mexico has the tastiest shrimp. [Laughter.]
    I'm very happy to have a challenge with Maine shrimp. This 
is our season right now, and they are pretty darn good. So we 
might want to just have a little face-off over that. Yes, yes. 
I think a blind taste test.
    Mr. Palazzo. I accept that challenge. I would happily 
participate in a taste test.
    Ms. Pingree. OK. There you go. I kind of think I am going 
to win, but I am willing to let you into it.

                         ANTIBIOTIC RESISTANCE

    But I just want to have a little bit of a dialogue about 
antibiotic resistance with you. I know that is a huge concern 
in the public health community; providers and the 
administration have put some focus on it. I am just worried we 
are not doing enough and we are not doing enough fast enough.
    So I know that the FDA published guidance in 2013 asking 
industry to remove the production claims for medically 
important antimicrobials, and I think that is good. In 2015, 
there was the Veterinary Feed Directive Final Rule and 
Guidance, again good. And the fiscal year 2017 budget request 
is $41.6 million for antimicrobial resistance activities, which 
is the same as fiscal year 2016.
    So I am a little concerned about whether FDA has the 
resources to ensure FDA is compliant with the Veterinary Feed 
Directive and FDA's guidance on production claims for medically 
important antimicrobials. So can you tell me what you are 
thinking? How much of your budget request will go towards the 
animal side of the FDA's antibiotic resistance activities? Do 
you have the resources to monitor compliance with the directive 
and the production claims? And if you do not have sufficient 
resources, then what is the impact on public health and safety?
    Dr. Ostroff. Thank you for that question. This is a very 
important year for us in terms of the activities related to the 
veterinary side of the antimicrobial resistance challenge in 
that the 2013 guidance that you referred to, which removes 
production indications for medically important antibiotics, 
actually takes effect at the end of this year.
    In addition to that, the Veterinary Feed Directive rule 
went final in the fall of last year. And so they will both be 
in place as of the end of this year. And one of our really 
critical challenges is to be able to monitor the impact of 
these changes, in particular establishing a baseline.
    We have multiple systems in place to be able to monitor 
this, including a requirement that was in the original animal 
drug user fees, to collect data on sales of medically 
important--or sales of antibiotics for use in food animals. And 
so we have been collecting that data. And we have actually 
proposed that we make some changes in the way that data is 
collected so that we do it by species and have better ability 
to track sales of antibiotics by animal species.
    In addition to that, we have the National Antimicrobial 
Resistance Monitoring System, which actually collects samples, 
isolates various important foodborne pathogens, and looks at 
the resistance patterns. And that is yet another way for us to 
be able to monitor the impact of these changes.
    However, one of the very important aspects of this is 
actually to be able to drill down and get some information 
about what is actually happening on the farm. And we had a 
meeting last September that we held jointly with USDA and CDC 
to put together the framework for being able to do this. 
Unfortunately, we do not have the funding to be able to 
implement it.
    And so we are trying to work on what the options may be to 
be able to accomplish this because it is really critical that 
we establish the baseline. In 2017, we are proposing moving 
some of the resources that we received on the human side--not 
to say that they are not also very much needed--to move them 
over to the veterinary side to be able to do some of these 
activities.
    Ms. Pingree. Well, thank you for your response. And I would 
express my alarm and concern that there is not sufficient 
funding, and certainly encourage you to do whatever is 
possible, and this committee to support you in that, to make 
sure we do have good baseline data and that we are able to 
follow what happens after this directive comes into place.
    Dr. Ostroff. Thank you.
    Mr. Aderholt. Mr. Palazzo.
    Mr. Palazzo. Thank you, Mr. Chairman.

                             SEAFOOD SAFETY

    Coming back to shrimp again--I am glad my colleagues on the 
other side see that this is an important issue--but to follow 
up on your risk-based approach to inspect shrimp being imported 
into our country, funding has been provided. It was provided to 
the FDA in fiscal year 2016. I think you received an additional 
$5 million to look into foreign high-risk inspections.
    And how are you using those funds? Are you using the data 
that is available, or are you trying to depend on growing the 
full-time employees at FDA? Because I know you cannot cover all 
these nations and all these risk areas. But if there is data 
out there that you can use to target these high-risk businesses 
that we know are sending polluted shrimp, or trying to send 
polluted shrimp, to America----
    Dr. Ostroff. That is the way that that funding is being 
used, to be able to put together as many information sources as 
possible so that we can most appropriately develop the risk 
framework for the inspections and the sampling.
    Mr. Palazzo. So it helps. When we have a lack of resources, 
we cannot really afford hiring all the people to do the job.
    Dr. Ostroff. Correct. So we have to----
    Mr. Palazzo. We use contractors, use data.
    Dr. Ostroff. Well, we have to make maximum use of the 
resources that we do have available.
    Mr. Palazzo. OK. If you give me a second.

                            ARSENIC IN RICE

    And going back to rice, would the risk assessment or other 
guidance establish a regulatory, whether it is enforceable or 
unenforceable, limit on the amount of arsenic in rice or rice 
products?
    Dr. Ostroff. The risk assessment is what it says that it 
is, which is a risk assessment. But what we are hoping to do in 
concert with the risk assessment is a risk management plan. So 
that is also a very important component of what it is that we 
are doing, as well as how we would engage in risk communication 
about the information that is contained in the assessment.
    Mr. Palazzo. Do you know what type of level it is going to 
be, whether it is guidance, regulatory, or action?
    Dr. Ostroff. Well, again, it is still being worked on.
    Mr. Palazzo. Still being worked on. Since arsenic is an 
element common in soil, water, and most foods, what authority 
are you using to regulate this naturally occurring substance? 
And has the authority changed since the issue was raised early 
last year? And if so, why?
    Dr. Ostroff. It is a naturally occurring substance, and 
rice seems to disproportionately absorb arsenic from the way 
that it is produced and from the soil and from the fact that it 
sits in a lot of water.
    And so not only are we doing the risk assessment and 
looking at ways to reduce any health risks that may be 
associated with the presence of arsenic, particularly in 
organic rice, and taking a very comprehensive approach not only 
in terms of what standards may be in place but also ways to be 
able to reduce that absorption and ways that the actual amount 
of arsenic that may be present in rice that is consumed can be 
reduced.
    Mr. Palazzo. Is the FDA planning on limiting any other 
foods that you are aware of, issuing limits on other foods 
similar to what you are reviewing with rice right now?
    Dr. Ostroff. Well, you know we always are reviewing 
information about health risks in the food supply and taking 
actions when they are necessary.
    Mr. Palazzo. All right. Thank you, Mr. Chairman. I do not 
know if anybody is craving shrimp quesadillas right now, but I 
am. [Laughter.]
    Mr. Aderholt. Mr. Bishop.
    Mr. Bishop. Thank you very much. I want to talk about 
Congressional directives regarding the FDA foods program. The 
enacted fiscal year 2016 agricultural appropriations bill 
contains a number of other policy riders for a range of 
programs that are related to FDA's foods program, and not all 
of the provisions are directly related to food safety 
activities but involve other FDA food programs.
    For example, the enacted law prevents the use of any funds 
to, one, implement the 2015 Dietary Guidelines for Americans 
unless the Department of Health and Human Services and the U.S. 
Department of Agriculture comply with specified requirements; 
two, prohibits implementation of policies that would require a 
reduction in the quantity of sodium contained in the federally 
reimbursed meals, foods, and snacks sold in schools below a 
certain level set in the regulation; and three, enforce FDA's 
final regulations regarding restaurant menu labeling.
    The fiscal year 2016 appropriations bill also allows states 
to grant an exemption to schools from certain whole grain 
requirements that took effect in July 2014, and it asserts that 
no partially hydrogenated oils shall be deemed unsafe or 
adulterated until FDA's formal phaseout, starting in June 2018.
    The Senate committee report further expresses concern that 
FDA has not published the results of its study of consumer 
responses to nutrition labeling regarding added sugars. Can you 
describe how the FDA has responded to these congressional 
directives within the agency's food program? I note that FDA's 
preliminary responses to some of these requirements were 
discussed in your justification of estimates for the 
Appropriations committee. So would you address that for me, 
please?
    Dr. Ostroff. Sir, not all of those things that you cited 
fall under FDA as opposed to USDA. But what I can comment on 
are a couple of the things that you mentioned. One of them is 
the issue of the partially hydrogenated oils. And as you are 
probably well aware, in the middle of last year we did issue a 
final determination that trans fats, which PHOs are the primary 
source of trans fats, would not be considered generally 
recognized as safe. And there is a three-year time period for 
them to be phased out of the food supply.
    We also did offer opportunities for petitions to come into 
the agency that would help inform the determination that was 
made. And so in the interim time period, before that actually 
takes effect in 2018, we will be considering any petitions that 
come in.
    As far as the nutrition facts label, as I was mentioning 
before, we did put a re-proposal out last year related to added 
sugars. And that included having a reference value for added 
sugars in the proposal that was issued, which is consistent 
with the dietary guidelines, is that in the average diet, not 
greater than 10 percent of calories should be in the form of 
added sugars. And that is the direction that we have been going 
in with the nutrition facts label.
    Mr. Bishop. Thank you, sir. That is all I have.
    Mr. Aderholt. Mr. Young.
    Mr. Young. Thank you, Mr. Chairman. Just having a very 
important conversation.
    My colleague, Ms. Pingree, was here and talking about 
antimicrobials. And you are asking for data from drug makers 
out there, and I wonder how that is going. Are you getting the 
information you need? What are you specifically looking for? 
And if you are not getting what you need, what do you need from 
us to help you out?
    Dr. Ostroff. Yes. As you know, that provision to collect 
information on annual sales of antibiotics was included in the 
Animal Drug User Fee Act in 2009. And so we have been, on an 
annual basis, collecting that information and publishing 
reports on the findings.
    One of the things that I can say to you is that if you look 
at the trend that has occurred between 2009 and the last report 
that we issued, which was, I believe, in 2014, covering 2014 
data, there has been a 22 percent increase in the overall sales 
of antibiotics for use in food animals. And if you look just 
between 2013 and 2014, it has increased by 4 percent.
    And so the trend is certainly not going in the right 
direction. However, I do think it is important to point out 
that that is data that is being collected before the 
implementation of what was just discussed. And part of our hope 
is that when these are implemented, that we will see the trends 
change.
    As I also mentioned, one of the things that we think is 
very important to be able to collect as part of that 
information is sales by species because that will enable us to 
be more focused in terms of if we do not see what we think we 
ought to be seeing as a result of these changes, it will help 
us better target where the problems may be.
    Mr. Young. Thank you. Keep us abreast of how this is going 
with data collection.
    I want to try to get a timeline from the FDA on their draft 
guidance regarding animal drug compounding. And there is some 
concern that the FDA's draft guidance on compounding from bulk 
drug substance could complicate a veterinarian's ability to 
treat animals. And I wonder if you could address the timeline, 
and how you will incorporate changes reflecting the concerns of 
the stakeholders such as veterinarians?
    Dr. Ostroff. Well, all I can say is that we always look at 
the comments that we receive very carefully. I cannot give you 
a time frame. I know that frustrates Congressman Farr, but all 
I can say is that we will look very carefully at all the 
comments that we receive.
    Mr. Young. Thank you for being here, both of you. Thank you 
for your service. I appreciate it.
    Dr. Ostroff. Thank you.
    Mr. Young. And I yield back, Mr. Chairman.
    Mr. Aderholt. Ms. DeLauro.
    Ms. DeLauro. Thank you, Mr. Chairman.

                              ADDED SUGARS

    Dr. Ostroff, I want to say thank you for the designation of 
added sugars. I think that is a great thing. And thank you for 
the work you have done on menu labeling. And we do not have 
time here at the moment, but if you can get back to me on this 
recent bill that was passed in the House of Representatives and 
how that may undermine the work that you have done at FDA to be 
responsive, quite frankly, to industry concerns, and what would 
be the ramifications if this was passed into law.

                          DIETARY SUPPLEMENTS

    Also, another answer to a question is, can you tell me how 
this new Office of Dietary Supplement Programs is going to 
work, if you have the money to do that, and are you moving in 
the direction of premarket approval for dietary supplements.
    Naloxone: The work that you guys are doing in terms of 
including reclassification of it as an over-the-counter 
medication, given the scale of the opioids.
    And misleading food labeling--I will not go through all of 
the recent articles on food fraud and mislabeling, a recent 
discovery that grated products labeled 100 percent parmesan 
cheese in fact contain higher levels of cellulose than are 
allowed under the law. This does have trade implications since 
we are in negotiation with Europe on these things. And I know 
that U.S. folks want to have these geographic indicators. But 
if we have a product that is misleading and is not what is in 
the product, we need to know that, and we rely on you to do 
that.

                          SALMONELLA OUTBREAK

    But two questions I do want to address a little bit more 
substantively is the cucumber outbreak, and very serious. Six 
deaths across 39 states, Salmonella-tainted cucumbers, 888 
illnesses, 191 hospitalizations. A public health crisis. What 
is happening, though, is cucumbers, as I understand it--and I 
am not a farmer--but they have a two-week shelf life. But CDC 
is reporting an additional number of consumers being sickened.
    So my question is, what is the agency doing to investigate 
all levels of the supply chain to determine the ongoing source 
of the contamination? Are you working with food retailers to 
ensure proper cleanup and decontamination? How are consumers 
still being sickened if the cucumbers have been recalled and 
the FDA has issued import notices?
    Dr. Ostroff. Thank you for that question, and I wish that I 
had the ultimate answer to the last question that you asked 
because it is something that we are following very closely and 
we are watching closely.
    I will say one thing, and that is that if you need an 
example of why what we are doing with FSMA is so absolutely 
critical, that particular outbreak hits two of the very 
critical aspects of FSMA. One of them is produce safety, and 
the other one is foreign supply.
    Ms. DeLauro. Foreign supply.
    Dr. Ostroff. Because we had, in 2015, several outbreaks 
that have that particular combination. And it is why it is so 
critical that we make progress in implementing the produce 
safety rule, regardless of whether we are talking about produce 
from outside the country or inside the country, and that we 
move on foreign supplier verification so that we can do more, 
working with our Mexican colleagues in the produce safety 
partnership to be able to address these types of problems.
    This was a very sizeable outbreak, as you pointed out. And 
we, working with CDC, looking at various clusters of disease, 
were able to determine the distributor and the source of the 
distributor's cucumbers that led back to nearby Mexico. And 
based on that information, we issued two import alerts in 
September. And as a result of those import alerts, if you look 
at the data for that outbreak, about 88 percent of the cases 
occurred before we issued the import alert. And so they 
certainly looked like they played a major role in reducing the 
risk associated with these cucumbers.
    But one of the things, as you pointed out, that we have 
observed is this very steady, low-level incidence of cases that 
are associated with the very same strain. And we have been 
working very hard throughout the supply chain, including doing 
extensive sampling of cucumbers that are being imported, to see 
if we can identify other potential sources of why this is 
occurring and whether or not it is that there are other sources 
where the Salmonella happens to be in cucumbers that are coming 
into the country, if it has got something to do with the crates 
that they are packed in, or whatever it happens to be. This is 
something that we are looking at quite closely.

                     DIRECT-TO-CONSUMER ADVERTISING

    Ms. DeLauro. I am going to try to sneak in one last 
question, if the Chairman will let me. And this is skyrocketing 
drug prices. The United States and New Zealand are the only two 
countries that allow direct-to-consumer drug advertising. In 
2007, WHO made a strong recommendation against the practice, 
calling it, and I quote, ``A significant risk of exposing more 
patients to the adverse effects of new drugs.''
    Federal law does not require the FDA to approve these 
advertisements before they are released to the public. The ads 
often run with erroneous or misleading information. The FDA can 
take action against these companies, but only after the ads 
have been aired and have been seen by the public, which can 
sometimes be too late.
    What is the FDA's capacity to review all the direct-to-
consumer advertisements that get submitted for review? What is 
your timeline for review? What resources or funding would you 
need to be able to review the ads in a timely manner?
    Dr. Ostroff. Yes. What I would say is that because I do not 
have those specific figures available to me, it is probably 
something that would be best if we were to get back to you.
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    Ms. DeLauro. OK. A very serious issue because we know that 
the direct-to-consumer advertising is absolutely linked to the 
increased health care costs. People see the ad. They think, oh, 
my God, this is for me. They go to the doctor and they ask for 
it. And so it is very, very significant issues associated with 
it.
    Thank you very much. And thank you, Mr. Chairman.

                             PREMIUM CIGARS

    Mr. Aderholt. Thank you. We have talked a little bit about 
tobacco and youth access and the deeming issue. Premium cigars 
have also been an issue. It does not have that youth access 
issue, and they are only sold in adult establishments. The 
goals of the Tobacco Control Act were to limit youth access, as 
you know, and prevent negative health effects from habitually 
used products. Neither apply, in my understanding, to premium 
cigars.
    The question is, should FDA leave this category out of the 
regulations?
    Dr. Ostroff. Again, I think that you know what was in the 
proposed rule related to cigarettes, particularly premium 
cigars. We asked several questions and we solicited comments 
about how premium cigars ought to be addressed. And I cannot 
presage what may be in the final rule.
    However, I know that we have looked at available 
information regarding how premium cigars are used. And I think 
that you may be a bit surprised at the fact that there actually 
are younger individuals that do use premium cigars. And so even 
in younger folks, particularly those over 18, they are used.
    Mr. Aderholt. They are used for ages over 18, though. 
Right?
    Dr. Ostroff. Yes.

                          UPCOMING REGULATIONS

    Mr. Aderholt. We have seen some situations in the past 
where the administrations in the past have decided to release 
controversial, unpopular regulations in the last few months of 
an administration that is not returning to power. And I guess 
the question would be to you is, could you inform the 
subcommittee if there are any regulations that are a priority 
to FDA that may be released before President Obama leaves 
office? And even if there are no specific plans for release of 
regulations, what might be on FDA's agenda toward the end of 
the year?
    Dr. Ostroff. As you may imagine, there are many things that 
we have been working on throughout all of our product 
categories. Certainly one example, and I said without question 
when I took over as the Acting Commissioner, the deeming rule 
was a very high priority. And we are working very hard to try 
to get that to final because of the recognized public health 
implications.
    And so that is certainly one. And then there are activities 
going on, especially related to various guidances such as the 
menu labeling guidance, that we are working on, some of the 
other things that I think were discussed over the course of the 
hearing. All of these are things that we are working on trying 
to get final as quickly as we possibly can.

                        FOREIGN FOOD INSPECTIONS

    Mr. Aderholt. Many of our domestic producers are concerned 
that they are disadvantaged when it comes to treatment of 
imports, that they would be on the same comparison level. The 
regulated industry has very strong concerns as it relates to 
the implementation of the FSMA regulations.
    According to FDA's 2010 report to Congress, the agency 
estimated that there were over 300,000 facilities in a hundred 
different countries that produce products that enter the United 
States at over 300 ports of entry. Despite significant funding 
increases from this Congress, FDA increased foreign inspections 
from 1,339 to 1,357, or about 18, between 2014 and fiscal year 
2015.
    Foreign inspections in general are often impeded by 
exporting countries, such as we saw in China, a country that 
exports quite a few food and medical products or ingredients to 
the U.S. The Chinese government has not been completely 
cooperative when it comes to granting timely work visas for our 
inspectors, and of course, the fear of the inspectors we have 
in place, the fear of inspections that they can perform.
    Once FDA puts staff on the ground, they seem to have 
different rules for notifying the firms of FDA's plans to 
inspect the facility. Does FDA give notice to facilities in the 
U.S. when it plans to conduct an inspection for all products 
under its authority?
    Dr. Ostroff. Well, it depends on the reason for the 
inspection, and so to the degree possible, we do work with 
regulated industries regarding inspections. But there are some 
times where it is more appropriate to do an unannounced 
inspection, depending on the circumstance.
    What I can say is that one of the core principles of FSMA, 
as you very well know, is that we have parity in terms of the 
safety of foods that are produced domestically with foods 
produced internationally and imported into the country, and 
that we have equivalent levels of food safety, and that we have 
equivalent levels of oversight and regulation of what is 
required in the FSMA rules. It does not make any difference if 
it is produced domestically or produced overseas.
    And so being able to ensure that we have equivalent levels 
of safety--and there are a variety of ways to be able to do 
that; it is not simply inspections--to do that is really quite 
important. Another example is that one of the other rules in 
FSMA is third party certification.
    And we also are very aggressively moving towards systems 
recognition. We already have systems recognition in place with 
New Zealand, and we will hopefully in the not too distant 
future have the same with Canada and with Australia because 
what we do not want to be doing is investing our resources in 
areas that have equivalent levels of food safety that we have 
in the United States, that we can focus our resources on where 
they are needed.
    Mr. Aderholt. I think the concern is probably China. And do 
we have different standards in place for places like China than 
we do in the United States?
    Dr. Ostroff. Well, not under FSMA. I mean, that is part of 
the principles of FSMA, is that there has to be an equivalent 
level of implementation of the various FSMA requirements, 
regardless of where the food is produced.
    Mr. Aderholt. Well, as it was mentioned last year, in China 
investigators posted in-country generally provided a few days' 
notice for routine inspections unrelated to a public health 
emergency. And if there is a potential significant public 
health risk, in-country investigators can perform an inspection 
within a day, and unannounced when necessary. So it seems like 
there is maybe a different standard.
    Dr. Ostroff. Well, part of the reason to have an office in 
China is to be able to work as closely as possible with our 
Chinese counterparts. That is a win for us, and it is a win for 
them as well. And we would rather be able to again raise the 
standards, which I think that we have been doing by working 
with them, especially in helping them incorporate some of the 
FSMA standards into their regulatory requirements so that we 
are not in always a position that we have to continuously take 
actions.
    Mr. Aderholt. Have you experienced any delays in receiving 
visas from the Chinese government or----
    Dr. Ostroff. No. This was an issue a couple of years ago. 
That has been resolved, and we are not currently having 
problems with obtaining visas for individuals that we want to 
place in our China office. We have 10 new positions that have 
been established. Six of the individuals are already in place; 
four of them are being processed to be able to be relocated 
over to our China office. And so we are not quite having the 
same problems that we did several years ago.
    Mr. Aderholt. Mr. Farr.
    Mr. Farr. Commissioner, I want to follow up on your China 
questions. But first, if you are going to promulgate any new 
rules or regulations, I hope, with the craziness going on in 
American politics right now, that you will bring the mental 
health drugs up to the priority because this country needs a 
lot of them right now, including Congress. [Laughter.]

                            JERKY PET TREATS

    Mr. Farr. The chairman's questions about China interest 
some staff around here about the jerky dog treats from China. I 
mentioned in my opening comments that you regulate dog food as 
well, and the jerky pet treats that were imported from China, I 
think exactly a year ago the FDA said--5800 dogs had--and it 
included more than had been affected--in more than a thousand 
canine deaths. The last report that we could find on your 
website was last Tuesday, and that was issued a year ago.
    Can you update us on the investigation and the work you are 
doing with CDC, and what the findings of the joint CDC/FDA 
study might be? Let me just read all these, and then you can 
respond once.
    In the past, the FDA has issued statements that it no 
longer has problems getting into and inspect facilities in 
China. But in the response you just gave to the Chairman and 
the inspectors in 2012 that tried to get into the pet food 
plants, it appears that while FDA inspectors got into the 
plants, they got the runaround from the Chinese and were not 
able to take any samples, their own samples, to be tested.
    Has that changed? Do you have unfettered and unrestricted 
access to all the inspections, not just those related to pet 
treats?
    And I know you have issued ``detain without physical 
examination'' orders for some Chinese pet food manufacturers. 
Have these ``detained without physical examination'' orders had 
an impact on the volume of pet treats imported from China--
since it was done a couple years ago? And do you know how many 
Chinese pet food manufacturers are still shipping pet treats to 
the United States?
    Dr. Ostroff. Yes. Obviously, these are specific pieces of 
information that we are going to have to get to you. What I can 
say is that the issue of the pet jerky treats is something that 
we devoted a lot of energy and resources to trying to figure 
out exactly what was happening. And that included collecting 
samples of various types of jerky. It included doing autopsies 
on various dogs, et cetera.
    And it is my understanding, at least, that the actual 
causation, I mean what precisely is going on, is still a 
question. What does appear to be the case is that the problem 
seems to be decreasing for whatever reason.
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    Mr. Farr. Do you take those samples in China, or are those 
samples from the stores here? Shouldn't we try to stop stuff 
before it even gets into the United States?
    Dr. Ostroff. Well, in trying to figure out the causes of 
this, which are not that straightforward, it has been looking 
at samples, even in some instances that the consumers were 
providing to their pets. And so we have been trying to address 
this at all stages along the continuum.
    But again, it has been difficult to be able to ascribe a 
particular cause to the problem--in other words, what is 
actually going on here and causing the problems. And so it 
remains something that we have been actively investigating, 
but----
    Mr. Farr. Didn't you stop certain manufacturers from 
importing these treats?
    Dr. Ostroff. Again, it was a matter of--we did take various 
actions, including import alerts in 2014, to be able to address 
this problem. Again, it does look like--in terms of the 
occurrence of the problems in the pets themselves, it appears 
to be abating.
    Mr. Farr. It appears to be abated?
    Dr. Ostroff. Abating.
    Mr. Farr. Abating. Fewer deaths. Still--but there is 
still----
    Dr. Ostroff. Fewer problems than we saw in the past, yes.
    Mr. Farr. So what does that all mean? You are just going to 
continue to monitor, try to find the----
    Dr. Ostroff. We will continue to work on this problem until 
we have been able to solve what is happening.
    Mr. Farr. All right.
    Mr. Aderholt. Without objection, I have got a letter that I 
would like to submit for the record. It is signed by 109 
Members regarding the development and treatment of a rare 
disease called Duchenne muscular dystrophy. And I would like 
that for the record.
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                           HUMAN GENE EDITING

    Mr. Aderholt. And just in closing, when we did the fiscal 
year 2016 Omnibus bill, there was a restriction in there 
regarding the editing genes in human embryos. An advisory 
committee on ethical practices regarding genetic engineering of 
human embryos, at the request of FDA and in conjunction with 
the National Academy of Science, recently gave a green light to 
``go forward, but with caution,'' with certain forms of genetic 
engineering. And I understand that the main focus of the 
committee was due to the eventually dream of trying to 
eliminate terminal diseases and also debilitating diseases.
    But the fear among many, on this panel and of course 
constituents, and I know there are different opinions on this, 
but the risk of unintended consequences with genetic 
modification has a potential to create new defects and/or 
disease.
    Given that FDA requested this advisory committee's work 
last year prior to the congressional restriction being in 
place, it makes some wonder whether FDA is actually engaged in 
the process. Can you confirm that the provision in the fiscal 
year 2016 Omnibus will prevent FDA from accepting applications 
at this time?
    Dr. Ostroff. Yes.
    Mr. Aderholt. And what is FDA's position--well, clearly, 
based on what the restriction is, then I think that speaks for 
itself.
    Dr. Ostroff. Yes.
    Mr. Aderholt. So with that, let me----
    Mr. Farr. Would you yield on that? I would like to just 
have some discussion on that. I mean, the fear also was 
unintended consequences. This rule would prohibit the research 
that could be done on building organs and things like that. I 
think that the motivation here was to not allow designer 
babies, and I think we unanimously supported that. But I think 
the way the language came out, it could not be much broader.
    So I do not want to stop this research. So it is going to 
move offshore, and America will lose all of this opportunity.
    Mr. Aderholt. I think it went beyond just designer babies. 
I think it went to toying around with embryos.
    Dr. Ostroff. That is correct. That is what the language 
says.
    Mr. Farr. What is it going to do to beneficial research?
    Dr. Ostroff. Well, this is always the conundrum. And I 
think that when you look at the report that was recently issued 
by the Institute of Medicine, they point out exactly this 
problem. And it is part of the reason that we went to them to 
ask them to take a comprehensive look. And this was 
specifically dealing with something that is called 
mitochondrial transfer for individuals that have mitochondrial 
diseases.
    And so they provided feedback to us in terms of the 
framework that may be appropriate to go forward in this area. 
And obviously, we are looking very carefully at that report 
because it lays out very nicely what you just said, which is 
trying to balance the risks with the potential benefits.
    But we are very cognizant of what the language in the 
Omnibus was, and that will not happen in this fiscal year.
    Mr. Farr. What will the consequences be, then?
    Dr. Ostroff. Well, any research activities that involve 
genetic manipulation of embryos will not occur in this fiscal 
year.
    Mr. Farr. Is that a good thing for America?
    Dr. Ostroff. Well, again, the language very specifically 
expressed Congressional intent.
    Mr. Farr. Well, you could debate that Congressional intent. 
And we tried to make sure there was not quite as extreme as I 
think it is being interpreted. But I think that is not a good 
future for this country in medical research. I agree with the 
Chairman on some things, but I think this research is going to 
go on in the world. It is just not going to occur in the United 
States, and we are going to lose a lot of great minds that will 
be moving to other countries to be involved in research.
    Mr. Aderholt. Well, thank you, Dr. Ostroff, for being here 
today, and of course, Mr. Tyler, for your assistance as well. 
And we wish you the best. I know you will be very active, so we 
look forward to seeing you and continuing to work with you in 
one facet or another. But thank you again for your service here 
in this acting time.
    Dr. Ostroff. Well, again, I said I am not going away.
    Mr. Aderholt. Right. Well, that is what I say. We look 
forward to working with you.
    Dr. Ostroff. Thank you so much.
    Mr. Aderholt. Just with a little bit different hat on.
    Dr. Ostroff. And again, thank you for the opportunity to 
work with you over the past year. It has been a real privilege, 
and your assistance has been very helpful.
    Mr. Aderholt. Well, all the best. Thank you.
   
   
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                                           Thursday, March 3, 2016.

      DEPARTMENT OF AGRICULTURE, MARKETING AND REGULATORY PROGRAMS

                               WITNESSES

ED AVALOS, UNDER SECRETARY, USDA MARKETING AND REGULATORY PROGRAMS
KEVIN SHEA, ADMINISTRATOR, ANIMAL AND PLANT HEALTH INSPECTION SERVICE
ELANOR STARMER, ACTING ADMINISTRATOR, AGRICULTURAL MARKETING SERVICE
LARRY MITCHELL, ADMINISTRATOR, GRAIN INSPECTION, PACKERS AND STOCKYARDS 
    ADMINISTRATION
MICHAEL YOUNG, BUDGET OFFICER, DEPARTMENT OF AGRICULTURE

                       Introduction of Witnesses

    Mr. Aderholt. Well, good morning. Sorry for the delay in 
getting started this morning. We had votes called about 5 
minutes before the hearing was to occur. So thank you all for 
your patience this morning, and we are probably going to have 
votes called in another hour, hour and a half. It just depends 
on how long the debate actually goes.
    So what I am going to do is to hold to the 5-minute rule 
pretty steadily. I try to generally, but sometimes people are 
in the middle of an explanation and I do not want to cut 
anybody off, but we will try to adhere to 5 minutes so we can 
go through as many questions as possible and as many Members as 
possible.
    But I want to welcome all of you to the hearing today. It 
is good to have all of you here. We are pleased to begin review 
of the fiscal year 2017 budget request from the agencies of 
USDA's Marketing and Regulatory Programs mission area.
    And I would like to welcome to the subcommittee Mr. Ed 
Avalos, USDA's Under Secretary for Marketing and Regulatory 
Programs.
    Also today, Mr. Kevin Shea, Administrator for the Animal 
and Plant Health Inspection Service, or better known as APHIS.
    Ms. Elanor Starmer, Acting Administrator for the 
Agricultural Marketing Service, and your first time here before 
us. Welcome. We are glad to have you here.
    And Mr. Larry Mitchell, Administrator for the Grain 
Inspection, Packers and Stockyards administration, or better 
known as GIPSA.
    And Mr. Mike Young, USDA's Budget Officer.
    So welcome to all of you.

                    Opening Statement--Mr. Aderholt

    I have emphasized in previous hearings that really there 
are four goals that we have for the subcommittee, and let me 
just briefly go through those.
    First, of course, increasing oversight efficiency and the 
need for effective outcomes.
    Second is keeping rural America vibrant.
    Third, supporting American farmers and ranchers.
    And, fourth, protecting the health of people, plants and 
animals.
    The Marketing and Regulatory Programs mission area is key 
to accomplishing many of these goals. Your agencies implement 
programs everyday that support U.S. producers with domestic and 
international marketing opportunities, address agricultural 
threats to safeguard animal and plant health, and ensure fair 
practices in the marketplace, all of which have made rural 
America great and a world leader in agriculture.
    USDA is requesting a total of $1.03 billion in 
discretionary resources for fiscal year 2017 for the MRP 
mission area and a modest increase of $8 million from the 2016 
enacted level.
    For AMS and GIPSA, the requests maintain current activities 
with only requested increases for pay costs. However, APHIS 
increases for animal health and emergency preparedness are 
mostly offset by decreases to the popular and beneficial 
programs that receive bipartisan support.
    For example, APHIS has requested an increase to enhance 
implementation of the Lacey Act provisions. There is some 
concern, I will have to admit, about supporting such an 
increase at the expense of higher priority and more effective 
animal and plant health programs, many of which the agency has 
proposed to decrease.
    It is this subcommittee's responsibility to ensure that the 
additional funds being requested for several initiatives are 
not to the detriment of the critical and successful programs.
    As the request is analyzed, we will be looking for evidence 
that current efforts are effective, and I would like to know 
what industry and public support exist for the expanded 
efforts.
    Last year at this hearing, we discussed the importance of 
your mission area, establishing a long-term strategic 
infrastructure plan that is crucial to moving products 
domestically in order to expand trade and marketing 
opportunities. USDA has been reacting to market disruptions 
like those at the ports and railroads instead of having a 
proactive plan in place.
    The fiscal year 2016 Agriculture Appropriations Explanatory 
Statement directed USDA to develop an infrastructure plan that 
will benefit American producers, and we look forward to 
receiving that report.
    In recent years, we have provided additional funding for 
APHIS to address significant agricultural threats, and just let 
me add we are very appreciative of your work with the private 
sector to address citrus greening and other threats to plant 
and animal health, such as the highly pathogenic avian 
influenza.
    As you know, in the Fourth District that I represent, we 
have quite a few poultry producers, and the Alabama poultry 
industry employs over 85,000 people and generates about $15 
billion annually.
    In the event of an avian influenza outbreak in the northern 
part of the state of Alabama, our folks could face billions of 
dollars in losses. That is why I greatly appreciate APHIS 
working with its partners in the public and the private sector 
to prevent, control and eradicate this disease.
    I know all of us will appreciate hearing more from you on 
the lessons that APHIS has learned in combatting this disease 
and how the request supports your efforts as we move forward.
    Today and in the coming months, we expect to have an 
ongoing dialogue with your agencies in order to develop a fair 
and responsible budget for the next fiscal year. We will have 
tough allocation decisions to make, and again, I want to be 
sure that we maintain funding for the most critical and the 
most successful programs.
    So at this point let me recognize Mr. Farr, Ranking Member, 
for any opening remarks that he may have.

                      Opening Statement--Mr. Farr

    Mr. Farr. Well, thank you very much, Mr. Chairman. Thank 
you for convening the meeting today, and I look forward to our 
discussion.
    And I thank all of you for coming to this hearing. Many of 
you may know that I am retiring at the end of this year, and 
these are my last Ag. Appropriations hearings. I am very 
reflective on lessons that I have learned and issues that I 
have taken up.
    But as I look back on subjects that I cared a lot about, I 
came here from the California State legislature where I created 
the first organic standards law in the Nation, which Senator 
Leahy and Senator Cranston offered as the Federal standard. 
They used our bill as the model and then came back here and, 
frankly, Mr. Chairman, we told Secretary Glickman at the time 
because he had not adopted the rules some 8 years later that if 
he did not adopt the rules, we were going to remove his salary 
from the budget. So we got the Federal rules adopted.
    What is amazing is just to see what has happened with that 
industry. It is, you know, a multimillion dollar industry 
nationwide, but I think as it emerged it is new and it 
essentially had to carry its own kind of cost of enforcement 
and certification, but I think as they move into major, major 
efforts in agriculture, the fastest growing economic engine in 
agriculture is organic sales, but I think that these producers 
need to be provided the support as traditional commodity crops 
and others have gotten research, things like that, as in sort 
of a new law, a new industry.
    I think in most cases with flat funding, you have got to 
rob Peter to pay Paul, but I think that there is so much in 
savings coming out of less inputs for producers that they can 
make the savings on those, and we ought to transfer some of 
those savings into providing the support that organic is going 
to need.
    And then over my tenure I have certainly learned a lot 
about what we call specialty crops. I think when I arrived 
here, we called them ``minor crops''. Congressman Valadao 
certainly knows about specialty crops because we grow over 400 
crops in California. I think we grow 40 crops that no other 
state grows.
    All the almonds come from California. All of the pistachios 
come from California, and most of the strawberries in this 
country come from my district, and that is about $2.5 billion.
    Over one-third of the country's vegetables and two-thirds 
of the country's fruits are grown in California.
    So, again, this is really going from a minor crop where we 
were trying to decide, well, will we help them out with 
pesticide reduction and alternative uses and things like methyl 
bromide, the research that is necessary, and I hope that this 
industry will get similar help, those afforded the large 
commodities.
    On animal rights issues, I in the California legislature 
banned the puppy mills and buying and selling animals from 
puppy mills in California. I was just thinking the other day 
that all of these animals you see performing in movies now, 
dogs driving cars, in California we created a retirement 
account just like other actors and performers get so that when 
they get too old there is a benefit to put them into a 
retirement home for performing animals.
    We created the first Red Wings horse retirement farm for 
people that bought horses that had been sold for slaughter and 
things like that where they actually would buy them and then 
put them in a pasture where they could retire.
    We banned horses from being hauled to slaughter on cattle 
trucks which were built for cows that do not have long necks.
    And so the list goes on and on, and I have certainly been 
interested in the humane treatment of animals at the federal 
level.
    I was with a Republican. We tried to ban performing 
elephants and we had quite a hearing with a lot of these movie 
stars, and the bill never got out of committee. But last year 
Barnum & Bailey decided not to use elephants anymore in 
circuses, and I think a lot of the issues that we brought up 
here they paid attention to.
    And now we are going into a new era. I represent probably 
25 or 30 marine research entities, both public and private, 
around Monterey Bay, and I think what we are looking at is the 
new marine mammal rules, and I would hope that we would have 
the ability to respond to the animal diseases that are coming 
out of marine mammals that could be really fatalistic to 
tourism and an eco-economy on the oceans.
    So I look forward to all of these discussions and thank 
you, Mr. Chairman, for this hearing and allowing me my time.
    Mr. Aderholt. Thank you, Mr. Farr.
    Mr. Avalos, without objection, your entire written 
testimony will be included in the record, but I want to 
recognize you for your opening statement and any comments you 
would like to make. So go ahead, and then we will proceed with 
the questions.
    So the floor is yours.

                     Opening Statement--Mr. Avalos

    Mr. Avalos. Thank you, Mr. Chairman, Members of the 
subcommittee. I am pleased to once again be here to appear 
before you.
    I represent the MRP mission area and to present our 2017 
budget proposals for AMS, GIPSA and APHIS.
    Mr. Chairman, you already introduced the folks up here. I 
just want to say a little bit more about Elanor Starmer. She 
has been at USDA since 2011. She has been a senior advisor to 
the Secretary and she has worked on many issues on AMS.
    Now, they also have submitted statements for the record and 
are here to answer questions.
    As you know, I have been here almost seven years. This is 
my last time testifying before you as the Under Secretary, and 
I want to take this opportunity to thank you, Mr. Chairman, to 
thank you, Mr. Ranking Member, and to thank the subcommittee 
for the support that you have provided to this mission area.
    In many, many areas we have been able to provide support 
for agricultural producers, for shippers, for exporters, and 
for so many folks throughout the country that make their living 
from agriculture. You have enabled us to support these hard 
working Americans, to support our rural communities, to support 
our rural economies.
    I personally am very, very appreciative and grateful. I 
also want to congratulate Ranking Member Farr on your 
retirement. We truly appreciate his passion for the welfare of 
animals and for the farmers of California and for farmers 
throughout the country.
    Congressman Farr, like they say back home, ``te felicito.''
    Before discussing the requests, I want to highlight 
contributions of the MRP agencies to shared goals. MRP agencies 
support trade through the removal of phytosanitary and sanitary 
trade barriers, the export verification program, and GIPSA's 
inspection and weighing program, and so many other activities.
    The three MRP agencies facilitate our agricultural exports. 
Through APHIS' animal and plant work and through other programs 
in the mission area, the MRP agencies protect agriculture.
    Through AMS' Market News and standards setting work, to 
just name a few, MRP agencies provide marketing opportunities. 
MRP agencies also support innovation. A good example are the 
revisions that APHIS made to the biotech petition review 
process which has resulted in our continued progress in 
eliminating the backlog.
    In closing, Mr. Chairman, MRP supports agricultural 
exports, protects domestic agriculture, assists in the 
development of markets, and supports innovation. Our 2017 
request allows us to continue this important work.
    This concludes my statement. I look forward to working with 
the subcommittee, and we are ready to answer any questions you 
might have.
    [The information follows:]
    
    
    
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                   HIGHLY PATHOGENIC AVIAN INFLUENZA

    Mr. Aderholt. Thank you, Mr. Avalos, and we appreciate, 
again, each of you being here today and for helping us get 
through a few questions that we wanted to pose to the panel.
    I wanted to start with the discussion of highly pathogenic 
avian influenza. I first want to say thanks to all the folks at 
APHIS who really have done a tremendous job working on that 
program to try to combat highly pathogenic avian influenza over 
the past few months and working with the states and the poultry 
and layer industries to not only prevent but to combat and 
contain the disease.
    As I mentioned in my opening statement, there are a lot of 
poultry growers and producers in the district down in Northern 
Alabama. So we have been closely watching the Department's 
response on this disease.
    Second, I want to hear your thoughts on the Secretary's use 
of emergency authority to access $1 billion to respond to this 
outbreak. Previously the funds covered indemnity payments for 
producers as well as cleaning and disinfecting the birdhouses.
    Lastly, I would like to hear from you on the lessons 
learned and how the fiscal year 2017 budget can help prevent 
future outbreaks.
    My first question would be regarding the Nation's poultry 
sector having lost nearly 50 million birds last year. Between 
the Federal dollars and the losses in the private sector, this 
outbreak will cost well over $1 billion.
    What could USDA have done differently to either identify 
the virus or contain the virus earlier?
    Mr. Avalos. Mr. Chairman, as you mentioned this was a 
devastating, devastating outbreak. Under the direction of Mr. 
Shea and his people at APHIS, we were able to rapidly address 
what I would call the worst animal disease outbreak in the 
history of our country.
    I want to ask Mr. Shea to talk a little bit about the 
lessons learned, talk about his emergency response plan and 
other work that is being done at APHIS to address highly 
pathogenic avian influenza.
    Mr. Shea. Thank you, Mr. Avalos.
    Mr. Chairman, there are a number of lessons we learned. 
Probably the most important lesson is that we and the industry 
need to really do a better job with biosecurity. The level of 
biosecurity in the poultry industry was good, but it was good 
for an ordinary time, not good for a time of an extraordinary 
disease like high path avian influenza. So we really need to do 
a better job with biosecurity.
    We need to be able to respond faster and with more people, 
and indeed, that is one of the primary increases we are asking 
for in our budget this year, is to add as many as 80 first 
responders. If we could have had more trained veterinarians and 
animal health technicians on the ground faster, I think we 
would have had a better outcome or a quicker outcome.
    We also learned that we need to rapidly depopulate poultry 
houses when they become infected. The longer the poultry houses 
sit there infected, the level of infection rises, can spread 
easily. So we really need to depopulate quickly.
    We need to make sure that we are working very closely with 
the producers to get them compensation quickly so they can get 
back in business as soon as possible and also to encourage them 
to report the disease as soon as possible.
    I think also we learned that we need consistency of message 
when we are on the farm. By not really being fully staffed with 
emergency responders, we had to rely probably more than we 
would have liked on contractors, which led to some 
inconsistency in message from farm to farm about what they 
should do. So I think that was important.
    I think we also learned that we need to know what to do 
with the carcasses once they are put down. The very best thing 
to do is to compost them right on the farm, but if that is not 
possible, they need to be sent somewhere else. We need to make 
sure there are disposal facilities available.
    What we found last year was that many landfills simply 
would not take the carcasses. So we need to be better prepared 
to deal with that.
    We also need to make sure we are working better around the 
world for an understanding of this disease, and what we are 
doing to deal with it. A few countries cut off all U.S. poultry 
from Alabama to California because of poultry diseases in Iowa 
and Minnesota, and we think that we can do a better job working 
with our partners around the world to understand that they 
should draw restriction lines on a much more narrow basis going 
forward.
    So all of those are things we have learned.
    Mr. Aderholt. All right. In keeping with the five minute 
rule, I am about down so I am going to go ahead and recognize 
Mr. Farr.

                     LIGHT BROWN APPLE MOTH (LBAM)

    Mr. Farr. Thank you, Mr. Chairman.
    Talking about specialty crop pests and combatting those 
pests with all of the input from transportation hubs and 
international hubs, both land and sea and air, there are always 
pests coming in unexpectedly and creating outbreaks of non-
native threats.
    And one of those was the light brown apple moth, and we 
kind of hoisted our own petard because we told countries that 
if they had any light brown apple moth, we were not going to 
allow any of their produce into our country and then, lo and 
behold, we have it, and in order to export our product we have 
to certify that every crate essentially has to be inspected, 
hand inspected, and including all foreign exports.
    So I want the Department to tell me that it will direct 
adequate resources to ensure that the agricultural export 
markets impacted by LBAM quarantines will be protected going 
forward.
    And how does the USDA plan to balance the competing 
regulatory needs for the nursery industry while providing 
sufficient resources and infrastructure for the core regulatory 
program for exports?
    Mr. Avalos. Congressman----

                      MARKET NEWS LOCAL FOOD DATA

    Mr. Farr. Quickly. Why do I not ask my questions and then 
you can answer them, and if not we can get them back?
    The other was many parts of the country and in my district 
more and more producers are differentiating their products as 
locally grown, organic or grass fed or other ways to tap into 
the rapidly growing markets that everybody wants, you know, 
local and fresh. It is important for the industry to have up to 
date information on changes in the market so that they can 
adapt quickly and make informed business decisions.
    So this question really goes to the work of going through 
the market news to track and report these growing markets so 
that farmers, buyers, aggregators, sellers and others will have 
information that they need.
    Are we paying attention to that?
    Just a nod, that is good. I am going to have to be careful 
of time because I run over more than anybody does.

                     NATIONAL ORGANIC PROGRAM (NOP)

    The National Organic Program is charged with regulating, 
enforcing organic regulations as well as ensuring that they 
evolve to keep pace with consumer expectations. They asked for 
a small increase. As the organic sector grows, the job of NOP 
grows.
    Does the small request for the increase in NOP keep pace 
with what is happening with the farm, ranch and consumer needs 
in organic?
    Do I have any time left?

                        ORGANIC AQUACULTURE RULE

    The other question I have is, and this is one that I am 
really kind of ticked that I never can get a hard answer for, 
and it has to do with the organic aquaculture rule. So many 
people in our area are interested in organic aquaculture. 
Certainly we cannot just keep hauling everything out of the 
wild ocean and expect it to be sustainable. We have got to 
start shifting and growing our fish and shellfish in an organic 
way in aquaculture.
    I know that the USDA has got a proposed rule to OMB last 
August. They were supposed to have 90 days to review it, and it 
is really held up. But as I understand it is held up by 
National Oceanic Atmospheric administration (NOAA) now, but it 
is your rule. So who takes the lead to get it out of NOAA and 
get it adopted?
    And that is the last question I will ask for this round.
    Mr. Avalos. Congressman, just to save time, I know how 
important this aquaculture rule is. I am going to give it to 
Ms. Starmer. She is also going to answer your NOP question.
    And Market News, I just want to put a plug in for Market 
News. It is so important to the large and small producers and 
so important to other stakeholders.
    Mr. Farr. We understand that.
    Mr. Avalos. So I will not take up any more time. I want to 
let Elanor talk a little bit about some of the other things 
that we are doing to address Market News in local and regional.
    Mr. Farr. In about a minute.

                      MARKET NEWS LOCAL FOOD DATA

    Ms. Starmer. Yes. Thank you, Congressman.
    Market News, as you know, provides critical information for 
the industry that can impact billions of dollars of trades each 
year, and we have worked very hard to ensure that that program 
innovates with new needs in the marketplace.
    So we now have over 270 organic price reporting programs 
through Market News. We have developed a Market News program 
for local food prices, which includes farmer's markets, farm-
to-school activities, and food hubs, and we have a grass-fed 
beef Market News price reporting service as well as one for 
non-GMO products.
    Mr. Farr. How are we doing in creating that grass-fed as an 
organic meat? Because, you know, that is the process that is so 
costly. You have to have your slaughter certified and 
everything and then keep it identified as organic, and a lot of 
people want to create smaller slaughtering centers.
    Does the newsletter keep that information?
    Ms. Starmer. It certainly helps provide price transparency 
across the whole supply chain, yes, but I think this gets to 
your other question about how we are supporting the organic 
industry overall.
    We have certainly made great strides within AMS in that, 
but we also have a full-time employee who works across USDA to 
ensure that things like our Credit Programs, our Crop Insurance 
Programs, and our research agenda are adequately meeting the 
needs of the organic industry.
    So our budget request really reflects, I think, a growing 
capacity across the institution to support this market.
    Mr. Farr. I would like some copies of that.
    Ms. Starmer. Absolutely.
    And finally, sir, on aquaculture, we are working very hard 
to address the questions that we are getting out of OMB. I know 
they are very complex. We are working diligently on that.
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    Mr. Aderholt. Mr. Yoder.

                          VETERINARY BIOLOGICS

    Mr. Yoder. Thank you, Mr. Chairman.
    Welcome to the committee, everyone. It is good to see Mr. 
Young back for a fifth time now maybe.
    I want to associate myself with the comments of our 
Chairman and the concerns that he has raised related to threats 
to the food supply, and he brought up avian issues.
    You know, in general, I think we all have to be certainly 
concerned about threats from terrorism, you know, in Kansas 
obviously, and in Manhattan they are building NBAF, National 
Bio and Agro-Defense Facility. So it is an issue that is 
important to my state, important to producers, but it is 
ultimately going to be important to every American if the food 
supply gets disrupted. And so I just want to associate myself 
with those comments.
    And I am interested, in particular, related to vaccines and 
how that relates to this. As we know, animal vaccines are 
critical to protecting America's flocks, herds, and pets from 
domestic and foreign animal diseases.
    What improvements have been made to speed up the approval 
process for new veterinarian biologics?
    Mr. Avalos. Congressman, I am going to ask Mr. Shea to 
answer.
    Mr. Shea. Thank you, Mr. Under Secretary.
    Yes, we made great progress on veterinary biologics. We 
entered into a business process improvement process four years 
ago, and we have dramatically reduced the amount of time it 
takes to get something on the market from the day it is first 
brought to us for approval.
    And just this last year we approved a single claim label, 
which will also speed up the process, because before a label 
would have many claims which took us much longer to approve for 
each claim. By just approving the single claim, which is the 
most important that producers will need, we have dramatically 
reduced the time.
    So we are making great progress.

                       BIOTECHNOLOGY REGULATIONS

    Mr. Yoder. Well, that is great to hear, and that is 
obviously a bottleneck on the ability to solve this if we do 
not have the vaccines moving quickly. So I am glad to hear 
that.
    I want to turn your attention to some comments that 
Secretary Vilsack made when he was before the committee a few 
weeks ago. I asked him about any new regulations that were 
coming forward that we ought to be concerned about or that 
producers and farmers should be aware of.
    You know, in the last year of an administration, Republican 
or Democrat, frankly, there is sometimes a flood of last minute 
regulations that come forward, and I have had some producers in 
Kansas raise some concerns about the modifications and 
regulations in Part 340, and I wondered if you could speak to 
that.
    What I hear from my folks is that it would represent a 
significant increase in what could be regulated. USDA authority 
would no longer be limited in many areas, and I think we all 
want smart regulations, just not over-regulations that are 
costly and burdensome, and we have to always remember that for 
the producers that have to implement these regulations, it is 
expensive for them. Ultimately it hits the cost of groceries 
for everyone.
    So we need greater efficiency and new technologies 
available to farmers, but not to increase the regulatory burden 
making it more difficult, and I thought you could speak to how 
you are balancing that and ensuring that we are keeping that in 
mind.
    Mr. Avalos. Congressman, I appreciate your question and 
your comments because I can relate to them.
    We are considering changing the biotech regulations. They 
have not been updated in over two decades. I am going to ask 
Mr. Shea to tell you a little bit about where we are on this.
    Mr. Yoder. Sure.
    Mr. Shea. It is certainly not our intention to make it more 
difficult for new technology to get to market, and in fact, 
some of the possibilities are that we are regulating more 
things than we need to be regulating now.
    So that is why we put out a notice of intent to do an 
environmental impact statement, and the comment period, by the 
way, has been extended for 75 more days. So there will be lots 
of time for folks to comment on this, but we are looking at all 
possibilities.
    One would be for us to entirely get out of the regulation 
business. One would be for us to do nothing different at all, 
and then there is a regulation or option that would have some 
more regulation, and then there is another option that we think 
may be the best one, but we need to get comment on this and 
analyze those comments, and that is to have a method where 
things that are proven safe, have been approved before and 
simply and extension of an early approval, that we do not spend 
a lot of time on those so we can move more quickly and get 
those to market.
    So we certainly understand your concerns, share those, and 
believe me, it is not our intention to make the process more 
difficult but rather streamline it as we go forward.

               GIPSA INSPECTION AND WEIGHING USER FEE CAP

    Mr. Yoder. I appreciate your comments.
    Lastly, in looking at the proposed budget for GIPSA, I 
noticed there is a proposition to remove the cap on user fees 
that your agency is allowed to collect. Given the current 
budgetary constraints felt by everyone, I would like to hear 
the justification for increasing these fees, and if we are 
taking into account the impact on the producers.
    Mr. Avalos. Congressman, let me ask Mr. Mitchell to answer 
your question.
    Mr. Yoder. Mr. Mitchell.
    Mr. Mitchell. I would be glad to, Congressman.
    The cap is on using our user fee account. That cap is there 
whether we are having a good year or a bad year on our exports. 
So there are some years where we have a very high level of 
grain exports. We bring in the revenue from the user fees, but 
we are capped on how much of those fees we may utilize to 
ensure we have the proper staff in place.
    As a provision of the Reauthorization Act of last 
September, we now have a system that will be in place that 
requires us to adjust our user fees each year so that we carry 
a window of between 3 and 6 months' reserve in that account, 
and so we should be able to deal with things a little bit 
better.
    Now, like I say, in a strong year, such as last year, we 
had record grain exports. It got pretty thin at times on how we 
could make sure we had the proper people in the proper place at 
the right time. But with this new three to six-month cap or a 
calculation on what the user fees will actually be, I think 
that is an additional place where we will keep this as 
inexpensive as possible.
    We are currently doing the entire service for exporting 
grain. It is weighed and inspected. Almost everything that goes 
out of this country, it is well under a penny a bushel, is the 
total cost. That is a pretty good bargain for producers who 
deal with risk mitigation in many, many levels. It is probably 
one of the least expensive places that they are allowed to buy 
that risk mitigation to ensure that our overseas buyers 
continue to buy from us and that our grain exports continue.
    Mr. Aderholt. Ms. Pingree.

                      MARKET NEWS LOCAL FOOD DATA

    Ms. Pingree. Thank you very much, Mr. Chair.
    Thank you everyone for being here today and for the work 
you do.
    I will just throw a couple of quick questions out in the 
interest of time. First, for Ms. Starmer, thank you, and I 
appreciate the Ranking Member's questions.
    I think I got my first question answered, but maybe if you 
are going to follow up with him, I would be interested in some 
of the same things about the local food data. I know that it's 
a relatively new expansion, and I am interested in how you go 
about collecting the data, and I would like to see some of the 
results. I know you said you were already doing it, but just 
anything about how you are moving forward and expanding your 
capacity because that has got to be one of the trickier things, 
to get the right kind of data.
    I was actually thrilled to hear that you have a full-time 
employee working across all of those sectors because I do think 
that this is such a great economic opportunity for agricultural 
sector, and there are a lot of pitfalls along the way.
    So maybe sometime, not in the committee, but we could just 
hear a little more about how that is working on that one.

                  FOOD SAFETY MODERNIZATION ACT (FSMA)

    The other question for you is around FSMA, which of course 
is an enormous rule. FDA has finished a lot of work on it, and 
probably the biggest question I get from farmers in my state is 
just how the implementation will work out.
    And I think for a lot of the small and medium size farmers, 
there are a lot of issues there.
    So I know you are launching the GroupGAP in April, and I am 
interested a little bit in how that is going to be there to 
help small and midsize farmers as they tackle the 
implementation and just want more assistance in doing that.
    And I will stop there because I hear our buzzers are 
ringing.
    Ms. Starmer. I thank you, Congresswoman. Thank you for your 
leadership on all of these issues.
    Quickly on the local food data, we are working through 
cooperative agreements with states to gather data. They may go 
out to the farmer's markets. The farmer's markets may report 
it, and they are looking, as I mentioned, at farm-to-school 
activities as well.
    Ms. Pingree. Great.
    Ms. Starmer. So all of that data is then going to flow into 
a number of our other programs and hopefully influence their 
effectiveness for that sector.
    On your question about FSMA, and I do want to say on a 
personal note that many of the producers in my home state of 
New Hampshire look quite a bit like some of the folks in your 
district. So this is something that I am personally very 
committed to ensuring we figure out.
    Ms. Pingree. Great.
    Ms. Starmer. Although the main responsibility for food 
safety is obviously lying with FDA, AMS has worked for a long 
time to try to bridge agricultural producers' needs in ensuring 
food safety verification in the marketplace through the Good 
Agricultural Practices (GAP) Program.
    And as you mentioned, we have developed GroupGAP. We will 
launch that in April. It helps smaller groups of producers 
share the cost of certification and audits across that whole 
group. So the burden is less for them, and then there are spot 
audits to ensure accountability.
    So we are very pleased with how our three-year pilot for 
that program has gone, and we are really looking forward to 
rolling that out in April.
    In addition to that, we do have a full-time employee who 
works with FDA on FSMA, who has been able to bring the 
perspective of the agricultural industry to those discussions, 
and she will continue to do that work.
    We jointly fund the Produce Safety Alliance with FDA, which 
is a Cornell University-based outreach and education program.
    We also fund through our Specialty Crop Block Grants 
Program and now through the new Specialty Crop Multi-State 
Program. We expect to fund a number of food safety-related 
projects there. I do know in Maine over the last few years, I 
think, since 2009 the state has been able to make about 12 
grants specifically targeted to small and organic producers 
around food safety education.
    So that is a really important program as well for that 
work. So there are lots of tools in the toolbox, but it is very 
important that we make sure this works for everyone.

                        ANTIMICROBIAL RESISTANCE

    Ms. Pingree. Well, we will certainly look forward to 
working with you on that as this progresses and as people start 
to implement this in the field.
    I will just throw one quick question in there for APHIS, 
Mr. Shea. I know you know antimicrobial resistance is a huge 
concern, and I think last year you said APHIS would gather on-
farm data on antibiotic use.
    Unfortunately, I know you did not receive the funding you 
requested, but can you give me just a little bit of an update?
    Are you currently doing any data collection? I know you 
have requested $10 million again, which would be very helpful. 
How would you use that funding if you are able to procure it?
    Mr. Shea. Unfortunately we will not be able to do anything 
without the funding, and so we are asking for that funding 
again.
    We really want to gather that data so there can be a fair 
and reasoned discussion about antimicrobials.
    Ms. Pingree. Right.
    Mr. Shea. There are those who believe that farming is all 
of the problem. We do not think that is probably the case, and 
so we think it would be very helpful to have that data so there 
can be a real science discussion here.
    Ms. Pingree. Great. Well, we will hope that you are able to 
receive the funding this year. It is an important conversation 
to have.
    Thank you, Mr. Chair.
    Mr. Aderholt. OK. Thank you, Ms. Pingree.
    The bells have rung. We have got a couple of votes coming 
up. So I think we will have time to go to Mr. Valadao and then 
we will come back and try to make sure everybody gets at least 
one round.
    So, Mr. Valadao, you are recognized.

                           WILDLIFE SERVICES

    Mr. Valadao. Thank you, Chairman, and I will be brief.
    Thank you, Under Secretary and fellow guests.
    Mr. Shea, I understand that some federal programs are 
administered by the USDA and APHIS through cooperative 
agreements directly with the counties in California. One of 
those programs is the Wildlife Services Program. I know that 
counties in California are under increasingly intense legal 
challenges and financial pressures.
    Can you please explain how APHIS distributes funds to 
states like California for this program?
    And I would also like to better understand how the cost 
share for Wildlife Services is split between APHIS and county 
cooperators in their cooperative agreements.
    Mr. Shea. Mr. Congressman, we spend about $2.5 million on 
wildlife services' work in California. The counties and other 
cooperators put in about $2.2 million. Unfortunately the state 
does not really put much money into wildlife services' work in 
California. At one time the ratio was about one-third, one-
third, one-third, but then the state pretty much stopped doing 
that.
    We are very aware of some of the legal challenges underway 
that the counties are dealing with, and we really tried to help 
with that. One thing we did was put a full-time National 
Environmental Policy Act (NEPA) coordinator in California to 
help with all of the counties, and particularly the counties in 
litigation now, to develop the data needed to respond.
    We also added another $200,000 to what we allocate to the 
counties from what we did the previous year to also help defray 
the costs that they are encountering in these cases.
    But we believe we are putting a pretty fair amount of money 
into California as a whole and certainly understand the need 
that exists in many counties throughout California, but we do 
look for more cooperation from the state.
    Mr. Valadao. Yes, and I apologize. Time is running short. I 
know we have got to go vote because they will cut us off.
    But that is an important issue in some of our counties 
facing these legal challenges and fighting it out in court is 
something that we do need to address quickly.
    I will see if I can come back and continue this 
conversation.
    Thank you.
    Mr. Aderholt. We will adjourn for votes. If you all will 
just bear with us for a few minutes, we will probably be back 
in ten or 20 minutes.
    Mr. Avalos. OK. Thank you.
    [Recess.]
    Mr. Aderholt. OK. subcommittee, come back to order. We'll 
recognize now Ms. DeLauro.

                      POULTRY PRODUCTS FROM CHINA

    Ms. DeLauro. Thank you very much, Mr. Chairman. Welcome to 
everyone here today.
    Mr. Avalos, the USDA Office of Inspector General, they 
issued a report, and it was entitled, ``AMS Procurement and 
Inspection of Fruits and Vegetables,'' in which it found fault 
with the agency's track record on closing out contracts and for 
not tracing back the source of the produce it was purchasing to 
ensure that it was from domestic sources.
    As you know, the Sacramento Bee revealed that some school 
districts in California were purchasing canned peaches from 
China in violation of the Buy American requirements for the 
National School Lunch Program.
    But as part of the 2017 USDA budget submission, the 
administration is recommending the elimination of Section 730 
of the 2016 Omnibus that would prohibit the purchase of poultry 
product from China for the various nutrition programs USDA 
administers because there is already a Buy American provision 
for food purchased by USDA.
    In light of the agency's track record on closing out 
contracts and tracing back the source of food purchases, tell 
me why we should drop that provision in future appropriations 
bills.
    Mr. Avalos. Congresswoman, first I want to applaud your 
efforts to promote America----
    Ms. DeLauro. Thank you.
    Mr. Avalos [continuing]. Promote American products. It is 
so important to our rural communities, so important to our 
farmers and ranchers. To answer your question, I'm going to ask 
our administrator to answer.
    Ms. DeLauro. OK.
    Ms. Starmer. Thank you, Congresswoman, and thank you for 
your leadership on these issues. We did appreciate the OIG 
report and the recommendations that it put forth. We do have a 
timeline for addressing those, and we're ahead of schedule on 
all of them.
    They raise procedural and documentation issues, not--
nothing that raised any concerns about food safety or other 
issues of nonconformance. And I can say that we are required by 
statute to purchase a hundred percent domestic products. So, 
even if the general provision were removed, that would not 
affect our purchase of a hundred percent domestic. That's 
governed by a separate part of the statute.

                         SCHOOL MEALS PROGRAMS

    Ms. DeLauro. Well, but as to that point, just let me say 
that that's correct. But the majority of the food used in the 
National School Lunch Program and the School Breakfast Program 
does not come from USDA commodities. It comes instead from 
private vendors. Under the USDA regulations, the vendors must 
use only 51 percent domestic ingredients, meaning that items 
like chicken burritos or chicken soup may contain Chinese 
processed chicken at up to 49 percent of the finished product.
    Moreover, under the School Lunch/School Breakfast Program, 
the 51 percent rule may be waived entirely if bids reveal that 
a domestic product costs significantly more than a foreign 
product. And there is no 51 percent requirement at all in the 
child and adult care food program or the Summer Food Service 
Program.
    So, that while that is there, the fact of the matter is 
that it is--quite frankly, it's meaningless. There are so many 
ways in which to avoid purchasing American products--and this 
Section 730 was all about prohibiting the purchase of poultry 
products from the People's Republic of China, a country that 
doesn't have exactly a stellar record on food safety. So, there 
was agreement that we would do this.
    Now, to remove that while it is in the Omnibus bill seems 
to me that why are we trying to do that when we both have a 
situation of canned fruit from China, and we have a law now 
that is--you can drive a Mack truck through it.
    Ms. Starmer. Yes, Congresswoman, and you've identified the 
distinction between the different programs that are at play 
there. The AMS Commodity Purchasing Program is required to be a 
hundred percent domestic. The other issues are covered by FNS, 
so I can't speak to them.
    Ms. DeLauro. Well, but the AMS purchased products for the 
school lunch program.
    Ms. Starmer. We purchase commodities, and those must be a 
hundred percent domestic.
    Ms. DeLauro. Well, I'm sorry. I don't know--then, I will 
double-check.
    Ms. Starmer. The other ones are Food Nutrition Service 
Purchase.
    Ms. DeLauro. Well, then it----
    Ms. Starmer. Or--excuse me--the schools purchasing directly 
using funding from the other agency. So, our commodity 
purchases for school lunches are governed by statute that 
requires them to be a hundred percent domestic.
    Ms. DeLauro. Well, what I would just say is I don't see 
then--while you are trying to do what has been asked of you 
with regard to the canned fruit--incidentally from China as 
well, I might add.
    There seems to be a great interest in purchasing products 
from China overall when we know what the safety record has been 
on those, and we know that we have no ability, no ability 
whatsoever, to oversee what is happening in China when they 
process chicken. We don't know what goes into what. We don't 
know at what temperature it's done. We have none of that 
information because we are not overseeing that process.
    So, it would seem to me that that section 730 would be a 
safeguard and that it ought to stay there. And I think you 
understand that--and especially when we just put it in the 
Omnibus, overwhelmingly budget deal, budget agreement, 
etcetera. And now, it's the administration that wants to pull 
that piece out. I find that very, very troubling, and you can 
be sure that I will do my best to keep us from turning this 
around for the safety of the product that we feed our kids in a 
school lunch program or in a school breakfast program.
    Thank you, Mr. Chairman.
    Mr. Aderholt. Mr. Rooney.

                     CITRUS HEALTH RESPONSE PROGRAM

    Mr. Rooney. Thank you, Mr. Chairman. Good to see you all.
    I wanted to talk about citrus funding today. The FY 2017 
budget cuts funding the Citrus Health Response Program or CHRP 
by adjusting the federal cost share rate from 94 percent to 80 
percent. Your budget requests an overall decrease to the 
Specialty Crop Pest Program, including a reduction of $7.2 
million to the CHRP program.
    I understand USDA has a lot of factors to consider when 
determining what the federal portion of that tab is going to 
be. You all have indicated that--to take into consideration 
whether it's a new threat or a longstanding program effort, 
whether the pest or disease spreads quickly, and what the 
commercial interests are at stake.
    I would argue that the current Huanglongbing (HLB) 
challenge more than addresses these qualifications. The 
President's budget request reduces the federal cost rate, 
again, from 94 to 80 percent. This might not seem like that 
much, but at this critical time, we need all the help that we 
can get.
    Last year you indicated that USDA had not conducted an 
analysis to determine whether or not state and local entities 
would be able to increase their portion of the cost share. And 
I don't need to remind you of the important stake agriculture 
has to our economy in Florida and the fears of how deeply 
aggressively dropping citrus production will impact our state. 
We have shown that we do have skin in the game in Florida, but 
the industry is getting to the point where it can't support a 
lot of the systems it used to rely on.
    A very prominent group of companies involved with the 
citrus industry recently suggested that our State Department of 
Citrus needs to reduce their budget by 70 percent. ``The impact 
of citrus greening has been overwhelming and unprecedented. And 
it is not an exaggeration to state that we are in a struggle 
for our very survival.''
    The letter said, ``This challenge has dictated a need to 
change and adapt, and the undersigned believe that the industry 
makes a dramatic change. It's prudent to consider significant 
modifications to the Department of Citrus to adapt the crisis 
and give the industry the best chance of survival and 
rebuild.''
    My question is, if the growers are unable to support their 
in-state organization, the Department of Citrus, how can you 
expect that a reduction in the federal investment is 
appropriate? And in the event that the states cannot afford an 
increase in the cost share rate, will this result in your 
overall decrease in CHRP funding? What CHRP activities would be 
impacted? If you can provide specifics, that would be great.
    I just want to editorialize at the end of my statement 
there. These growers are at the end of their rope. It is a 
critical time in Florida for us to be able to defeat greening 
and move forward. So, I appreciate your answer.
    Mr. Avalos. Congressman, we understand very well how 
devastating citrus greening has been to the growers. And I want 
to show you that we're not going to abandon the growers. We're 
still looking for solutions, looking for tools to help them 
overcome this devastating disease.
    I'm going to ask Mr. Shea to talk a little bit more on your 
statement and your question.
    Mr. Shea. Mr. Congressman, we are certainly devoted to this 
cause, and I know Secretary Vilsack is as well. And we are 
hoping that some of the tools that we've been able to develop 
over the last few years, thanks to the funding provided by this 
committee, will make a big difference.
    Thermotherapy, Dr. Ehsani at University of Florida has done 
great research there, and it looks like you can indeed provide 
protection for a tree for four years, treating the tree at a 
cost of about $1.56 a tree with thermotherapy. We think that 
might help.
    We think the use of antimicrobials will help. And currently 
the state has a pending Section 18 exemption request with EPA, 
which they believe they will receive this year or this month, 
that will allow the use of these under foliar spray. And we 
believe that can provide indefinite protection to a tree. So, 
that's another tool that we put into the hands of the growers 
that they didn't really have a couple of years ago.
    And also the use of biocontrol using parasitic wasps, they 
had great success so far in Texas, an 85 percent reduction in 
the number of silletes in Texas where we've used these, and we 
think that can have good success in Florida as well and 
California too for that matter.
    And of course, another big issue in Florida, as you're well 
aware, is how do we manage abandoned groves. And I know that 
the state has done some good work on that with private 
landowners. So, we think we have more tools available than we 
did before and that these maybe have some effect coming 
forward.
    Mr. Rooney. Thank you. Thank you, Mr. Chairman.
    Mr. Aderholt. Mr. Valadao is back, so I'm going to go ahead 
and--you only used about half of your time, so I'm going to go 
ahead and give you the rest of your time on this first round.

                          SPECIALTY CROP PESTS

    Mr. Valadao. Thank you, Chairman. And I'm back. So, took a 
second there. I apologize.
    But the 2017 budget proposal Specialty Crops Program--Pest 
Programs to be funded at $146 million. However, the estimated 
2016 budget is $164 million. Given that we are seeing an 
increase in fruit fly, HLB, Asian Citrus Psyllid (ACP) and 
other pest and disease outbreaks in specialty crops, this $18 
million decrease in funding seems inadequate.
    In California, Florida, Texas, and other citrus-producing 
states, ACP and the devastating disease HLB continue to spread.
    Can you please give the committee a breakdown of what 
programs you anticipate will be cut, and what is your plan to 
continue to combat these pests and diseases while cutting the 
budget so dramatically?
    Mr. Avalos. Congressman, I'm going to ask Mr. Shea to 
answer your question. I still want to talk about wildlife 
services.
    Mr. Valadao. All right.
    Mr. Avalos. I thought we were going to come back. But I 
just wanted to make a statement about wildlife services, that 
it's so important a program to our farmers, our ranchers--not 
just to rural communities but to citizens all over the country 
that so many people don't realize. I wanted to say that, but I 
knew you were going to break to go vote, so I just wanted to 
get it in.
    Mr. Valadao. And yeah, it was a little more just a 
statement of how important the program was. And some of our 
counties are facing lawsuits, and they continue to be sued. 
Some settled and actually came back to second round of 
lawsuits, and so it is something that we are obviously paying 
attention to. And I wanted to make sure that was on your radar, 
so thank you for that.
    But back to that question if you don't mind.
    Mr. Shea. Yeah, Mr. Congressman. On this specialty crop 
issue, we hope there is no reduction whatsoever in those 
programs. We hope that the states will step in and pick up a 
bigger share of the program than they have in the past. Now, we 
were just talking about the Citrus Health Program where the 
Federal Government has been paying 94 percent and we think the 
states could pay a little more there and the same with the 
other programs, glassy-winged Sharpshooter, all the programs. 
Same goes with the Tree and Wood pest programs. We are simply--
--
    Mr. Farr. How much is the state paying?
    Mr. Shea. Well, for the glassy-winged sharpshooter, the 
breakout is about 53 percent federal and 47 percent state, and 
we would kind of like to reverse that. And for glassy-winged--
or I'm sorry--for the light brown apple moth, the state 
actually puts no money into it, and we are paying a hundred 
percent of the cost.
    And if I could very quickly--I didn't get a chance to 
answer your question about that. OK. I'm sorry.
    Mr. Valadao. I'll be happy to yield a little bit of time if 
you want to add to that.
    Mr. Farr. No, I'm interested in what we do. Usually the 
first money comes from the growers themselves, you know, 
through their association marketing orders. But I think the 
question is, will you sustain it. And if not, I mean, is there 
a standard? I mean, disaster assistance, 75 federal and 25 
local. That's sort of the standard. Is that the standard in 
matching these outbreaks?
    Mr. Shea. I think that's a good example. In an emergency 
situation early on, we think a very high Federal percentage is 
appropriate. But for long-term sustained management programs 
like glassy-winged Sharpshooter and Light-Brown Apple Moth, we 
think that the states should bring up--pick up more of the cost 
than they have been. I might add that producers themselves are 
picking up quite a bit of the cost.
    And on light brown apple moth, I just want to give you the 
firm commitment you asked for earlier. We will not back away 
from what's needed to keep trade moving. And we also have 
something in mind that will help the nursery people, and that 
is getting away from inspecting every plant that leaves and, 
instead treating. And doing that would remove that need, we 
hope, going forward.
    I apologize for taking some of the time to answer the light 
brown apple moth question.
    Mr. Valadao. No, I'm fine. I think my time is up, so----
    Mr. Aderholt. You still have a little time. Go ahead if 
you've got--you need anything else?
    Mr. Valadao. No, I'm good. Thanks.
    Mr. Aderholt. OK.

                         PORK INDUSTRY LAWSUIT

    Mr. Young. Thank you, Mr. Chairman.
    Acting Administrator Starmer, I want to thank you for 
allowing Arthur Neal to come out a few weeks ago to the Third 
District and participate in an agriculture transportation 
roundtable. He's a great representative for the USDA and the 
AMS.
    Two thoughts here, one, Pork the Other White Meat lawsuit. 
I hope the USDA is working with the pork producers on this 
ongoing suit. My understanding is a settlement is being 
discussed. And I'm not sure who in the industry is speaking for 
the pork industry, but I'm hearing a lot of voices back home 
that their voices aren't being heard. And so, I just want to 
make sure that you're reaching out to the pork producers to be 
part of the settlement discussions at least.
    Ms. Starmer. Yes, sir, we do to the degree that we are able 
to, given that there is pending litigation. So, we aren't 
really able to talk about it, but we have certainly worked as 
hard as we can to bring the parties together on this.
    Mr. Young. OK, because many of the producers are wondering 
who is representing them in this settlement, in this lawsuit 
and who is speaking for them because they do not feel like 
their voice is heard.

                   HIGHLY PATHOGENIC AVIAN INFLUENZA

    Second issue here--and the Chairman touched on this--and 
that's about the avian influenza, the bird flu. In Iowa it was 
31 million chickens, turkeys, backyard flocks. And we had some 
lessons learned about how we go forward to address these and 
put them into action.
    One thing that was very concerning to folks on the ground 
in Iowa was the lack of communication and the length of time it 
took to dispose of birds; and the reimbursement process, they 
said, was slow. How are you working to implement the lessons 
learned. This was one of the biggest viral outbreaks in 
livestock to date that we really know of.
    How do we go forward with this and streamline the 
communication problems and put those lessons learned into 
action? What are you doing to help rectify this?
    Mr. Avalos. Congressman, again, I want to reinforce that it 
was the largest single disease, animal disease outbreak in the 
history of this country. Mr. Shea spoke to that a while ago.
    And maybe I'll ask you to go ahead and repeat some of the 
stuff you said.
    Mr. Shea. Mr. Congressman, specifically on the things that 
you mentioned, we have a request to add about 80 emergency 
responders in the animal health area. If we would have had 
trained APHIS veterinarians to dispatch and stay on site for 
the entire time, I think we would have overcome a lot of those 
communication issues.
    When we had to rotate people in and out, that led to some 
inconsistency in message. So, if we had the emergency 
responders in place who could stay there, I think we would have 
been better off.
    In terms of compensation, we've streamlined that process 
already so that we can make the calculation of indemnity based 
on paperwork that the owners already have rather than do some 
other kind of inventory later. So, I think we made great 
progress on that as well.
    And in terms of rapid depopulation, you're absolutely 
correct. If we can do that in 24 hours, we help that producer 
get back in business sooner, which is important. But more 
important, if we can knock that virus load down, there's less 
virus to spread around. So, 24 hours is our standard that we 
want to apply. And that's certainly a big lesson we learned.

                        FOREIGN ANIMAL DISEASES

    Mr. Young. One final note. The Homeland Security 
subcommittee on Emergency Preparedness recently had a hearing 
on agro-terrorism. Witnesses called for increased scrutiny of 
imports to prevent diseases such as foot-and-mouth disease or 
African Swine Fever from entering the country.
    Can you talk about how APHIS determines whether a foreign 
site visit is warranted?
    Mr. Shea. Well, we start with a presumption, if a disease 
is present in another country, that we will not accept products 
from that country, whether it's beef, pork, what have you. When 
another country makes a request of us to allow their product to 
be imported, that's when we would do a risk assessment. And 
certainly, a risk assessment almost always entails a site 
visit, an in-country site visit. Certainly, any country that 
has major diseases in the past like foot-and-mouth disease or 
classical swine fever, we would indeed do an in-country visit 
to help with that risk assessment.
    Mr. Young. And do you work in partnership with the FDA 
these risk assessments and these inspections abroad?
    Mr. Shea. We tend not to because these requests are only on 
the animal health side of it.
    Mr. Young. Thank you for your testimony and coming for us 
today and your service. I yield back.

             GENETICALLY MODIFIED ORGANISMS (GMO) LABELING

    Mr. Aderholt. Thank you. I want to ask a little bit about 
GMO labeling. And Mr. Avalos, and of course, anybody on the 
panel, I certainly need your input on this. Secretary Vilsack 
and the Acting Commissioner of the FDA were both here before 
the subcommittee. And I asked both of their opinions on the 
safety of genetically modified organisms, GMOs. Both of those 
individuals, Acting Commissioner and the Secretary, clearly 
stated that the science behind these products supported the 
federal government's position that these products are safe for 
planting and safe for human consumption.
    He and I also spoke about the lack of information out in 
the public. And as you know, has been the case that we've been 
dealing with, regarding GMOs. And a great deal of the 
misinformation that is relayed in the public realm. Your 
mission area plays a lead role in the regulation of genetically 
engineered organisms, as it relates to agriculture. Correct me 
if I'm wrong on this, but essentially, APHIS will decide if a 
seed can be sold in interstate commerce, planted in the ground, 
or allowed to go to the market. How many years has the federal 
government been studying GMO products?
    Mr. Avalos. First off, Mr. Chairman, I know that there's 
been considerable discussion on this topic. And I know that the 
House and the Senate continue to work on the subject. And, this 
mission area, we do provide technical support. But to answer 
your question on the deregulation of GMO products at USDA, I'm 
going to ask Kevin to respond.
    Mr. Shea. Mr. Chairman, of course, we're a part of the 
federal framework. The EPA has a role in this. The FDA has a 
role in this. Our role is rather limited, really. We only 
determine whether or not a proposed event, as they call it in 
that business, would pose a plant health threat. That is our 
role. So we don't really address the human health angles. 
Someone else does that. Or even other environmental angles. 
Now, certainly they are part of the overall rulemaking. As, 
because any rulemaking has to have some economic and 
environmental analysis to it. But the bottom line for us is, is 
a new biotech proposal, proposed item, a plant-pest or not? 
Will it cause harm to plant heath? That is our only role in it. 
And it's the role we've had in this framework, federal 
framework now, since 1987. It's why I mentioned earlier, we put 
that framework together and our rules together based on the 
technology of the day, which has changed pretty dramatically.
    And in terms of improving products, I will say, we've kept 
our commitment to you. The backlog has essentially been 
eliminated. We had 23 products in the backlog four years ago. 
All but one of those have been deregulated. And the only one 
that hasn't is involved in a very complex environmental impact 
statement. Since then, 16 more have come in. Eleven have 
already been deregulated and four are on the quick path towards 
deregulation.
    Mr. Aderholt. But you are responsible to go through and 
approve if different seeds or products can get approval, is 
that correct?
    Mr. Shea. Yeah, but only for the plant health angle. We can 
approve that. But if EPA hasn't done its part of it, the 
products still couldn't be used.
    Mr. Aderholt. As far as what your role has been, in that 
limited role that you mentioned, do you have a rough estimate 
of how many different seeds or products have been approved by 
APHIS?
    Mr. Shea. We'll get that for the record. But I think it's 
probably hundreds.
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                       ORGANIC EGG STANDARDS

    Mr. Aderholt. Let me start out, let me go ahead and ask 
about one other issue that I'm aware that there are concerns 
from the organic egg producers about some of the requirements 
the National Organic Standards Board has recommended in regards 
to organic egg production. If implemented by USDA's National 
Organic Program, these recommendations would effectively ban 
the use of endorsed outdoor access areas that are called 
porches. It's already been said, and you know that we've just 
faced one of the largest or maybe the largest animal health 
event, with the outbreak of the highly pathogenic avian 
influenza. It could cost over a billion dollars and result in 
the depopulation of nearly 50 million birds.
    The egg laying industry has significantly been impacted by 
this. And a question, birds that are exposed to the outdoors 
run a much greater risk of being infected with avian influenza. 
Yet it sounds like the proposal would require organic layer 
hens to be outdoors. Has APHIS been consulted about this 
potential requirement, as they may have different thoughts on 
exposing all organic layer hens to outdoor elements?
    Mr. Shea. We're working very closely with our colleagues in 
the Agricultural Marketing Service on it, yes.
    Mr. Aderholt. So certainly that possibility is being looked 
at then? You're saying that they stand a much greater risk 
there for that to occur?
    Mr. Shea. Well, I think that there are mitigations that can 
take place. And that rule is still under development as I 
understand it. I'll defer to Ms. Starmer. But I think that rule 
is still under development and we're still working closely with 
our colleagues on it.
    Ms. Starmer. Yes, that's correct, sir. The rule, the 
proposed rule is currently over in OMB. As you mentioned, it 
did grow out of recommendations from the National Organic 
Standards Board, as well as from OIG and some statutory 
requirements that we create clear standards for organic 
producers. And so we have attempted to do that. We have 
certainly met with stakeholders from across the industry and we 
believe the proposal incorporates their feedback. And there 
will also be ample opportunity for public comment when the 
proposal comes out. But right now it is, it is with OMB for 
review.
    Mr. Aderholt. Yeah. Well, our hope, or my hope is that as 
you move forward, you would certainly carefully consider the 
threat of avian influenza and the devastation that banning 
porches could bring upon the organic egg layer industry as we 
move forward. So, Mr. Farr.

                        ORGANIC AQUACULTURE RULE

    Mr. Farr. Well, thank you very much. On the hot seat. You 
said you're working on the organic aquaculture rule?
    Ms. Starmer. Yes, sir.
    Mr. Farr. But I want a hard answer, because everybody's 
been working on it for a long time.
    Ms. Starmer. Yes. I have in my limited amount of time here 
in the agency, I have learned about the rule as well as about 
how important it is to you, sir. So I appreciate that.
    Mr. Farr. Now, when?
    Ms. Starmer. I cannot give you a firm timeframe. It is with 
OMB. As I mentioned, we do continue to receive questions that 
we are working to respond to as expeditiously as possible.
    Mr. Farr. Tell me what some of that is. Because I 
understood that they sort of flipped it over to NOAA.
    Ms. Starmer. Well, there is an inter-agency review process 
that happens. That's standard for this type of process. And so 
there have been a number of agencies that have reviewed it. I 
don't think I can go into the specifics, given that the rule is 
still under review. But I can say that we're working as quickly 
as we can to address those questions, so that we can move it 
forward.
    Mr. Farr. Well, it was submitted in August, so----
    Ms. Starmer. That's right, sir.
    Mr. Farr [continuing]. Is there a time frame?
    Ms. Starmer. We are working as quickly as possible.
    Mr. Farr. I know. I don't want a specific date. I just want 
like, you know, months or, before the end of the like, summer, 
or.
    Ms. Starmer. I wish that I could give you a firm time 
frame. I can't. I apologize. But we are working as quickly as 
we can to address--it's, I think, reflective of the complexity 
of the rule and the equities that our federal partners have in 
it.
    Mr. Farr. You don't know how many times that's the answer 
we've gotten this year on these questions of rules and time, 
and studies and everything.
    Ms. Starmer. Yes, sir.
    Mr. Farr. But it's really not fair to the consumer, just 
to, you know, pay--we have our process, and we say it's going 
to take 90 days or take whatever it is. I mean, we in 
government. And then the government can't give us an answer. I 
think you got to--you've got to put the time frame that's 
allowed in law, we've exhausted. So we keep delaying it, 
because we're getting more and more questions. But you got to 
take some leadership on this and just jam this thing through.
    Ms. Starmer. We are doing everything that we can to move 
it, sir.
    Mr. Farr. Well, I'd kind of like to know what those things 
are. Can you give us a letter or whatever it is, or talk to my 
staff about it?
    Ms. Starmer. Absolutely.
    [The information follows:]

                        Organic Aquaculture Rule

    As of February 2016, the Aquaculture rule is with OMB. USDA staff 
followed up with Congressional staff and will make themselves available 
to discuss all matters and questions related to the Aquaculture rule.

    Mr. Farr. We get a call a day from our constituents on 
this. This is how important it is. They worked years putting 
the proposed suggestions together.
    Ms. Starmer. Mm-hmm.
    Mr. Farr. And they can't just understand why government 
hasn't accepted their suggestions. They're all professionals. 
They're in the industry.
    Ms. Starmer. Of course. Yes, we would be happy to follow up 
with your office on this.

                            HORSE PROTECTION

    Mr. Farr. All right. Well, let's get it done. Thank you. 
I've never been able to get a hard answer on that. In 2012, the 
GAO Horse Welfare Report made some recommendations regarding 
inspections, especially to improve completion and oversight of 
travel certificates for horses crossing the Canadian and 
Mexican borders. My own daughter, you know, in shipping her 
horse to Canada for a horse show, landed in all kinds of 
problems. So just getting across the Canadian border, proving 
ownership and all that, and health records. So I really 
experienced that. Because she called me at three in the 
morning, wanting to know if I could help. Can you provide some 
follow up on any changes that have come from these 
recommendations?
    Mr. Avalos. Congressman, I don't know of any changes 
pertaining to horses going into Canada or Mexico or coming back 
from those countries. Mr. Shea, do you have any information on 
this?
    Mr. Farr. Well, there were, in 2011. The GAO Horse Welfare 
Report made some recommendations regarding inspections. And 
especially improved completion and oversight of these travel 
certificates for horses crossing the borders. And you were 
supposed to, the agency, well, you are probably supposed to get 
back to, what those improvements were. Or where they are.
    Mr. Shea. We'll have to look into that and get back to you.
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                       APHIS OPERATIONAL AIRCRAFT

    Mr. Farr. All right. According to another report, you're, 
this year's budget, you're currently, you currently own 41 
operational aircraft, that you use by the Wildlife Services. 
And the budget this year is asking for $8 million more, to 
expand the fleet. I presume that's the aircraft fleet. Apart 
from aerial gutting, what other activities are carried out by 
these aircraft? And given the high cost of aerial gutting 
operations and human risks involved, what are the alternatives 
that have been looked at by the research arm?
    Mr. Shea. Mr. Congressman, we are not asking for $8 million 
this year. There were $8 million in the Fiscal Year 2016 
Omnibus to purchase two helicopters and two fixed wing 
aircraft, but we are not requesting anymore funding for anymore 
aircraft, for Wildlife Services, in 2017.
    Mr. Farr. So what are the activities that are being 
conducted out of those aircraft, and what are the alternatives 
to guiding operations from the air?
    Mr. Avalos. Congressman, the helicopters, there's one being 
placed in Alabama. There's one being placed in Mississippi. 
They'll be used for feral swine control. The airplanes, one 
being placed in New Mexico and one being placed in Wyoming, 
would be used for, on a regular predator control. Alternatives?
    Mr. Farr. Can we get any other bang for the buck? I mean, 
from just, from use of those aircraft? Or is it just used for 
aerial----
    Mr. Avalos. They're strictly for feral swine control and 
predator control. And it's not--they don't just stay in that 
one state where they're placed. They work a whole region.
    Mr. Farr. Are there any alternatives to that? It's 
expensive----
    Mr. Avalos. We do have--I want to ask Mr. Shea.
    Mr. Farr [continuing]. Predator control.
    Mr. Avalos. But I just wanted to touch on one alternative 
that I really, really promote and I really, really like. It's 
the Protection Dog Program. It's an alternative that we use 
primarily out west. And it's primarily to address the issue of 
grizzly bears and wolves. And I'll never forget, Congressman, 
Mr. Chairman. I'll never forget. I was in Montana. We had a 
roundtable. And there was the leader for the Hunter Right 
Colony. And he was complaining about the grizzly bears and the 
wolves. And when I brought up the Protection Dogs, he said, ``I 
want to tell you, Mr. Under Secretary, that we really 
appreciate the Protection Dogs. So once we got the three dogs, 
our wives, our children, could take their afternoon walks 
without fearing the grizzly bear and the wolf.'' So I think 
that the Protection Dog Program has a lot of merit. And that 
it's something that can be used in the future as a non-lethal 
weapon.
    Mr. Farr. Well, those are alternatives. And I think that's 
a good idea. Are your ideas, is there any money in your budget 
for that? It's certainly cheaper than helicopters.
    Mr. Shea. We're certainly pursuing non-lethal methods. And 
in fact what we've begun the last year is having non-lethal 
workshops where we bring producers in to inform them about new 
methods. And in fact, we're even working with the Natural 
Resources Defense Council, which is not a fan of Wildlife 
Services generally speaking, on some projects out west as well. 
So we are pursuing those. We are developing non-lethal methods 
through our Methods Development Program in Wildlife Services. 
So we continue to pursue non-lethal methods for sure.
    Mr. Farr. Well, I appreciate that. Particularly for the 
compound 1080 Livestock Protection. I know that there have been 
protracted deaths and unintended non-predators from consumption 
of 1080. So.
    Mr. Aderholt. Mr. Valadao.
    Mr. Farr. My time's up.

                       BIOTECHNOLOGY REGULATIONS

    Mr. Valadao. So Biotech is the next one for me. I'm hearing 
concerns about implementation of USDA's proposed rewrite of the 
biotech regulations. I understand the 30 day comment period was 
recently extended another 45 days. And I want to stress how 
important it is to ensure the department gets this done right. 
Many groups representing production and agriculture asked for 
the extension, because some of the concepts USDA is considering 
in its proposed alternatives appear to be significantly 
different from the way UDSA has regulated Biotech crops in the 
past.
    For example, the new terms defined in the Notice of Intent 
(NOI) would bring under the scope of the USDA's regulations on 
products developed using newer breeding methods, as well as 
potentially including products like seedless watermelon, that 
have been safely consumed for years, or even breeding methods 
used in organic production. Can you assure this committee that 
you will carefully consider the potential negative impacts of 
any new proposals on the ability of our farmers to produce an 
adequate and wholesome economic food supply and compete in a 
world or a global marketplace? And that's basically a yes or no 
question.
    Mr. Avalos. Yes.
    Mr. Valadao. Thank you. What specific problem with the 
current regulation are you trying to address?
    Mr. Avalos. You made it easy.
    Mr. Valadao. Well, I've got follow ups. What specific 
problem with the current regulations are you trying to address, 
and how does your current thinking address this problem? 
Further, how will you ensure that it addresses the perceived 
problems without causing more? That's not a yes or no question.
    Mr. Avalos. Congressman, I'm going to give that part of 
your question to Mr. Shea.
    Mr. Shea. I think the basic problem we're trying to address 
is that the regulations are nearly 30 years old. And the 
technology has changed. So we may very well be putting products 
through a regulatory process that don't need to be anymore. And 
there may be some others that we probably should be looking at. 
So we're trying to get it right for 2016. And it's certainly 
not our intention to make it more difficult to get these 
products to market. As I mentioned earlier, we've completely 
eliminated the backlog that we had been dealing with, in 
deregulation. So we don't want to get into another backlog 
situation. And that's what we're trying to do though, is make 
these regulations current. Because we're operating under a 1987 
kind of paradigm.

                   BIOTECHNOLOGY REGULATORY SERVICES

    Mr. Valadao. All right. And then the budget requests for 
Biotechnology Regulatory Services Program for Fiscal Year 2017 
is less than a 1 percent increase. If the USDA intends to 
complete its update within this administration, does the 
request for a nominal increase provide any indication about how 
the USDA is thinking of changing the scope of regulation?
    Mr. Shea. Well, I would say that perhaps it indicates that 
we don't intend to have a massively larger regulatory structure 
in place. That's not where we see this going. Of course I 
hasten to add, there's, as you mentioned, a total of 75 day 
comment period. We added 45 to the original 30. So we need to 
hear from everyone. So we haven't made up our minds for sure. 
But we don't want to be headed toward a greater regulatory 
structure.
    Mr. Valadao. All right.
    Mr. Shea. So I think the funding that's requested is 
certainly adequate.

                             PRODUCE SAFETY

    Mr. Valadao. And Ms. Starmer, in 2009, you authored a 
report on Produce Safety. In the report, you recommended that 
policy makers must avoid taking a one size fits all approach to 
produce safety. Recommended practices and record keeping 
mechanisms must be adaptable to a range of farms and supply 
chains. As an employee of AMS, you work closely with the FDA in 
developing the FSMA regulations. How would you grade FDA's 
regulations in terms of providing flexibility for producers in 
different regions, of different sizes and different products?
    Ms. Starmer. I would say--and thank you for the question, 
Congressman. In my time as a Senior Advisor to the Secretary, I 
was the liaison to FDA from the Office of the Secretary. And we 
did provide significant technical assistance in the drafting of 
those rules, and now in implementation. I think my point then, 
and this is still something that I feel very strongly about 
now, is that it is critical that we have robust food safety 
standards that everyone is held to. There are going to be 
different needs, depending on the type of operation and the 
size of that operation. And I think that FDA has done a very 
good job of being responsive to the range of industry 
perspectives on this during the rulemaking process, and that 
the technical assistance opportunities that are available for 
the industry are reflective of that diversity. So everything 
from the Produce Safety Alliance, which AMS helps support with 
FDA, to some of the cooperative agreements that FDA is putting 
out to provide technical assistance to special groups such as 
tribal producers and others. We are responsible for ensuring 
that the produce industry can make these rules work regardless 
of their size or where they're located.
    Mr. Valadao. I think my time is up. Thank you. Thank you, 
Chairman.

                         USDA REGULATORY AGENDA

    Mr. Aderholt. Thank you. I think Mr. Farr and I may have a 
couple of more questions as we close out. We've seen situations 
in the past where administrations have decided to release some 
controversial or more unpopular regulations in the last few 
months of the administration,--especially those that are not 
returning to power. Are there any regulations that are a 
priority within your mission area, that may be released before 
President Obama leaves office? And even if there's no 
particular plans to release, for release of regulations, what 
will be on your agenda for the end of the year?
    Mr. Avalos. Mr. Chairman, I'm trying to think. The first 
rule that came in mind is something that's been pending for a 
long time. It's the Scrapie rule, to help the sheep industry in 
this country finally eradicate Scrapie and be able to trade 
with our foreign partners. And Mr. Shea, Ms. Starmer, Mr. 
Mitchell, are there others that come to mind? That's the first 
one that came to my mind. And we can always get back to you on 
your question. But that's the only one that I can think of at 
this time.
    Mr. Shea. I think we'd probably like to conclude the Marine 
Mammals Rule that has been pending for so long. So that is one 
we'd like to finish.
    Mr. Avalos. Mr. Chairman, if you allow us to put more 
thought into this, then we can, we can send it in for the 
record.
    [The information follows:]
    
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                             CERVID HEALTH

    Mr. Aderholt. OK. All right. Cervid health. As you know, in 
FY 2016, the Approps bill provided APHIS with no less than $3 
million for cervid health activities and gave consideration to 
indemnity payments if warranted. Can you tell us how this 
funding is being spent and how much is being planned for 
indemnification?
    Mr. Shea. As in the previous two years, we would allocate 
about $1 million of that $3 million for indemnification. We 
allocate about $200,000 for research into live animal testing. 
Because right now we can't determine whether the animal is 
diseased until it's dead. And the rest of the money goes into 
our work in the Voluntary Certification Program.

               GRAIN INSPECTION AND WEIGHING USER FEE CAP

    Mr. Aderholt. Anything else that anyone wants to add to 
that? Regarding GIPSA, as your testimony notes, the budget 
includes a request to eliminate the limitation on inspection 
and weighing services. It's my understanding that this 
limitation has been in place for a number of years. Has the 
Federal Grain Inspection Service had to deny any requests for 
services under the limitation?
    Mr. Avalos. I want to ask Mr. Mitchell to answer your 
question.
    Mr. Mitchell. Yes, sir. We've asked to eliminate the cap on 
what we can spend out of the user fee funds. One of the main 
reasons is the recently enacted reauthorization of the U.S. 
Grain Standards Act. It provides, or requires us to establish a 
mechanism for determining our user fees on an annual basis, to 
ensure that we have a three to six month reserve on hand. We 
believe that first off, we have cut back a lot of our spending. 
We've got it to--we're very economical in what we're doing. But 
with this provision, that's in the reauthorization, we believe 
that that mechanism will help us and future administrators deal 
with this issue better.
    One of the reasons that we asked to remove the cap is the 
cap isn't related to appropriated funds. Of course, it's user 
fee funds. A year like last year, last marketing year, we had 
record bulk grain exports. Grains, oils, seeds. That means a 
lot more activity for us. It means actually a lot more revenue 
coming in through the user fees. But it also means increased 
expenses for making sure that job gets done. And we got very 
close to breaching last year's user fee cap. So I think that we 
have the mechanism in place to ensure that we continue to do a 
very efficient job with the funds to keep those user fees as 
low as we possibly can, without the cap.
    Mr. Aderholt. Without the limitation in place, how much 
funding would be available for grain inspection and weighing 
activities?
    Mr. Mitchell. For user fees, it would probably still be in 
that $50 million range. Are you asking--we do get appropriated 
funds for a couple of other issues dealing with the Federal 
Grain Inspection Service. That's what you're asking about?
    Mr. Aderholt. Well, either way. But you said $50 million 
would be--in the neighborhood of $50 million?
    Mr. Mitchell. $50 to $55 million is our expectation. It 
might actually be a little lower this year. Our exports are 
down a bit from last year. Of course last year being a record. 
You usually don't win the Super Bowl every year. So we're 
spending a little bit less this year. But that is our best 
estimate at this time.
    Mr. Aderholt. OK. Mr. Farr.

                    U.S. MEAT ANIMAL RESEARCH CENTER

    Mr. Farr. Thank you, Mr. Chairman. I just want to state I 
think that the Chair is sort of precautionary, in rulemaking. 
But, look, we're all hired, or elected to do a job up until 
we're not doing it. So you have to carry out your 
responsibilities in law to do everything that you're 
responsible for doing. And I don't think you ought to hold 
back. I mean, we're not a lame duck until after November 8th. 
That's when new President will be President Elect and will be 
putting in their administration. And we'll know who won the 
Congressional seats.
    But as long as we're in Congressional offices or Senate 
Offices, they ought to be doing their job. And the President 
ought to nominate people for the appointments that he's 
Constitutionally responsible to do. And Congress should do its 
job by confirming or rejecting him. But I just, this idea that 
there's going to be a new administration next year, and that we 
ought to just stop government right now is ridiculous. I 
wouldn't be here. Because why should any Member of Congress 
show up to any meeting or introduce any legislation or have 
ideas? So I feel very strongly, we're all hired to do our job 
responsibly. And if it takes making rules to address concerns, 
then make them.
    One of the things that the Chairman and I are very 
concerned about is that we directed the ARS to execute an 
agreement with APHIS within 90 days of enactment, to deal with 
the U.S. Meat and Animal Research Center (MARC). With great 
concern to the subcommittee after the New York Times story 
alleged animal mistreatment. And you were--the inspections that 
were supposed to be consistent with the Animal Welfare Act, at 
each ARS research facility that uses animals in research. That 
directive was reaffirmed in the conference report that both 
houses adopted, and the President signed.
    For the benefit of the public and our Members, will you 
give us a status report on this timetable? And I understand you 
are currently doing pre-compliance inspections of all ARS 
facilities. Are these just a walkthrough, or can they uncover 
issues that need to be address? And have any issues of concern 
been found? And if so, what are they? And as a follow up, 
because of the information we received, it's really unclear 
that you in fact do unannounced inspections on all your 
facilities following the pre-compliance inspections. And we 
actually got a copy of one of the inspection reports. It's one 
page. It seems to be a little flimsy on what actually was done. 
How can we be sure that you're doing your job as requested by 
Congress?
    Mr. Shea. Mr. Congressman, we have entered into that 
agreement. I personally signed that agreement just a few weeks 
ago. We have done the pre-compliance inspections already at 13 
facilities. And we will have completed 21 of the pre-compliance 
inspections by May 1. So we're making great progress there, and 
we'll do them all by the end of the year.
    Mr. Farr. But the question is, how thorough are these 
inspections? Are you discovering things, and are they then 
addressing what you're discovering?
    Mr. Shea. Yes. We're addressing this just like we would any 
other new licensee. We go in, look at the facility. Just as we 
do with private or university facilities. And help them find 
what violations might exist now and what they need to do to 
improve. So we've done that already at 13 of the facilities. 
And we actually are going to begin unannounced inspections at 
some of those by May 1st. So we're moving expeditiously to do 
this. I think we've got a really good process in place, with my 
counterpart, Dr. Jacobs-Young, in the Agricultural Research 
Service. And we will do our best, our inspections just like we 
do for everybody else. We will post those inspections on the 
internet, just like we do for every other inspection we do. And 
if there are serious violations found that aren't corrected 
quickly, then there's commitment from ARS leadership that the 
local IACUC, which is the Institutional Animal Care and Use 
committee, will stop research until those things are fixed. So 
I think we're in a good place with this. We have great 
cooperation from the leadership of the Agricultural Research 
Service. And I think this program will work well.
    Mr. Farr. Are you going to do unannounced inspections at 
all of your----
    Mr. Shea. Yes, yes. Once we've done the pre-compliance 
inspections, we'll then go back and start doing unannounced 
inspections.
    Mr. Farr. And those as you said are online, then, the 
findings?
    Mr. Shea. Yes, we will post those online.
    Mr. Farr. OK. Because I think that's going to reestablish 
some confidence in our government responsibilities.
    Mr. Shea. Mm-hmm.
    Mr. Farr. I appreciate that. Thank you for taking it up. I 
thought I would get you the answers for our rulemaking. I'm 
going to find out when the unannounced--Chairman, I have no 
further questions. And we're breaking for 10 days. And so have 
a nice break.
    Mr. Aderholt. Thank you, Mr. Farr. Well, thank you all for 
being here today and for your testimony. And we look forward to 
continuing to work with you as we work on the FY 17 budget. So 
the hearing is adjourned.


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                                          Thursday, March 17, 2016.

   DEPARTMENT OF AGRICULTURE, FARM AND FOREIGN AGRICULTURAL SERVICES

                               WITNESSES

ALEXIS TAYLOR, DEPUTY UNDER SECRETARY, FARM AND FOREIGN AGRICULTURAL 
    SERVICES
BRANDON WILLIS, ADMINISTRATOR, RISK MANAGEMENT AGENCY
VAL DOLCINI, ADMINISTRATOR, FARM SERVICE AGENCY
SUZANNE PALMIERI, ASSOCIATE ADMINISTRATOR, FOREIGN AGRICULTURAL SERVICE
MICHAEL YOUNG, BUDGET OFFICER, DEPARTMENT OF AGRICULTURE

                       Introduction of Witnesses

    Mr. Aderholt. The subcommittee will come to order.
    Good morning and happy St. Patrick's Day to everyone. 
Welcome everybody here to today's hearing.
    Sorry for the little delay in getting started, but just 
before we were to begin the hearing, the vote was called. So we 
were delayed there, but we are back now. We still have another 
series of votes, but we are going to continue on and see how 
far we get before they call the vote. It sometimes can be 
longer than they anticipate. So we will just play it by ear.
    So anyway, good morning, and it is good to have you here.
    The primary goal of our hearing today is to examine the 
fiscal year 2017 budget submission from the Farm and Foreign 
Agricultural Services mission area and its respective agencies. 
This is the eleventh and our hearing for the fiscal year 2017 
budget hearings. So we have had quite a busy month as we have 
heard a lot from your colleagues in the Department of 
Agriculture.
    Joining us today are Ms. Alexis Taylor, the Deputy Under 
Secretary of the Farm and Foreign Agricultural Services mission 
area. We welcome you.
    Mr. Val Dolcini, Administrator for the Farm Service Agency. 
Thank you for being here and welcome.
    Ms. Suzanne Palmieri, who is the Administrator of the 
Foreign Agricultural Service. Welcome.
    Mr. Brandon Willis, Administrator of the Risk Management 
Agency. Welcome to you.
    And, of course, welcome back Mr. Mike Young, the USDA's 
Budget Director. He gets to hear all of it, so he gets to know 
all of it.

                    Opening Statement--Mr. Aderholt

    But to begin with, I want to welcome Ms. Taylor for her 
first time to testify before the subcommittee in this current 
role. I also want to commend you and your team for achieving 
several key accomplishments over the past fiscal year, 
including opening new markets for American agricultural 
products, such as the South African markets, to American 
poultry, beef, and pork for the first time in 15 years; and the 
continued implementation of the 2014 farm bill; and also the 
reinstatement of marketing loan certificates as directed in the 
subcommittee's fiscal year 2016 appropriations bill.
    We have emphasized in this subcommittee over the previous 
hearings that we have had over the last few weeks basically 
four areas that we try to focus on and to emphasize as we move 
forward. The first goal would be increasing oversight, 
efficiency and the need for effective outcomes.
    The second is that we keep rural America vibrant.
    Number 3, we support American farmers and ranchers.
    And, fourth, protecting the health of people, plants and 
animals.
    During the hearing today, we will have an opportunity to 
discuss the topics that include the Risk Management Agency's 
budget proposal to use mandatory crop insurance funding for its 
salaries and expenses account. We will highlight significant 
reductions in the U.S. commodities and maritime sealift 
capability supplied to food aid programs in recent years, and 
concerns this subcommittee has expressed in regard to the 
Modernize and Innovate the Delivery of Agricultural Systems 
Program, better known as MIDAS.
    The Farm and Foreign Agricultural Services mission area 
plays a unique role at USDA and also within the United States 
economy. It implements the essential safety net for the 
American farmer through crop insurance. It maintains access to 
credit through farm ownership and operating loans and oversees 
numerous disaster, conservation, and supplemental assistance 
programs.
    At the same time, the Foreign Agricultural Service is 
working in over 170 countries around the world to promote the 
products and the commodities American farmers produce.
    The mission area also represents a large portion of 
America's humanitarian food assistance overseas, using American 
taxpayer dollars to send American food on American ships to 
feed those that are in need.
    The President's budget request for the Farm and Foreign 
Agricultural Services mission area is $3.4 billion. This budget 
request uses a number of gimmicks and out-of-touch assumptions 
to achieve this funding level. For example, the budget 
shortchanges the food aid programs, including reductions of 
$116 million for the Food for Peace Program and $20 million for 
the McGovern-Dole Food for Education Program.
    This comes at a time when our world is facing a global 
refugee crisis, one that directly affects us here at home. And 
I will be honest. The budget request continues in a worrisome 
trend we have found in many mission areas under this 
subcommittee: paying for discretionary programs with mandatory 
funding.
    The President's proposal to transfer $20 million of 
mandatory crop insurance funding to the Risk Management Agency 
is simply a non-starter.
    The budget also proposes to once again open up the 2014 
farm bill and to cut the Federal Crop Insurance Program, which 
provides a crucial safety net for our farmers, our ranchers, 
and our producers across the country.
    In 2015, USDA estimated that American producers would feel 
cuts of 36 percent in farm income. That is the lowest income 
rate in nine years.
    Not only is this proposal hurtful to our agricultural 
economy, but also it is misguided by seeking to change a 
mandatory spending program through the appropriations process.
    With regard to food aid programs, this budget request 
reflects a decline in support for key constituencies that have 
made up the backbone of the food aid program: the American 
farmers and the shippers. Changes to the traditions of these 
programs in recent legislation and the outright circumvention 
of the Food for Peace Act, largely led by this administration, 
have eroded the participation of these groups. This decline is 
reflected no more starkly than in the sharp decline in the 
tonnage of U.S. commodities and shipping activity in the Food 
for Peace program alone, a drop of almost 25 percent in metric 
tons since the reforms were enacted.
    These reductions have been offset by the use of local and 
regional purchases and cash transfers backed by questionable 
legal interpretations. This subcommittee has been a strong 
champion of our food aid program and their 60-plus year 
tradition. Last year, this subcommittee included a one-time 
$250 million increase for refugees and other emerging crises 
around the world in the Food for Peace Program.
    We have also discussed USDA's long-awaited response to the 
2014 Farm Bill provision establishing an Under Secretary for 
Trade and Foreign Agricultural Affairs. The study required by 
Secretary Vilsack is in its second year of delay. The fiscal 
year 2016 Omnibus reinforced the Farm Bill mandate and supports 
the establishment of this position and a new mission area. This 
new position would concentrate USDA's role in promoting U.S. 
agricultural exports, overseas imports, and supplying food aid 
overseas.
    In closing, I would like to say that we are grateful for 
your mission area and the role they play in helping our 
nation's farmers and ranchers. I look forward to discussing 
these matters in a little more detail and getting your input 
and input from the subcommittee members as we move forward.
    Before I recognize the Ranking Member, I want to say a word 
about a good friend and a colleague, the ranking member, Sam 
Farr. Sam, as you may know, has announced his retirement, and 
this is his last scheduled hearing to be the Ranking Member 
this year and this Congress, and he will be sorely missed.
    He was first elected to Congress in 1993 in a special 
election, and he succeeded a young man by the name of Leon 
Panetta, and he went on to serve then on the Appropriations 
committee and on this subcommittee subsequent to being elected.
    I believe I can speak for all of us on this subcommittee 
and all that know Sam that we really know that he has a genuine 
interest in looking out for those who are underprivileged. He 
has a real desire to fix problems that are in government, and 
we will miss his personal stories and also hearing about the 
Salad Bowl that he represents.
    Sam, as you often do, you come and thank the Members and 
thank our witnesses for their service, but we do want to thank 
you.
    I will tell you a little story. Right after I first got 
elected, I had the opportunity to travel on my first 
congressional trip with Sam, and we became friends on that 
trip. This was back in 1999, and we were able to go to Bosnia 
right after the war and see what was happening there trying to 
restabilize that region.
    But one of the fun things about that trip is that my wife 
was about to have our first child, and she was 7 months 
pregnant, and we did not want to know if it was going to be a 
boy or a girl. We decided to let that be just a surprise.
    But Sam predicted that it would be a girl, and he predicted 
that because every Member of Congress that was on that 
congressional trip, their first born was a girl, and Sam was 
right. It was a girl. [Laughter.]
    Mr. Aderholt. I will always remember that. Sam, we do 
appreciate your service and your dedication to those not only 
in your district, but also California and the United States.
    So let's give him a round of applause.
    [Applause.]

                      Opening Statement--Mr. Farr

    Mr. Farr. Well, thank you very much, Mr. Chairman. And I 
have to say that I will miss it. I think that the most 
constructive part of this job is subcommittee hearings. It is 
where you really get down, as we all talk about drilling down; 
this is where you drill down, and you really understand the 
largess of government in all capacities and how incredibly 
necessary all of these programs are.
    Can we do things better? I think so, and that is why I am 
always trying to reorganize or suggest collaboration that is 
different.
    And I want to thank you, Mr. Chairman, because you have 
been a really good Chair of this committee and we have been 
able to work out many differences that we have in these 
budgets. We do not always agree, but we certainly do get along 
together, and that is what it is all about.
    And I want to thank the panel. I want to thank particularly 
Val for your incredible service first on the Hill here with Vic 
Fazio, and now in the Department, and I really appreciate your 
career and all of you for volunteering.
    I mean, most of the people in this room have volunteered to 
be government employees and legislative employees. Thank you 
all, including the staff behind me.
    As you said, this is my last Agriculture Appropriations 
hearing, and I am glad to see in this budget a lot of items 
that I do not think would have ever been here. I would not have 
imagined that they would be before us when I first got here.
    Particularly as you talked about, I represent the Salad 
Bowl of the world. My county of Monterey does $4.8 billion in 
agriculture. They grow 100 crops. It is just one small county. 
You know, there are 58 counties in California, and all of those 
are specialty crops.
    So we did not even use that word when we got here. The 
phrase that everybody used was ``minor crops,'' not knowing 
what in the hell that meant.
    It is very active in the National Organic Program. We did 
not have rules yet established. I carried a bill to the State 
legislature to create the California certified organic law, and 
I remember then Alan Cranston, Senator Cranston, and Senator 
Leahy asking if they could use that bill as a model for the 
Federal Government.
    Yet when I got here, the rules had not been yet established 
for the National Organic Program. So we have seen that come to 
fruition.
    We have seen the Market Access Program (MAP), the Technical 
Assistance for Specialty Crop Programs (TASC), the MAP and the 
TASC helping expand conventional and organic markets around the 
world.
    We have seen within the United States the Risk Management 
Agency has expanded the types of insurance for crop coverage to 
producers of organic and specialty crops. Those were not 
available when I first arrived.
    Food safety is no longer a matter of buyer beware, but a 
modern process using most of the up to date technology 
available to ensure that the meals we prepare for our families 
and friends are healthy and wholesome.
    And now with the fiscal year 2017 budget and the budget for 
the Foreign Agricultural Service and plans to expand its 
network with the opening of an overseas office in Cuba, I am 
very excited. I am going with the President and your Secretary 
this Sunday to Cuba. It is only 90 miles off our shore, and it 
imports the majority of all of its food, most of that from 
other Western Hemisphere countries, not from the United States, 
and I think we have a great opportunity to expand those markets 
for all our growers in the country.
    You know, on a less positive note, Secretary Vilsack said 
here a couple of weeks ago that he described rural America as 
the heart and soul, not the glitz and glitter, and I do not 
feel that we are showing much heart or much soul in proposing 
cutting the Food for Peace Program. I disagree with the 
Chairman on the implementation of that program. I am not part 
of that. I think that we need to change it.
    When you think about how we have to grow that food, harvest 
that field, transport that food, then to get on an overseas 
carrier, usually by ships, get it overseas, get it off those 
ships, distribute it to a center, then distribute it to the 
countries that are the recipients of that food, and then work 
it out in the local markets, that is the most expensive food in 
the world.
    And what we are missing in that is we are not helping those 
countries invest in their agrarian economic development, not 
creating the opportunity to grow and create markets and 
investments in their own countries. I think that is why I am 
interested that we give some of that money to the local 
communities because I'm very supportive of doing that at home.
    I think we need to expand. We need to invest in the Local 
and Regional Procurement Program. In my district right now the 
University of California at Santa Cruz has been challenged as 
have all University of California campuses to look at how you 
could reanalyze the markets, get all the public buying, all the 
buying that goes for school lunches, for universities, for 
jails, for hospitals, for everywhere you have these public 
feeding programs, and find out how much of that food is grown 
locally, and then if so, we just go right to those local 
growers and reach contracts with them.
    What does that do? That cuts down on these incredible 
transportation costs. We are sending food away just to get it 
come right back, and we want to distribute that locally. So I 
think that is something we need to work on.
    And there is some money in that for the first time, and 
hopefully we can keep that in there. So I think it is about 
smarter investments, getting a better bang for our limited buck 
at the federal level.
    I think one of the interesting things and why most of us 
are on this committee, it is not just because of a commodity. 
Some people are on the Agriculture committee. When I got there 
and I told them that we grow over 100 crops in my district, 
they just could not believe it because they were growing corn 
or wheat or something like that.
    I think what the Department of Agriculture is is really 
about all of America, the whole of America. When you think we 
have overseas offices, we deal with the Commodity Futures 
Trading Commission. We deal with poverty programs. We deal with 
food commodity programs, specialty crops, insurance, the whole 
thing. It is just an awesome department.
    Thank you, Mr. Chairman, for bearing with me for all of 
these years where I brag about my district, but I am not going 
to be representing it anymore, but I will still brag about it.
    But thank you very much for giving this time to open in 
this last subcommittee meeting before this panel, and thank you 
again for your presence here today.
    Mr. Aderholt. Thank you. Thank you, Mr. Farr.
    Deputy Under Secretary Taylor, without objection your 
entire written statement will be included in the record, but at 
this time we recognize you for any opening remarks you would 
like to make before we go into the question series of the 
hearing.

                     Opening Statement--Ms. Taylor

    Ms. Taylor. Thank you for that, Mr. Chairman.
    Mr. Chairman, Ranking Member, I would like to thank both of 
you for your opening comments.
    Mr. Chairman, I would also like to just echo your comments 
on Ranking Member Farr's leadership on this subcommittee and 
really his commitment to U.S. agriculture.
    Happy St. Patrick's Day to you as well. Taylor may not be 
an inherently Irish name, but I assure you it actually is. So 
it is a day special for me as well.
    We certainly appreciate the knowledge and understanding of 
what the Farm and Foreign Agricultural Services does and the 
important role that it serves for rural America.
    Mr. Chairman, you introduced my colleagues. So I will not 
do that again but just thank them as well for being here with 
me today.
    I would also like to thank the Members of the subcommittee 
for being here. As you said, this is my first time testifying 
before your subcommittee, and I will be here to present, along 
with my colleagues, the 2017 budget and program proposals for 
the Farm and Foreign Agricultural Services.
    We appreciate the challenges of today's budget environment 
and the need to reduce the federal deficit while striving to 
streamline our operations, improve efficiency, and reduce 
administrative costs.
    Today, American agriculture faces significant challenges. 
Falling farm income and natural disasters have increased the 
stress on America's farmers and ranchers. Our commodity 
disaster crop insurance and farm credit programs are important 
parts of our farm safety net to American producers and our 
rural communities.
    Turning to the Farm Service Agency (FSA), the budget 
request for salaries and expenses is $1.5 billion. FSA delivers 
its programs through about 2,100 offices located in all 50 
States, Puerto Rico, the Virgin Islands and Western Pacific 
territories.
    FSA provides a broad range of services, including direct 
loans and loan guarantees, disaster assistance, marketing 
assistance loans, and certain conservation programs.
    FSA has developed a program service delivery model which 
focuses on improving customer service and streamlining program 
delivery.
    For farm loans, the budget proposes a program level of 
about $6.7 billion, $255 million more than the 2016 level. The 
budget request reflects our request and commitment to support 
new, beginning and veteran farmers and ranchers, including $3.9 
million to support 25 new regional coordinators for outreach 
and mentorship opportunities.
    The request also includes $1.5 million to enhance the 
StrikeForce Initiative. For the 2015 crop year, the Risk 
Management Agency (RMA) through the Federal Crop Insurance 
Corporation, provided about $102 billion of insurance 
protection. Our current projections for the 2016 crop year is 
that protection will be just over $100 billion.
    For salaries and expenses of RMA, the budget requests $67 
million to support 466 employees. This would be supplemented by 
a transfer of up to $20 million in existing crop insurance fees 
into the salaries and expenses account, if authorized by 
Congress.
    RMA continued to implement key 2014 Farm Bill programs 
during 2015, including the supplemental coverage option, STAX, 
and the actual production history yield exclusion. Also, RMA is 
currently offering whole farm revenue protection in every 
county in the country for 2016. This is a first for the crop 
insurance program.
    On the international side, the budget provides $197 million 
for the Foreign Agricultural Service salaries and expenses, 
about $5 million more than 2016. For trade expansion and 
promotion activities, the budget includes $200 million for the 
Market Access Program, $34.5 million for the Foreign Market 
Development Program, $10 million for the Emerging Markets 
Program, and $9 million for the Technical Assistance to 
Specialty Crops Program.
    For international food aid, the budget includes $182 
million for McGovern-Dole, including $5 million for local 
purchases, and $175 million for Food for Progress.
    In addition, the budget activities includes $15 million for 
Local and Regional Food Aid Procurement Program.
    For P.L. 480 Title II, the budget provides $1.35 billion.
    Mr. Chairman and Members of the subcommittee, thank you for 
the opportunity to be here today, and we look forward to any 
questions you may have.
    [The information follows:]
    
    
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]  
    
    Mr. Aderholt. Thank you.

                   FOOD AID REFORM--FOOD FOR PROGRESS

    Let me start out with the food aid reform issue. The 
President's budget, once again, proposes to slash spending for 
food aid, including a $116 million cut to the Food for Peace 
Program. The President is also proposing to transform these 
programs into a cash-based assistance program.
    Reforms have already been enacted into law that undermine 
support for these programs by cutting them out of U.S. 
commodities and maritime sealift capability to use. I fear that 
the President's request has realized concerns of many past and 
current stakeholders about the unintended consequences 
associated with these proposed reforms.
    As I previously noted, I know others in Congress are 
concerned that removing the American farmer and shipper from 
participation in this 60 year old tradition of the Food for 
Peace Program does not create intended efficiencies, but 
instead it will lead to cuts to the program due to simply a 
lack of support.
    These reforms enacted for the Food for Peace Program have 
reduced overall commodity and sealift capability usage by 
almost 25 percent, as I had mentioned earlier. For example, in 
just the two years leading up to and following the enactment of 
these so-called reforms, purchases of U.S. grown rice fell by 
65 percent. U.S. wheat fell by 56 percent, and U.S. soy fell by 
100 percent. Even the demand for nonprofit groups seems to have 
drastically dropped off.
    Proposals submitted to the Food for Progress Program, for 
example, have dropped by 76 percent in the last five years. 
Without the support and the participation of the American 
farmer and the shipper, it is hard for many of us to go back to 
our constituencies and justify spending more money on foreign 
aid programs at a time when our Nation's deficit is out of 
control.
    In fact, when asked, the majority of Americans consistently 
choose foreign aid as the number one place to cut funding, and 
that is just a fact. I think we have to realize that.
    Thankfully, this subcommittee won support in the fiscal 
year 2016 Omnibus for one-time additional funding of $250 
million due to exceptional circumstances with the refugee 
crisis in the Middle East.
    The budget claims that the cuts to the food aid programs 
are offset by efficiencies gained through the supposed reforms. 
Have we actually seen gains come about as a result of 
efficiencies enacted in the recent years, including those 
changes in the 2014 farm bill?
    And are more people being fed now than before?
    Ms. Taylor. Thank you for that question, Mr. Chairman.
    In-kind food aid is an important component of the 
international assistance that the U.S. government provides. It 
is certainly, I think, foundational to what USDA provides in 
McGovern-Dole and also Food for Progress.
    I think the 2008 farm bill provided authority to do some 
local and regional pilot programs. We did find efficiencies in 
getting food to certain populations quicker and more 
affordably.
    The 2014 farm bill provided us with permanent authority to 
do this, and the subcommittee last year granted us $5 million. 
We are working to get the rule out to utilize that $5 million. 
We greatly appreciated the flexibility that the farm bill 
provided, but then also the money to really utilize some of 
that flexibility.
    As I said, I think in-kind food aid is vital to the food 
programs we provide at USDA. I think long term it is going to 
continue to be part of the tool basket that we have, but really 
what we are looking for are the best use of tools to target 
what the situation is in each country and each crisis that is 
ongoing.
    Mr. Aderholt. What feedback have you received from 
stakeholder groups that have traditionally been involved in the 
food aid programs, including the commodity groups, the maritime 
groups that you have dealt with, and also in regard to the 
reductions since these reforms have taken place?
    Ms. Taylor. We have worked quite closely, I think with all 
of the stakeholders on some of these additional flexibilities 
through the farm bill, but also through the recent WTO 
negotiations that went on in Nairobi and concluded in December.
    I was there. We actively negotiated some disciplines around 
food aid, and we worked to ensure that in-kind food aid and 
particularly monetization which the Food for Progress Program 
is based upon was able to continue to operate as it currently 
does today, and so we have been talking to stakeholders, I 
think, all along through the farm bill, through the budget 
process, but then also quite closely, including the commodity 
groups, in the World Trade Organization (WTO) Nairobi decision.
    Mr. Aderholt. Well, can you talk just a minute about the 
decline in the amount of U.S. commodities purchased over the 
past few years?
    Ms. Taylor. I think part of that obviously when you're 
talking about tonnage declines is really tied to commodity 
costs, and you know, for the past few years commodity prices 
have been higher than they are today. Commodity prices have 
certainly softened, and so that lessens the amount of overall 
that you can buy.
    Mr. Aderholt. My time is up.
    Mr. Farr.
    Mr. Farr. Well, Mr. Chairman, I just Googled how much food 
you are talking about of our production. It is 0.015 percent. 
Do you think that if we just stopped the entire program that 
our American agriculture is going to fall apart?
    I am surprised, and frankly, I have been struggling with 
this for years. This ought to be a Republican issue. This is 
the most expensive food in the world you want to cut, squeeze 
and trim. What we are doing here is trying to feed people and, 
boy, do we need to.
    I just came out of a seminar about Syria. They have 
murdered 300,000 people in Syria. Every professional is 
leaving. They are leaving by boat. They go to Greece, and they 
walk all the way to Germany with their families. These are like 
lawyers and doctors, professional people.
    And all that food that is supporting all of these refugee 
camps is all done by USAID and comes from these programs.
    So it is absolutely essential for these refugee camps to 
make sure that the food is there, but I think what is happening 
is you have got to put these countries back together and they 
have got to have agrarian countries. Their economic start, 
their first step is in agriculture, even if it is in small 
stuff that just can feed a village so that they do not have to 
migrate.
    I mean, it gets into all of these issues with Genetically 
Modified Organisms (GMOs) and stuff like that. I know when we 
were in Africa, the irony is that Tanzania has banned GMO corn. 
GMO corn is the only kind of corn that will grow in that kind 
of climate.
    I mean, these are real serious issues. You know, we get 
lobbied heavily by the Seafarers Union. I voted for this 
amendment and I was a member of the Seafarers Union. I was in 
the Merchant Marine when I was in college. They hate me, but I 
just think it is the right thing to do.
    I know the farmers, but I mean, frankly, we are not talking 
about a lot of food that if our commodity growers did not get 
to buy from the U.S. for Food for Peace or other food programs, 
they would not go bankrupt.
    I would just like to have you comment on this. Ms. 
Palmieri, is that your program?
    Ms. Palmieri. Yes, sir, it is. Thank you.
    Mr. Farr. I just Googled it. I do not know what the real 
data is.
    Ms. Palmieri. No, that is our understanding. This is less 
than one percent of our exports, and we are proud to be a part 
of the team that has had seven record years of exports for 
agriculture. So we know that we are shipping product. It is not 
all going through our food aid programs at this point.
    I just wanted to report that for Food for Progress Program 
for fiscal year 2015, we did have increased tonnage going out, 
and so we are mindful of the use of commodities when we can.
    Thank you.

                           FOOD AID PROGRAMS

    Mr. Farr. How is our marketing program? Is there any MAP 
Program where we try to encourage countries to buy American 
agriculture, for example, strawberries in the Southern 
Hemisphere during their winter and our summer?
    Here with one hand we are spending taxpayer money to 
encourage advertising of American products, and with the other 
hand we are just giving the stuff all over the world with no 
cost. The taxpayer is paying for that, too, the give-away 
program and the marketing program.
    Do people look at how we can use both of those programs and 
maybe develop better infrastructure within country so that they 
can buy our food rather than getting it for free?
    Ms. Taylor. Congressman Farr, if I could talk to that 
point, I do think we do not target our food aid programs based 
upon necessarily creating U.S. market demand. It is targeted to 
the need and needy populations.
    However, I think there is a correlation here, and I think 
that is partly why we have market development programs. We have 
got the trade promotion arm under the Foreign Agricultural 
Service, but also our International Food Aid Programs and 
capacity building.
    A lot of the programs we do like Food for Progress, we 
monetize U.S. commodity, but then we do development work and 
help that country build capacity.
    I was just in Jordan last year where we signed a Food for 
Peace wheat grant, and it will help Jordan build some of their 
capacity in the Jordan Valley so they can create some of the 
agriculture themselves.
    You know, then the next step from being a food aid 
recipient to being able to have their own markets and feed 
themselves is eventually moving into a trading partner with the 
United States.
    That is not the target of these programs. As I said, it is 
to feed hungry people and target those populations, but 
certainly there is a reason all of this is housed under one 
agency at USDA.
    Mr. Farr. Well, that is helpful. I appreciate that. I am 
glad that there is the carrot there as well as the stick.
    Ms. Taylor. Yes, sir.
    Mr. Aderholt. Mr. Palazzo.

                 INSURANCE FOR CONTRACT POULTRY GROWERS

    Mr. Palazzo. Thank you, Mr. Chairman.
    Ms. Taylor and team, thank you for being here today.
    Poultry is a significant industry in Mississippi with a 
large economic impact within my congressional district, and as 
you know, contract poultry growers have often struggled for 
long-term solutions to provide some form of safety net in the 
event of other types of economic losses.
    I further understand that the contract grower-integrator 
relationship is very unique. In the last farm bill Congress 
asked RMA to conduct studies of ways RMA could provide risk 
management programs for contract poultry growers.
    Can you update the committee on those efforts?
    And can you tell me what is being done within the agency to 
develop more long-term policy solutions to help contract 
growers establish a viable safety net through the USDA in the 
event of catastrophic losses or business interruptions?
    Mr. Willis. Yes, the farm bill required a handful of 
studies, some for poultry, a little for swine as well. Some 
looked at business interruption. Others I think that you 
referenced focused more upon not business interruption but 
catastrophic diseases.
    What we did with those is we had a third party. We 
contracted out to those in the private sector who are 
experienced in crop insurance and have knowledge to do such a 
study. They went out. They talked to growers. They talked to 
experts in the field, and they presented us with a study.
    We put that study out on our website in the middle of 
December. Their recommendation was that there are a lot of 
hurdles to go, to be very honest. Some of the exact problems 
they mentioned are things you alluded to as far as the 
relationship with the integrator and the farmer.
    What we have allowed though is we posted on our website we 
wanted comments. We want to continue discussions with those 
producers, and where it stands today is I think our door is 
open. We are more than willing to visit with those producers 
and talk about some of the hurdles in this study and perhaps 
talk about ways that those can be overcome.
    The reality is we want the crop insurance program to be a 
safety net for as many producers as we can in rural America, 
and while the study pointed out some large hurdles, that does 
not mean that we are not open to conversations on ways that 
those hurdles could be overcome.

            NEW, BEGINNING AND VETERANS FARMERS AND RANCHERS

    Mr. Palazzo. Thank you.
    Also, Ms. Taylor, you mentioned the FSA is requesting $3.9 
million for a new, beginning and veteran farmers' and ranchers' 
initiative. It looks like this would include a certification 
program to help veteran farmers prequalify for loans.
    Can you tell me a little bit more about this request and 
how is it different from programs that you may already have in 
place?
    Ms. Taylor. Thank you for that question, Congressman.
    Some of this money would go to help develop outreach 
coordinators. One thing that we have done on the veteran side 
is recently sign a Memorandum of Understanding (MOU) with the 
Department of Defense, and what they have, they have the 
Transition Assistance Program so that all of the people 
transitioning out of the military, all service men and women 
come in and learn about different types of educational or 
career opportunities out there.
    Prior to just recently, agriculture was not part of that. 
USDA was not part of that. They have these Transition 
Assistance Programs all over the country, and we are now going 
to be partnering with them to develop an educational course on 
agriculture, on farming careers, and farming and ranching, and 
then the tools that we have at USDA to help many of those men 
and women coming back who want to go back to their rural 
communities and farm.
    Mr. Palazzo. Thank you.
    Mr. Chairman, I yield back.
    Mr. Aderholt. Mr. Bishop.

                          PRICE LOSS COVERAGE

    Mr. Bishop. Thank you very much.
    Let me welcome you, and before I start let me associate 
myself with remarks of other colleagues and our witnesses with 
regard to our colleague, Mr. Farr. He has really brought 
thoughtful, meaningful questions and ideas to this committee, 
and we are going to miss him very greatly, and I just want to 
add my voice to those who are saying adieu and indicating how 
much we really are going to miss your thoughtful dialogue here.
    I have got a couple of questions. One, the Price Loss 
Coverage (PLC) Program, there are a number of farmers who 
participate in the Price Loss Coverage Program who have 
recurring difficulties in the processing of payment requests, 
as well as issuing of the payments themselves.
    In 2015, you enrolled 1.76 million farmers in the 
Agriculture Risk Coverage (ARC) and the Price Loss Coverage 
Programs by conducting unprecedented education campaigns. ARC 
and PLC are part of the farm safety net providing assistance 
only when there are year-to-year crop revenue and commodity 
downturns.
    It is my understanding that the FSA IT staff determined 
that the issue was a defect that occurred in the payment 
software process which supports several of FSA's payment 
applications.
    We first contacted the Department regarding this issue in 
December of last year, and we were assured in January that the 
software issues were being addressed and corrected. In fact, we 
were told that the software had been modified and was being 
tested for a late January release.
    But just as recently as last week several farmers have 
contacted our offices to express concern that the problems 
still persist and have not yet been addressed.
    Can you tell us exactly what the status is and what the 
plan is to get this issue resolved?
    Mr. Dolcini. I would be happy to do that, Mr. Bishop. I 
will work with your staff directly to get more details about 
the specific payment issues regarding PLC. I think across 
Georgia and really throughout most of the country, PLC as well 
as ARC have been very successful Title 1 programs, and the 
payments made to farmers in your district and farmers all over 
the Nation have gone out without any significant difficulty.
    But I am happy to follow up with your staff to get to the 
bottom of it.
    Mr. Bishop. Please do because we continue to get recurring 
complaints from our constituents.
    Mr. Dolcini. Will do.
    [The information follows:]

    While there was a software related issue that delayed a small 
number of PLC payments earlier in the year, this issue was resolved in 
late January 2016. The Georgia FSA office reports that the only 
remaining unpaid payments that they are aware of are being held due to 
a contract dispute between producers on a farm. Payment is being 
withheld until the dispute is resolved. USDA's Office of the General 
Counsel has been consulted to provide guidance on this dispute.
                               cottonseed
    Mr. Bishop. Let me talk about cotton. Earlier this year I joined 99 
members and colleagues requesting that you make cottonseed an eligible 
commodity under the new Price Loss Coverage and the Agriculture Risk 
Coverage Programs that were created under the 2014 farm bill.
    Needless to say many of us were quite disappointed with your 
decision and the legal interpretation that the farm bill does not 
provide you the authority and that you do not otherwise have the 
authority to make that cottonseed designation.
    However, as a result of some direct conversations and discussions 
with the Secretary, it appears that we may have an alternative 
temporary solution, which would center around the creation of a Cotton 
Gin Cost Sharing Program.
    Can you update the subcommittee on any progress which has been made 
in this area or if there are any other developments with respect to 
cottonseed, and what administrative authority does USDA have that can 
be used to provide assistance to the cotton folks who are in dire need 
right now?
    Ms. Taylor. I appreciate that question, Congressman Bishop. We, 
like the subcommittee, are quite committed to ensuring that cotton 
farmers have an adequate safety net, particularly as we are seeing farm 
income decline and commodity prices soften. Cotton is no exception to 
that.
    I actually met with some cotton producers just yesterday who were 
in my office talking about the economics that they are seeing, but also 
what USDA may be able to do to try and help them.
    The Secretary was up here a few weeks ago talking about this issue. 
I do not know on cottonseed specifically. I do not think I have 
anything more to add to that, but we are looking, as he alluded to, 
setting up a cotton ginning program. We are working through some of 
those specifics right now and what that might look like, and some of 
the unanswered questions we still have in trying to work through that 
process.
    We will certainly keep the subcommittee apprised as we make 
progress and work closely with you to ensure that it is within the 
administrative authority that we have today that we can structure a 
program that helps the maximum amount of cotton farmers possible.

    But we are also willing to work with the subcommittee on 
some of the restrictions on USDA's programs and really what is 
preventing us from providing assistance directly to cotton 
farmers.
    Mr. Bishop. Thank you.
    I think my time has just about expired. So I will yield 
back.
    Mr. Aderholt. Mr. Valadao.

                   DAIRY AND TRANSPACIFIC PARTNERSHIP

    Mr. Valadao. Thank you, Chairman.
    Thank you, Ms. Taylor and guests.
    My first question has to do with dairy and Trans-Pacific 
Partnership (TPP). Canada continues to contemplate dairy 
measures that would move us backwards on market access and 
choke off hundreds of millions of dollars in dairy exports. As 
we prepare to consider deepening trade ties with Canada and 
TPP, what are we doing to make sure that they are not simply 
taking with one hand what they promised to give with another?
    Ms. Taylor. I appreciate that question, Congressman.
    So TPP itself, I think, has some protections in there. We 
got good market access, but as you alluded to, it's ensuring 
that then Canada lives up to that market access. We negotiated 
a side letter that covers a host of commodity issues, but 
really requires in consultation before any kind of these 
changes happen.
    We continue though outside of TPP to work with our Canadian 
colleagues and press them on these issues as well. Secretary 
Vilsack recently met with his counterpart who is new and 
brought up some of these issues that I think you are alluding 
to.
    I have personally written letters to my counterparts up in 
Canada, and so we would certainly see it as a priority and will 
continue as a whole of the U.S. Government to raise this issue 
with our Canadian counterparts.

                         CROP INSURANCE PROGRAM

    Mr. Valadao. I would also like to thank Mr. Willis for the 
time you have taken meeting with me personally on some issues 
on crop insurance.
    But on this issue of crop insurance, do you agree that 
during the period of 2011 to 2013, specialty crop insurance 
agents in California and other states received substantial 
reduction in the agent commissions as a result of inequities 
built in the cap and factor formula in the 2011 Standard 
Reinsurance Agreement (SRA)?
    Mr. Willis. What we saw in those years specifically was 
commodity prices for corn and soybeans, et cetera, rose 
dramatically. That reduction made it so all commissions were 
capped at a certain point.
    What happened is in 2011 and 2012, you saw that hit agents 
in areas where they had specialty crops. California, for 
example, was hit quite hard. Since then as commodity prices 
have moderated, we have kind of seen just the opposite, which 
they are actually doing better than their counterparts across 
the nation.
    But for those two years, yes, due to commodity prices they 
were below. Today, I mean, just to give you one example, before 
the cap was set, agents in California, the Administrative and 
Operating expense subsidy (A&O) was $41 million. Last year it 
was $68 million.
    Mr. Valadao. I know we have spoken on this in the past. 
What I am hearing is from the agents that deal with the 
smallest of our farmers and the commission that they have been 
capped at, I know the numbers have increased overall, and when 
you spread it out and throw an average out there, you are 
including large with small.
    But those who service the smallest farmers are the ones who 
seem to be hurting the most and the agents I am hearing from on 
a regular basis, and they have actually been in my office quite 
a bit.
    So I appreciate the efforts you have made, and I hope to 
continue working with you on that.
    Mr. Willis. Thank you.

                                 COTTON

    Mr. Valadao. Then I also have a question on cotton, U.S. 
extra-long staple (ELS), I am more familiar with it as Pima. 
Given the current economic state of the U.S. cotton industry, 
including the ELS production concentrated in the Western United 
States, California, Arizona, and New Mexico and parts of Texas, 
we were asking for FSA officials to work with the U.S. cotton 
industry and specifically on the ELS or Pima industry to make 
the necessary changes to ELS cotton competitiveness program to 
ensure it operates, functions as intended.
    This means the program will help keep U.S. ELS cotton 
competitive relative to ELS cotton produced in other countries 
by adding back the Egyptian ELS price quote that was previously 
removed.
    It also is including the Chinese ELS price quote to reflect 
the significant production increases in that country.
    If there are ongoing concerns by the FSA about the 
qualities of the cotton represented by these quotes, I 
encourage the FSA to work with the cotton industry to make the 
necessary price adjustments based on quality and any other 
adjustments based on location differentials.
    Can you assure me that the FSA will work closely with our 
cotton industry to accomplish these important changes to make 
the ELS competitiveness program functional and effective once 
again?
    Ms. Taylor. Congressman, I will commit to going back and 
talking to staff about this and taking a look at it and then 
following up with your staff.
    Mr. Valadao. I appreciate that, but obviously the industry, 
those who grow the crops here in our district or our country 
play a role in this as well. So I would appreciate it if you 
would take some time to meet with those who are on the ground 
level of this, too.
    Ms. Taylor. Yes, absolutely, sir.
    Mr. Valadao. Thank you.
    Mr. Aderholt. Ms. Pingree.

            NEW, BEGINNING AND VETERAN FARMERS AND REANCHERS

    Ms. Pingree. Thank you, Mr. Chair.
    Thank you very much to everyone on the panel. I am sorry to 
miss some of the earlier testimony, but I really appreciate the 
work that you do and how you help the farmers in my state. So 
thank you very much for that.
    I think I missed some of the nice things that people were 
saying about our Ranking Member, but I will just join in and 
say that we are going to miss you very much, and I have really 
been grateful to learn so much on this committee from you and 
your wonderful stories. So I hope you will not go too far way. 
I know you are going to be missed in your district. I hear that 
from people all the time. So we will miss you, too.
    I missed Mr. Palazzo's question, but I think he was asking 
a little bit about the new and beginning farmer outreach 
program. I think that the President's request has $3.9 million 
for beginning farmer projects at FSA.
    He might have focused a little bit on veteran's programs, 
which we are very interested in in our state and have some 
great work going on, but I know that part of the funds will 
support a pilot project that will help to mediate 
intergenerational transfers and leasing issues between one 
generation and the next.
    In my state, land access is such a critical issue. This is 
really challenging. So I am interested in that project. Can you 
tell us a little more about it?
    Mr. Dolcini. I would be happy to do that, Ms. Pingree, and 
thank you.
    The intergenerational transfer rule for dairies in 
particular was an important part of the farm bill, and I think 
that that is mostly implemented at this point.
    Beyond that, you know, the work that FSA and agencies all 
across the Department are doing on beginning farmer and rancher 
issues, I think, are just as important in Maine as they are in 
California and every other state.
    And just using the micro loans, for example, it is sort of 
the work horse of our farm loan portfolio around the nation. We 
have made 18,000 of these micro loans in three years. Seventy 
percent of them have gone to beginning farmers and ranchers. So 
that is 18,000 American dreams that we are helping fund in your 
State and in other States.
    Ms. Pingree. Right.
    Mr. Dolcini. And 50 percent of those micro loan recipients 
are first time customers for the Farm Service Agency. So these 
are people walking through our doors for the very first time.
    We deal with farm storage facility loans, low cost crop 
insurance. The Natural Resources Conservation Service (NRCS) 
does it with their conservation programs. Rural Development 
does it with its value added business grants. We are really 
trying to provide the soup to nuts approach to building up the 
economic wherewithal for beginning farmers and ranchers around 
the country.

                        INSURANCE FOR COVER CROP

    Ms. Pingree. Well, all of those are much appreciated and 
critically important, particularly in regions like mine where a 
lot of young people are wanting to get into farming but not 
having all of the assistance that they need. So thank you for 
that.
    Just a little bit about cover crops. Thank you, Mr. Willis. 
I can tell you visited all of us. You have been everywhere to 
talk to people about crop insurance, and thank you all for some 
of the changes that we are going through.
    It is about cover crop termination rules. So I understand 
farmers have to follow a complicated set of guidelines if they 
want to plant a cover crop and not have it impact a farmer's 
eligibility for crop insurance. Those guidelines vary around 
the country. They require a farmer to terminate their cover 
crop a certain number of days before planting a cash crop.
    As I understand this, there is no other common farming 
practice that has such rules. Generally a farmer just has to 
follow what the RMA calls good farming practices to ensure they 
do not compromise their eligibility for crop insurance 
indemnity.
    I know there are several groups that have recommended that 
cover crop termination rules should be decoupled from federal 
crop insurance eligibility, and instead cover crops should 
simply have the same good farming practice process that other 
widely used agricultural management processes are subject to.
    So is RMA considering getting rid of these complicated 
cover crop termination rules and instead considering cover 
crops a good farming practice?
    It seems to me like something that the RMA should 
prioritize so we do not dissuade folks from using sustainable 
practices like cover cropping. Particularly in sustainable and 
organic agriculture, cover crops are such a critical part of 
building up the soil, and with the tremendous amount of topsoil 
loss we are having in our country, I feel like we should be 
doing everything we can to get more of them in use.
    Mr. Willis. Thank you for the question.
    We do fully support cover crops at the Risk Management 
Agency. In fact, a few years ago one of the things that I think 
we are proud of is the fact that we sat down with NRCS, FSA and 
RMA, and we tried to simplify the guidance on cover crop and 
also tried to make all of the agencies consistent.
    The guidelines you talked about are available on the 
website. They are greatly simplified. Having said that, we have 
had conversations with people who wish we would continue that, 
and we have had discussions. I think we want to continue those 
discussions.
    The last thing anybody wants is to have any of the agencies 
be inconsistent, which we are on the same page right now, but 
we also want to support cover crops and the crop insurance 
program as well.
    So we are happy to continue that dialogue. We are pretty 
proud though of what came out a few years ago with the new 
guidelines.
    Ms. Pingree. So I would be interested to follow up with 
you. I am not sure why it cannot be included under good farming 
practices. I can see that you have put a lot of time and 
thinking into this, but if we are hearing people raise concerns 
about it, it must be a stumbling block.
    So at least if you could help us understand if there is a 
reason we cannot just take it one step further. Thank you for 
the work you have done, and thank you for your answer.
    Thank you, Mr. Chair.
    Mr. Aderholt. Dr. Harris.

                COMMODITY CREDIT CORPORATION (CCC) AUDIT

    Dr. Harris. Thank you very much.
    Let me first ask, Ms. Taylor, about the CCC and the 
financial statement issues. The USDA's financial statements 
were delayed for a second year in a row this year, due in part 
to issues between the CCC and the USAID.
    Can you describe the specific issues with those financial 
statements and what those deficiencies were?
    Ms. Taylor. Thank you for that question, Congressman.
    So first I just want to say that obviously USDA, CCC and 
FSA take their financial responsibility quite seriously here. 
Some of what you are specifically alluding to is what the 
auditors call a parent-child relationship and how we are 
passing money to USAID but then not looking in and seeing 
exactly how they are spending it.
    They have their own OIG and auditors on that side of the 
books, but there were some processes that we should be looking 
at from the best accounting practices and that we were not.
    Dr. Harris. And is the intention to start looking more 
closely at the USAID books?
    Ms. Taylor. So we received this audit and the findings in 
mid-February. We have 60 days to respond. So that puts us about 
mid-April. We are actively going through each of the findings 
and creating a roadmap and a way to address it.
    I think there are short-term things we can do, and then 
there is a long-term strategy that we are going to have to 
develop here.
    In the short term some things we are doing is FSA CCC 
recently contracted with some professional firms on audit 
readiness, and also all of USDA is really taking this quite 
seriously and helping. Our Chief Financial Officer recently 
detailed one of his senior executives, a seasoned professional, 
over to fill a vacant deputy FSA CFO role.
    And so we are ensuring in the short term we have the 
resources we need to build that long-term plan.

                    INTERNATIONAL FOOD PROGRAMS MOU

    Dr. Harris. And the fiscal year 2015 and 2016 Omnibus 
included directives to update the MOUs that lay out the 
framework for our USDA and USAID cooperating on international 
food programs.
    Can you update me on the status of whether that MOU has 
been updated?
    Ms. Palmieri. I am going to take that question if it is 
okay.
    Dr. Harris. Sure.
    Ms. Palmieri. I can update you on that, yes, we are having 
ongoing conversations currently with USAID. We are drafting a 
new MOU agreement to define the roles and responsibilities. 
There are productive conversations currently.
    We are hoping to have a report more fully reporting to you, 
this subcommittee.
    Dr. Harris. Any time now?
    Ms. Palmieri. Yes, any time now. I had hoped it would be 
here ahead of me, but it is not. So, yes, we are expecting the 
report to come through.

                             FOOD FOR PEACE

    Dr. Harris. OK. And just one final subject is to follow up, 
I think, on something the Chairman asked about, which is really 
the attempts, it appears, to circumvent the Food for Peace Act 
and the fact that it is supposed to be a way of using American 
commodities, not American cash, to help in foreign food 
programs.
    So right now it seems that in the 2017 justification that 
was submitted, USDA includes a provision that would allow funds 
made available to programs at Department of State to meet the 
funding requirements of the safe box. Obviously those State 
Department funds would not be subject to the Food for Peace Act 
requirements of the food aid and take the form of U.S. 
commodities grown here and, of course, shipped on U.S. flag 
carriers.
    Is that true? Can you tell me right now whether or not you 
are meeting the safe box levels using those funds, without 
using those funds from the State Department?
    Ms. Palmieri. I will need to talk with our colleagues at 
USAID and get you a precise answer. I do not want to answer 
that incorrectly today.
    [The information follows:] 
    
    
    
   [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 
    
    
    Dr. Harris. OK. I guess it is the Community Development 
Fund that is also over at, I guess, the State Department that 
is potentially another end run around, you know, the Food for 
Peace Act.
    Look. I understand, you know, the importance of cash, and 
as the gentleman from California indicates, it is not a large 
part, but it is the philosophy that we are helping. I visited 
Kenya, and like Tanzania, I am at a food distribution center 
refugee camp and the corn is not American.
    I asked, ``Why is this not American corn?'' Well, because 
they do not allow GMO corn.
    So let me get it straight. I mean, we are actually donating 
food to these countries, but they do not want the food that we 
actually grow here and we eat?
    So I have got to tell you, you could see how potentially a 
use of cash would be to buy some other country's corn instead 
of using our corn. That does not make sense to me. So I would 
just say that, you know, we have to think carefully about this 
because in the end, you know, our farmers are the most 
productive in the world, and when we donate food through Food 
for Peace, it ought to be Food for Peace grown by American 
farmers.
    That is just my philosophy, and I yield back.
    Mr. Aderholt. Mr. Yoder.

                             EXPORT MARKETS

    Mr. Yoder. Thank you, Mr. Chairman.
    You know, when I talk to farmers back home or farmers that 
come here to Washington, D.C., they express a lot of concern 
related to the current state of the agriculture economy. I 
think we are all aware that yields are doing well in a lot of 
parts of the country, but the prices are down, and they may be 
down for a while, and farm incomes down over 50 percent, I 
think, on average across the country, and so that is going to 
have an impact on job opportunities, and economic opportunity 
for all of us.
    I know, Ms. Taylor, I read you grew up on a farm in Iowa. I 
grew up on a farm in Kansas. It has been in my family for 
generations as well, and so we have an appreciation for how 
hard those folks are working, and we want them to be 
successful.
    I offered the remark that I grew up in the 1980s when half 
of our neighbors went bankrupt. Those painful memories still 
stick with us. I do not think we are still in that same 
situation. We are not as leveraged as we were in the 1980s, but 
you know, we do not want to go back there.
    So I want to ask a couple of questions about how we help 
what your agency does in particular and I want to maybe focus a 
little bit on opening up export markets. I know the Chairman 
brought that up in his comments as well already.
    I saw Secretary Vilsack announced the removal of some trade 
barriers with Peru a couple of days ago, and that seemed like a 
very welcomed result, and so I thought maybe you could talk a 
little bit about the Peruvian trade barriers that were removed 
briefly and then more broadly talk about what other markets we 
are specifically working on to open up the same opportunities 
because if we can get countries buying our goods or if we are 
donating the goods and they were taking American goods. I tend 
to agree with Dr. Harris on that.
    What are we doing to eliminate those export barriers 
specifically?
    And if you could also speak to our work in China, in 
particular. That seems to be the largest untapped market for 
meat and poultry.
    Ms. Taylor. Thank you for that question, Congressman.
    I think as we talk about what is going on in the farm 
economy, farm incomes are down over the past several years. 
Commodity prices have softened. I think tying that to the 
direct importance of trade is vital.
    Twenty percent of farm income comes directly from 
agricultural exports. It is key to keeping our farmers and 
ranchers in business. We are highly efficient producers in this 
country of safe, quality, affordable product, but 95 percent of 
the customers in the world live outside our borders, and so we 
produce far more food than we are going to consume.
    So having export opportunities is vital. As you mentioned, 
the announcement of the Secretary who is in Peru as we speak or 
this week he was, and Peru lifted some remaining Bovine 
Spongiform Encephalopathy (BSE) restrictions that they had on 
U.S. beef exports there. We continue to discuss this with 
markets all over the world. We have seen a lot of successes 
over the past several years in opening up markets that were 
restricting our beef because of BSE.
    Some other big successes have been Japan, and Korea. Most 
recently it was South Africa, but you alluded to China, and we 
continue to have conversations there on a host of products that 
are being restricted currently. Beef is certainly one of them 
and at the top, but also poultry with highly pathogenic avian 
influenza.
    We take issue with how for low path avian influenza they 
regionalize at a state level. For high path they ban the whole 
country. We think that is not consistent with international 
norms and standards and spend a lot of time trying to talk 
about the concept of regionalization and the strong biosafety 
protocols we have in the United States.
    There is just one other point I would add, I would be 
remiss if I am talking about trade and not talk about TPP and 
really the importance that that could mean to the U.S. farm 
economy.
    Forty percent of the world's economy is in the Trans-
Pacific Partnership. You know, Japan is a very exciting market. 
You know, depending on the year, they are in our top four, top 
five export markets, number one for a host of products, number 
one for pork, top four for dairy, and so they are important in 
lowering tariffs there in the short term is going to be key, 
but then you can look at some other market opportunities, 
Vietnam, Malaysia, very exciting. There are young populations. 
About 43 and 45 percent of their population, respectively, is 
under 25 years old or younger.
    What that means is we have an opportunity today as their 
middle class grows to get them a taste for American food 
products and really grow that market as their populations grow. 
Today there are hundreds of millions. You know, in a couple of 
years they are going to be measured in billions of people, and 
so there is a really big market opportunity in the short term, 
but the long term is really hard to measure.
    The Farm Bureau recently came out and I think they said 
that they expect a $4.4 billion boost to net farm income based 
upon TPP, and so it is something we cannot afford to pass up in 
the short term.
    Mr. Yoder. I appreciate your attention to this. I know it 
is part of the philosophy, and as the population continues to 
grow in these developing countries, they are going to need more 
and more food products. We are the best, most efficient growers 
in the world. We want to sell them American grain and meat and 
poultry. That creates jobs at home, and so there ought to be 
bipartisan unity on breaking down these export barriers and 
making that a top priority for the agriculture community.
    Thanks for your testimony.
    Mr. Aderholt. Mr. Young.

                   CONSERVATION RESERVE PROGRAM (CRP)

    Mr. Young. Thank you, Mr. Chair.
    Under Secretary Taylor, it is good to see you. 
Congratulations on your new role. As Mr. Yoder pointed out, you 
are an Iowan. Of course I like that.
    Administrator Dolcini, I want to talk to you about, and Mr. 
Yoder also mentioned, what is going on in agriculture. In Iowa, 
incomes are down about a third. Yields are great though. Inputs 
are high. Commodity prices are low, and you look at the land 
prices, too, and how they are adjusting one way or another and 
more in ways down.
    There are many farmers who are frustrated by the high CRP 
rate. I want to talk about that. They say they can get more 
money from rolling in CRP than to farm the ground. Some feel 
like they are competing with the government at times, that the 
government may be putting them out of business.
    Livestock producers are concerned as well specifically 
because diluted due to CRP, some of the operations run into 
lack of grazing and pasture land. As you know, this seems to be 
a systemic issue.
    We have seen the cycle before as commodity and land prices 
decline. NRCS adjusts their rental rates, as you know. It lags 
the land market and takes some time to catch up.
    So a question for you. When FSA looks at rental rate 
annually, those rates are not always adjusted. Will you please 
share how often the FSA is reviewing or re-evaluating CRP rates 
and plans, and what causes you to act and when?
    Mr. Dolcini. Well, we look, sir, at rental rates based on 
statistical information that we receive from NASS, the National 
Agricultural Statistics Service, and so we typically make those 
changes every couple of years. Sometimes it varies a little 
bit, but that is about the timetable.
    And I would be happy to come back and visit with you and 
your staff a little more specifically with regard to what we 
have done in Iowa.
    Mr. Young. What is the longest period of time you have 
waited until you have adjusted it?
    Mr. Dolcini. That is a good question. I do not know off the 
top of my head, sir. I will have to get back to you on that.
    CRP though in general, I think, has been a very successful 
program. It has been an important economic tool for farmers to 
incorporate into their overall practices, and I think we have 
seen a lot of activity certainly in Iowa and throughout the 
country with regard to, you know, the various uses of CRP, 
whether it is continuous programs or general sign-up or some of 
the other things that we are working with it.
    [The information follows:]

Since 2006, the longest time between systematic national 
updates has been 2 years. The 2014 farm bill replaced the 
requirement for an annual survey with flexibility to conduct 
surveys ``not less frequently than once every year'' (16 U.S.C. 
3834(d)(5)).

    Mr. Young. In any way do you also have data detailing the 
economic impact that this program has on some of the 
communities?
    Mr. Dolcini. Perhaps the Economic Research Service (ERS) 
has done a study. I can certainly look into that and get back 
to you on that, sir.

                           DIRECT FARM LOANS

    Mr. Young. We will contact them. Thank you.
    But jumping to another topic, Administrator, access to 
capital is one of the most significant barriers that beginning 
farmers face when they are looking to start a career in 
farming. FSA direct farm loans provide a crucial source of 
capital for beginning farmers. In light of the increasing age 
of farmers, we need new farmers to come in.
    Tell me about the 17 percent increase for direct operating 
loans that is included in your budget request. Why do you need 
more money and tell me about the importance of this funding.
    Mr. Dolcini. Part of it is the issue that you described and 
that Mr. Yoder has referenced and other members of the 
subcommittee in terms of the overall demand on farm loans, both 
commercial loans as well as loans that are provided by the Farm 
Service Agency. We have seen a real demand in our direct 
program, and I think that the budget request reflects the 
demands that we are seeing in places like the Midwest and Texas 
and other parts of the nation.
    The programs have a very low delinquency rate and a very 
low default rate. So it is a very good tool for us to use to 
make sure that folks are taking advantage of the credit safety 
net that the FSA offers.
    Mr. Young. Thank you for that.
    Mr. Chairman, I am going to yield, but before that I want 
to thank my Ranking Member for allowing me to be part of this.
    Thank you for your kindness to me, this our last hearing, 
that you have shown me as a new Member. Thank you for your sage 
wisdom and advice and about how to put this all in perspective.
    Thank you very much.
    Mr. Farr. Thank you. I am not dead yet. [Laughter.]
    Mr. Young. We are not looking for you to go anywhere any 
time soon.

       UNDER SECRETARY FOR TRADE AND FOREIGN AGRICULTURAL AFFAIRS

    Mr. Aderholt. Let me talk a little bit about the trade. 
Under Secretary, in your written testimony, you talk about the 
importance of U.S. exports to the agriculture sector, and this 
is one of the few sectors of our economy that has a consistent 
trade surplus.
    In order to keep this momentum and continuation at record 
levels, the 2014 farm bill mandated the creation of an Under 
Secretary for Trade and Foreign Agricultural Affairs at USDA. 
The new position provides a focal point at the Under Secretary 
level for the in-the-trenches issues like the agencies that 
serve in the Foreign Agricultural Service, and it would 
establish a USDA proprietary role in providing international 
food aid overseas.
    In the fiscal year 2015 Agriculture Appropriations Bill, 
money was appropriated to assist an independent study of this 
new position and how potential reorganization would occur.
    USDA was required to complete this initial study, this 
reorganization, within 180 days of enactment of the farm bill. 
This study should have been completed August of 2014. It has 
been almost a year and a half, and we have still not received 
it.
    Can you tell me a little bit about the delay and why it has 
been held up and what progress that you have actually made on 
it?
    Ms. Taylor. Thank you for that question, Mr. Chairman.
    As you have alluded to and I think Ms. Palmieri mentioned, 
we have seen the strongest seven years in agricultural trade in 
the history of our country since we started recording it in the 
past seven, and so agricultural exports are obviously very 
vital to the U.S. farm economy.
    I think this is a Department-wide question. It is not just 
an FFAS or FAS question. It is hard to see when you look across 
the 17 agencies or seven mission areas, many of them have some 
components to international activities. FAS is the coordinator.
    But it is not just the international components. I think it 
is also the domestic components as well. You would be changing 
leadership structures, and so I think it is a more complicated 
question than many people anticipated in the beginning, and 
that is why I think it is taking the department a little while 
to wrap its arms around this and really look at this question.
    As you mentioned, this subcommittee directed us to do a 
study. We have received that study and the Department is going 
through that study and building upon what they provided for 
that report that was directed in the farm bill, and we hope by 
the end of this year to have that to Congress.
    Mr. Aderholt. Well, the 2016 Agriculture Appropriations law 
directed USDA to complete a study by June 16th of this year, 
and this is the second law that has been passed that required a 
completion of the study.
    I guess my question to you: can you personally commit that 
you will deliver us a report no later than that date?
    Ms. Taylor. As I said, Mr. Chairman, this is a much larger 
question for the whole Department. You are looking at a 
Departmental reorganization, and it is much larger than what I 
can control or what my mission area does.
    What I can commit is I am certainly part of that 
conversation, and we have the study that the National Academy 
of Public administration (NAPA) did. We are working quite hard 
on this. We take it quite seriously. We take whatever laws 
Congress passes and directs us to do quite seriously, and we 
are certainly committed to working through the issues and the 
complexity of this in a pragmatic way and one that gives our 
employees certainty, but also gets Congress what they have 
requested.
    Mr. Aderholt. Well, again, it has been over 2 years, and 
this is just a study. So what I will do is I would like to ask 
for your personal commitment that you will deliver that message 
and that you will do everything that you can when you get back 
to make sure that by June 16 that we have something.
    Like I said, we understand the whole thing cannot be 
completed. We are just asking for that study to be turned into 
us by the 16th.
    Ms. Taylor. I will certainly go back and deliver that 
message, Mr. Chairman, and work on the pieces that I can 
control.
    Mr. Aderholt. Thank you.
    Mr. Farr.

                             FOOD FOR PEACE

    Mr. Farr. Thank you, Mr. Chairman.
    I just want to make a comment about Food for Peace. I mean, 
my feeling here is that Secretary Vilsack said the other day 
that the privilege we all have to choose a profession is 
because we have people growing food for us, and we do not have 
to go out there and grow it. We do not have to produce our food 
every day in our house.
    And it seems to me that in our Food for Peace, do we not 
want these poorest countries who are at risk for all kinds of 
national, international risk, security risks because of 
migration and starvation; should we not be teaching them how to 
fish so that they can, indeed, produce professionals?
    It is interesting that on TPP you said was 40 percent of 
the world market. None of the countries we send the food to are 
part of that. I mean, these countries have gotten on their 
feet, and now they can participate in trade with us.
    And it seems to me that we are going to have a strong world 
economy if we can work people out of poverty, and we cannot 
work them out of poverty unless they can at least start with 
growing their own food and having their own local markets.

                            PRESENCE IN CUBA

    That is my comment. I just want to say that Mr. Yoder was 
talking about breaking down export barriers. I wish our former 
colleague Jo Ann Emerson were here today. She was a very active 
member of this committee, a Republican from Missouri, and she 
and I were involved in the first bipartisan Cuba Working Group, 
and I think she sat here trying to figure out how we could 
break down this political barrier that we have created in the 
United States so that farmers in Missouri and other States 
could do business with Cuba.
    Now, there is some money in here to open up an office in 
Cuba. I am very excited about that. We sold $367 million worth 
of goods to Cuba last year.
    What will this office do in Cuba? How will it help the 
farmers now and in the future?
    Ms. Taylor. Thank you for that question, Ranking Member 
Farr.
    Obviously Cuba is an exciting market for U.S. agriculture. 
Our farmers and ranchers commodity groups are very excited by 
the possibility to be able to not just sell more product, but 
eventually when the embargo is lifted to be able to directly 
market to the Cuban people.
    Cuba imports roughly 80 percent of its food, somewhere 
between $1.8 to $2 billion. In some years we have had a 50 
percent market share of that. The past few years it has been 
declining. There is no reason when they are 90 miles off our 
coast that we should not have the majority of that.
    Setting up a presence in Cuba is a priority for USDA. 
Certainly in the short term as more tourists from the United 
States will be going or more professionals for travel will be 
going to Cuba. That increases the risk of certain pests and 
diseases when they are coming back to the United States.
    So having an Animal and Plant Health Inspection Service 
(APHIS) component there is going to be very important.
    It is also about rebuilding relationships. I had the 
ability to and the opportunity to travel with Secretary Vilsack 
in November on his first trip to Cuba, and it was the first 
time a U.S. Secretary had been there since the late 1950s and 
really rebuilding those relationships with our Cuban 
counterparts and finding areas of commonality.
    One area of commonality that we discovered was citrus 
greening. We are doing a lot of work in Florida and research to 
combat citrus greening. Cuba has it as well and they are doing 
research as well, and we have looked at it from different 
perspectives.
    There is a way to collaborate there and share what we have 
each learned and not kind of recreate the wheel. So I think 
there are a lot of different areas for us to work together in 
the short term, not just about selling more product, which our 
market development programs because of the embargo today are 
prohibited from being used there.

                         ORGANIC CROP INSURANCE

    Mr. Farr. Thank you very much.
    The last question I have is how is RMA going to expand 
access to crop insurance for diversified, sustainable and 
organic farms, and what more can we expect to see from RMA in 
the fear future?
    Mr. Willis. Well, the employees of the Risk Management 
Agency over the years have gone the extra mile to bring 
insurance to crops, to regions, to farming practices that have 
previously not had crop insurance. You know, in 2009 we did not 
offer crop insurance for organic crops. Recognizing the price 
today, we are at about 56 crops that have that. We added 30 
last year.
    We are creating new tools it seems like every few months to 
help these growers. We had a new program a year and a half ago 
called the Whole Farm Program that works well for diversified 
producers, but we did not just stop. We actually went out. We 
sent our team out to talk to farmers across the nation in the 
last year to find out what worked and what did not work, and we 
went back to the drawing board and made some changes.
    The other way that we are seeing crop insurance grow is 
through private submissions. We have a board process where 
farmers can bring new products to a committee.
    Mr. Farr. So you will continue to expand that as time runs 
out and we have got to go.
    Mr. Willis. I am very confident we are going to continue to 
expand and to serve farmers' needs very well.
    Mr. Farr. Thank you.
    Thank you, Mr. Chairman.
    Mr. Aderholt. All right. With that, you heard the bell. So 
we have got a vote on the floor, but we thank you for being 
here. We appreciate your service. We look forward to working 
with you, and we look forward to getting that report real soon.
    Thank you.
    
    
    
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Avalos, Ed.......................................................   352

Dolcini, Val.....................................................  1035

Mitchell, Larry..................................................   398

Ostroff, Stephen.................................................     4

Palmieri, Suzanne................................................  1032

Shea, Kevin......................................................   397

Starmer, Elanor..................................................   393

Taylor, Alexis...................................................   992