    [House Hearing, 116 Congress]
    [From the U.S. Government Publishing Office]

        AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION, AND
                    RELATED AGENCIES APPROPRIATIONS FOR 2020

    _______________________________________________________________________

                                     HEARINGS

                                     BEFORE A

                               SUBCOMMITTEE OF THE

                           COMMITTEE ON APPROPRIATIONS

                             HOUSE OF REPRESENTATIVES

                          ONE HUNDRED SIXTEENTH CONGRESS

                                  FIRST SESSION

                                    ________

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

                    SANFORD D. BISHOP, Jr., Georgia, Chairman

      ROSA L. DeLAURO, Connecticut      JEFF FORTENBERRY, Nebraska
      CHELLIE PINGREE, Maine            ROBERT B. ADHERHOLT, Alabama
      MARK POCAN, Wisconsin             ANDY HARRIS, Maryland
      BARBARA LEE, California           JOHN R. MOOLENAAR, Michigan
      BETTY McCOLLUM, Minnesota
      HENRY CUELLAR, Texas

      NOTE: Under committee rules, Mrs. Lowey, as chairwoman of the full
    committee, and Ms. Granger, as ranking minority member of the full
    committee, are authorized to sit as members of all subcommittees.

                  Martha Foley, Diem-Linh Jones, Joseph Layman,
                 Justin Masucci, Perry Yates, and Randall Staples
                                Subcommittee Staff
                                      _____

                                      PART 2

                                                                       Page

      Food and Drug Administration--Status of Operations .............   1

      Office of the Inspector General................................. 133

      Members' Day.................................................... 161

     Oversight of Economic Research Service and National Institute
      of Food & Agriculture .......................................... 201

     Oversight of the Rural Economy................................... 265

      Food and Drug Administration.................................... 341

      U.S. Department of Agriculture.................................. 381

      Economic Opportunities for Farmers.............................. 425

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                        ______

              Printed for the use of the Committee on Appropriations

     PART 2--AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION,

                  AND RELATED AGENCIES APPROPRIATIONS FOR 2020

        AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION, AND
                    RELATED AGENCIES APPROPRIATIONS FOR 2020

    _______________________________________________________________________

                                     HEARINGS

                                     BEFORE A

                               SUBCOMMITTEE OF THE

                           COMMITTEE ON APPROPRIATIONS

                             HOUSE OF REPRESENTATIVES

                          ONE HUNDRED SIXTEENTH CONGRESS

                                  FIRST SESSION

                                     _______

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

                    SANFORD D. BISHOP, Jr., Georgia, Chairman

      ROSA L. DeLAURO, Connecticut        JEFF FORTENBERRY, Nebraska
      CHELLIE PINGREE, Maine              ROBERT B. ADHERHOLT, Alabama
      MARK POCAN, Wisconsin               ANDY HARRIS, Maryland
      BARBARA LEE, California             JOHN R. MOOLENAAR, Michigan
      BETTY McCOLLUM, Minnesota
      HENRY CUELLAR, Texas

      NOTE: Under committee rules, Mrs. Lowey, as chairwoman of the full
    committee, and Ms. Granger, as ranking minority member of the full
    committee, are authorized to sit as members of all subcommittees.

                  Martha Foley, Diem-Linh Jones, Joseph Layman,
                 Justin Masucci, Perry Yates, and Randall Staples
                                Subcommittee Staff

                                      _____

                                      PART 2

                                                                       Page

      Food and Drug Administration--Status of Operations .............   1

      Office of the Inspector General................................. 133

      Members' Day.................................................... 161

      Oversight of Economic Research Service and National Institute
      of Food & Agriculture .......................................... 201

     Oversight of the Rural Economy................................... 265

     Food and Drug Administration..................................... 341

     U.S. Department of Agriculture................................... 381

     Economic Opportunities for Farmers............................... 425

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

              Printed for the use of the Committee on Appropriations

                        U.S. GOVERNMENT PUBLISHING OFFICE

    36-667                     WASHINGTON : 2019

                          COMMITTEE ON APPROPRIATIONS

                                    ----------
                      NITA M. LOWEY, New York, Chairwoman

      MARCY KAPTUR, Ohio                      KAY GRANGER, Texas
      PETER J. VISCLOSKY, Indiana             HAROLD ROGERS, Kentucky
      JOSE E. SERRANO, New York               ROBERT B. ADERHOLT, Alabama
      ROSA L. DeLAURO, Connecticut            MICHAEL K. SIMPSON, Idaho
      DAVID E. PRICE, North Carolina          JOHN R. CARTER, Texas
      LUCILLE ROYBAL-ALLARD, California       KEN CALVERT, California
      SANFORD D. BISHOP, Jr., Georgia         TOM COLE, Oklahoma
      BARBARA LEE, California                 MARIO DIAZ-BALART, Florida
      BETTY McCOLLUM, Minnesota               TOM GRAVES, Georgia
      TIM RYAN, Ohio                          STEVE WOMACK, Arkansas
      C. A. DUTCH RUPPERSBERGER, Maryland     JEFF FORTENBERRY, Nebraska
      DEBBIE WASSERMAN SCHULTZ, Florida       CHUCK FLEISCHMANN, Tennessee
      HENRY CUELLAR, Texas                    JAIME HERRERA BEUTLER, Washington
      CHELLIE PINGREE, Maine                  DAVID P. JOYCE, Ohio
      MIKE QUIGLEY, Illinois                  ANDY HARRIS, Maryland
      DEREK KILMER, Washington                MARTHA ROBY, Alabama
      MATT CARTWRIGHT, Pennsylvania           MARK E. AMODEI, Nevada
      GRACE MENG, New York                    CHRIS STEWART, Utah
      MARK POCAN, Wisconsin                   STEVEN M. PALAZZO, Mississippi
      KATHERINE M. CLARK, Massachusetts       DAN NEWHOUSE, Washington
      PETE AGUILAR, California                JOHN R. MOOLENAAR, Michigan
      LOIS FRANKEL, Florida                   JOHN H. RUTHERFORD, Florida
      CHERI BUSTOS, Illinois                  WILL HURD, Texas
      BONNIE WATSON COLEMAN, New Jersey
      BRENDA L. LAWRENCE, Michigan
      NORMA J. TORRES, California
      CHARLIE CRIST, Florida
      ANN KIRKPATRICK, Arizona
      ED CASE, Hawaii

                     Shalanda Young, Clerk and Staff Director

                                       (ii)

       AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION, AND
                    RELATED AGENCIES APPROPRIATIONS FOR 2020

                                          Wednesday, February 27, 2019.

               FOOD AND DRUG ADMINISTRATION--STATUS OF OPERATIONS

                                    WITNESS

    SCOTT GOTTLIEB, M.D., COMMISSIONER, FOOD AND DRUG ADMINISTRATION

                         Opening Statement--Mr. Bishop

        Mr. Bishop. The Subcommittee for Agriculture, Food and Drug
    Administration, FDA, and related agencies will come to order.
        Good afternoon. I would like to welcome everyone to today's
    hearing, which is our first in the 116th Congress.
        Before we get underway, I would like to personally welcome
    all of the returning members to the subcommittee, as well as
    our new members. Although they have not all arrived, Ms. Lee of
    California; Ms. McCollum of Minnesota, Mr. Cuellar of Texas,
    and of course, Ranking Member Fortenberry of Nebraska, and Mr.
    Moolenaar of Michigan.
        I would also like to thank Mr. Aderholt for his work on the
    subcommittee. He served as chairman for the previously six
    years.
        I look forward to working with all of the members of the
    committee in a productive and a bipartisan manner.
        I also would like to thank Commissioner Gottlieb for
    allowing us to start the hearing two hours later. We are very
    appreciative for your flexibility.
        The work of this subcommittee touches the lives of every
    citizen on a daily basis. As we have said so often, many do not
    recognize the far-reaching jurisdictions and programs that this
    subcommittee addresses, a little bit of everything from food
    safety to agriculture research, to drug approval, to rural
    development, to protecting market integrity, through the
    Commodity Futures Trading Commission.
        Part of our efforts include providing necessary resources
    to the Food and Drug Administration, which plays a critical
    role in the lives of every single American.
        In addition, we have a duty to make sure that those
    resources are put to the best possible use by the agency.
        With that, I would like to welcome our witness, Dr. Scott
    Gottlieb, Commissioner of the Food and Drug Administration. We
    are delighted to see you. Today we would like to discuss the
    status of operations at the Food and Drug Administration,
    including the impacts and the recovery from the longest and the
    most pointless shutdown in U.S. history.
        Before we begin, I would like to thank you and your very
    committed employees for your efforts during the shutdown, many
    of them working without pay. While the full impacts of the
    shutdown will not be known for some time, there are undoubtedly
    accrued backlogs of inspections, delayed drug and medical
    device reviews, and potentially exhausted pools of user fees as
    a result of the shutdown.
        We look forward to hearing the processes put in place to
    work through these backlogs as efficiently as possible and
    other efforts to return to more standard operations.
        And I would like to thank you for being with us today, and
    I look forward to today's discussion.
        I will defer the opening statement from our distinguished
    Ranking Member, Mr. Fortenberry, until he arrives.
        And at this time I would defer the comments from our
    chairwoman of the full committee, Congresswoman Lowey, who I
    believe is en route, and she will have some opening remarks.
        Before Dr. Gottlieb begins, I would like to give a reminder
    to members that as is customary with our subcommittee, members
    will be recognized by seniority, for those who were here when I
    gaveled the hearing to order and then in the order of their
    arrival after that.
        We will alternate majority/minority members, and we will
    adhere to the 5-minute rule.
        Commissioner Gottlieb, without objection, your entire
    written testimony will be included in the record.
        I will recognize you now for your statement, and then we
    will proceed with questions from members.

                    Opening Statement--Commissioner Gottlieb

        Dr. Gottlieb. I thank you, Mr. Chairman, and I want to
    thank the ranking member as well, whom I had an opportunity to
    meet with a couple of weeks ago, and I look forward to his
    arrival.
        I also want to thank the Members of the Subcommittee. I
    want to thank all of you today on behalf of the FDA for your
    continued support of our public health mission. We are witness
    to, quite simply, a period of historic scientific advance right
    now, and the opportunity that we have across our entire
    portfolio to advance health and well-being and protect
    consumers exceeds any comparable period of rapid technological
    change, in my opinion.
        And your support is helping us seize those opportunities.
    The initiatives that Congress supported in our 2019 Budget will
    help us uncover new treatment options for patients suffering
    from debilitating conditions; improve competition to help lower
    drug costs and improve patient access to medicines; and advance
    the developments for rare diseases and secure good safety,
    among many other initiatives.
        To complement the support that you have given us and to
    secure these scientific advances, we are also undertaking one
    of the most significant policy modernizations at the Agency in
    decades. And I would like to take this opportunity to tell you
    about some of the elements of this undertaking and how I
    believe they extend the opportunities and the resources that
    you have provided with us.
        These steps begin at the outset of a new drug development
    process when a sponsor files an Investigational New Drug (IND)
    seeking permission from the FDA to administer an
    investigational drug or a biological product to patients for
    the first time.
        Beginning in the next few months, our Center for Drugs will
    adopt a new standard template for the review of these
    protocols. By using standardized templates for the submission
    and review of these INDs, we believe it will help investigators
    more efficiently advance new research while making sure that
    the FDA has the information it needs to safeguard patients.
        As part of our pursuit of more standardized methods for the
    assessment of information across all aspects of our drug review
    progress and to improve the rigor and predictability of these
    methods, we are also extending these same approaches to how we
    assess product safety.
        We are launching a safety signal tracker to serve as a
    repository for important information and potential safety
    issues throughout a drug's life cycle, from early in IND
    development, through application review and well into the post
    market.
        This consolidates information about safety concerns during
    drug development in a single location, and in this way the
    safety questions can be more consistently tracked and annotated
    and continuously evaluated through every stage in the life
    cycle of a new medical product.
        It will help cement a more systematic approach to how we
    continue to evaluate certain safety questions throughout the
    new drug and biological products application review and could
    measurably improve the drug development process.
        This same commitment to using modern tools and policies to
    achieve a more structured approach to drug development extends
    into our review of clinical evidence in new drug applications.
    For the first time in more than 20 years, we are undertaking
    the first update of our guidance outlining how we assess the
    clinical effectiveness for drugs, a large change in the last
    few decades. We have much more opportunity as a broader array
    of data is confirmatory evidence to help support new product
    review, and this includes real-world evidence and real-world
    data.
        These same general approaches also extend to our efforts to
    modernize how we assess post market drug safety. As part of the
    new drug program modernization that we have launched, we have
    put in place a new effort to analyze more safety data more
    efficiently across the entire drug life cycle, including in the
    post market.
        We are implementing changes to capture more types of safety
    data, enhance our data analytics, and grow our sentinel
    database's ability to detect potential new safety problems.
        We will be working to link claims data in our post market
    sentinel system to electronic health records to improve our
    ability to conduct active surveillance and use real-world data
    to improve patient outcomes, and we will be using the new
    resources as part of the 2019 Budget to help advance these
    efforts.
        By linking information from the electronic health records
    to the data that we have on medical claims through our existing
    sentinel system, we will be able to get a much more complete
    picture of potential safety issues post approval and advance
    the use of real-world data to study drug effectiveness.
        As another part of these efforts, I am pleased to announce
    that FDA's adverse event reporting system for drugs will be
    expanded to cover more types of safety data, and for the first
    time, this system will also include pre-market drug safety
    data.
        The support of this Committee is key to all of these
    efforts, and it is key to our goal of helping leverage the
    tools of science innovation to advance the public health.
        I look forward to working with you on these shared goals
    and many other endeavors and look forward to answering your
    questions today.
        Thank you.
        [The information follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Bishop. Thank you, Dr. Gottlieb.
        We will proceed with questions. As I mentioned in my
    opening statement, I applaud the efforts of you and your
    agency's employees during the shutdown, and it is a testament,
    I think, to their dedication. They were a bright spot in the
    pointless shutdown.

                 impact of government shutdown

        My question is: where does FDA stand in terms of getting
    the agency back on track?
        What kind of backlog accrued for your review work?
        How long will it take to get it back to normal?
        What is your assessment of the shutdown's impact on
    employee morale, on hiring and recruitment issues?
        I am very concerned about what would happen should we have
    another shutdown.
        What impact would a future shutdown have at FDA?
        Finally, I am interested in understanding some of the long-
    lasting effects of the shutdown. So if you would, could you
    just take a moment to discuss the activities that FDA conducted
    during the shutdown and how it was carried out by your
    workforce, and in addition, what informed FDA decisions to
    continue, reduce, or stop altogether its regular activities
    during the shutdown?
        Dr. Gottlieb. Well, Mr. Chairman, I appreciate the
    question. I want to just start out by acknowledging the work of
    the people at FDA, both those who continued to work in exempt
    and accepted statuses, meaning that they were able to continue
    their work because they were either being supported by user
    fees or their work was considered critical to the protection of
    the public health, as well as those who were on furlough.
        I think being on furlough and being disconnected from the
    Agency and the work that is important to them was perhaps the
    most difficult position to find yourself in, and I want to just
    commend their dedication, and especially the fortitude of their
    families through what I have said was perhaps the most
    difficult operational challenge that we have faced in modern
    times through this extended shutdown.
        I feel confident that things are back on track. I do not
    think we are going to see significant impacts on our work going
    forward as a result of the shutdown. I think that owes to the
    dedication and the hard efforts of the men and women of FDA.
        We will meet, for example, our user fee goals related to
    medical products across most of our programs. There will be
    some impacts. Certain policy work was delayed. Certain centers
    were hit particularly hard by this shutdown. For example, our
    Food Center was. Probably 90 percent of the Food Center was on
    furlough. So policy work was delayed for the 5 weeks of the
    shutdown.
        Inspectional work over the course of the year, the number
    of inspections that we are able to conduct, will be diminished
    by an amount that's commensurate with the length of the
    shutdown, probably by about ten percent from where we would
    have been.
        But across the board, as we get back to full operational
    strength, and we are there now, and as we assess the impacts
    across our programs, I continue to feel confident that we are
    able to mitigate the hardest impacts and that we remain a
    strong Agency.
        Mr. Bishop. I wanted to discuss a topic related to food
    safety. I would like to stress I am not criticizing you or your
    decisions during the shutdown.
        The Antideficiency Act, which governs legal determinations
    during the shutdown, says an officer or employee of the United
    States Government may not employ personal services exceeding
    that authorized by law, except for emergencies involving the
    safety of human life or the protection of property.
        In 1995, the Justice Department advised OMB, ``We believe
    that the emergencies exception applies only to cases of threat
    to human life or property where the threat can be reasonably
    said to be near at hand or demanding of immediate response.''
        And as you know, we also fund and oversee Food Safety and
    Inspection Service. When there is a shutdown, all FSIS
    inspectors are required to be on the job, and while FSIS
    operates under different authorization, the Antideficiency Act
    only looks to the threat to human life.
        So can you tell us why you did not initially bring back
    inspectors to ensure continuation of high-risk food safety
    inspections?
        Dr. Gottlieb. Well, we were guided by prior decisions, but
    none of those prior decisions were sufficiently robust to
    accommodate all of the circumstances that we encountered
    through this shutdown. The decisions that we made were
    consistent with the Antideficiency Act, as you mentioned, Mr.
    Chairman, and the legal advice that we obtained, and the public
    health considerations of the circumstances that we encountered
    in this shutdown.
        I will say that initially, if you remember, the shutdown
    occurred just prior to Christmas and there was thinking that
    the shutdown would end just after Christmas, and we would not
    have been in the position of conducting inspections over the 2-
    week period of the Christmas break, as well as the week
    following that. Typically, we would not have many inspections
    scheduled during that time period.
        When it became apparent to us that this shutdown was going
    to be prolonged and when it became apparent to us that the
    routine inspection work met the standard under the
    Antideficiency Act for the protection of human life, we very
    quickly initiated an effort to recall inspectors to begin
    conducting those inspections.
        I do not believe that we missed that many inspections. At
    best we were delayed perhaps a week from ramping inspections
    back up from where we would have been coming off a holiday
    where we would not have been doing inspectional work.
        I just want to close by acknowledging that these were
    inspectors who were in unpaid excepted positions who were
    accruing routine expenses on their government credit cards even
    though we were able to offload the expenses of travel and
    lodging. So they did endure hardship to carry out this mission,
    and we received an overwhelming response from our inspectional
    workforce when we recalled them into these important roles, and
    I just want to acknowledge their commitment.
        Mr. Bishop. Thank you, Dr. Gottlieb.
        We have been joined by the distinguished chairman of the
    full Appropriations Committee, and at this time I would like to
    yield to her for an opening statement of whatever comments she
    might care to make.

                         Opening Statement--Mrs. Lowey.

        The Chairwoman. Well, thank you very much to our
    distinguished chairman, and welcome, Dr. Gottlieb.
        Excuse me, Doctor. I need a little help today. I do not
    have a voice.
        First of all, I would like to thank our chairman, Sanford
    Bishop, and Ranking Member Jeff Fortenberry for holding this
    hearing, Commissioner Gottlieb, and I welcome you back before
    this subcommittee.
        Among the many effects of the 35-day government shutdown
    was a sharp reduction in FDA inspections of the Nation's food
    supply. Routine safety inspections of food at high risk of
    contamination, including seafood and vegetables, grounded to a
    halt as hundreds of inspectors were furloughed without pay.
        And while I commend the FDA for taking steps to restore
    food surveillance, any unexpected break in inspections designed
    to prevent contamination is simply unacceptable, particularly
    with foodborne illness sickening 48 million people and killing
    3,000 every year in the United States of America.
        Of course, food inspections were not the only FDA service
    curtailed by the shutdown. Applications for new jobs and
    biologics submitted during the shutdown were also suspended as
    policy statements and guidance documents related to drugs,
    medical devices, review activities for products not funded by
    UCs, such as over-the-counter medicines were also put on hold.
    And pharmaceutical manufacturing inspections were delayed.
        In short, unfortunately, we cannot repeal the shutdown, and
    to that end, everyone, including the Trump administration, must
    work together productively as we head into the fiscal year 2020
    budget and appropriations process.
        And, Commissioner Gottlieb, you know that every time you
    come before this subcommittee there is that one topic that
    hangs over our conversation, and that is tobacco products. I do
    believe that we share a similar goal to eradicate addiction to
    nicotine and improve public health.
        But I remain concerned where our paths part. I continue to
    believe that the FDA's decision to exempt e-cigarette
    manufacturers from pre-market review until 2022 gave the public
    the false perception that e-cigarettes are safe. They are not.
        And FDA's decision to take its foot off the gas while
    thousands of products have entered the market has led to the
    epidemic we face today. I implore you. Do whatever you can to
    take aggressive action to combat this public health emergency.
        I know you have a lot to say on this subject, and I look
    forward to discussing it during questions.
        I appreciate the generosity of the chairman because, as you
    know, I end up with roller skates, and I do not want to take
    advantage as I go from hearing to hearing, but you are very
    kind.
        Thank you very much.

                                sesame allergen

        Commissioner Gottlieb, as you know, eight major allergens
    are required to be disclosed on food packaging. Although sesame
    is estimated to afflict nearly a half million Americans, making
    it one of the six or seven most common food allergens,
    manufacturers are not currently required to label it in
    compliance with the Food Allergen Labeling and Consumer
    Protection Act, which I am proud to have authored.
        It took a long time, by the way. It took a long time. It
    took 5 years, but I should tell you that still is one of my
    proudest achievements because although it took full time, could
    not get one Republican cosponsor until 5 years later, it passed
    on a voice vote. That is an important, important lesson for all
    of us that when you are out there in the community, they
    finally do what is right.
        So in May of 2016, I wrote to the FDA in support of adding
    sesame and requesting information on the status of the
    petition. I am pleased that in October, FDA announced it would
    open a 60-day comment period to receive feedback on adding
    sesame to the list of major allergens, scheduled to conclude in
    late December in the midst of the shutdown.
        Did the shutdown add to a delay in processing comments from
    the scientific community and the public?
        And when will the FDA announce whether sesame will be
    added?
        Dr. Gottlieb. Is that a question?
        The Chairwoman. I have one other question because the
    chairman is so generous to me, but you can answer that, and he
    gave me permission to do one other question, and you can guess
    what that will be about.
        Dr. Gottlieb. OK. Thank you. Thank you, Mr. Chairman.
        We received about 4,000 comments to the docket related to
    sesame. There is no question that the shutdown delayed our
    processing of those comments. We were not doing work on the
    petition over the course of the 5 weeks that we had a
    government shutdown.
        I share your concerns. You know, when you look at sesame,
    the prevalence of sesame allergy is about on par with the
    eighth allergen. The severity is significant, and I do not want
    to prejudge the outcome of our process, but I will tell you
    that, as you know, a public health professional, we are
    concerned about it and are actively looking at whether it would
    meet the criteria for inclusion.
        We are going through the comments and are going to follow
    the process prescribed by the law, but we are going to do it
    very expeditiously.

                                  e-cigarettes

        The Chairwoman. Because of the generosity of the chairman,
    I will go on to the next question. Thank you.
        And now, Commissioner Gottlieb, you know the issue that I
    am so passionate about. I have some e-cigarette questions for
    you.
        Juul argues that its products are intended only for adults
    looking to transition from cigarettes. Yet it is clear that
    products are being widely used by kids.
        In prior comments, you alluded to FDA estimates on the
    proportion of Juul sales that are going to children. Can you
    share with us what percentage of Juul sales are to children;
    what percentage of Juul sales from individuals who do not use
    tobacco products, who did not use tobacco products prior to
    using Juul?
        Dr. Gottlieb. Well, I will just say at the outset, Mr.
    Chairman, that this is one of the biggest public health
    challenges that we face right now at the Agency, the rising use
    of these products. We see an opportunity for these products to
    be a vehicle for adults, currently addicted adult smokers, to
    transition off of combustible tobacco onto less harmful, but
    not harmless, products, especially at a time that we are
    advancing regulation to try to regulate nicotine and
    combustible products to render them minimally or nonaddictive
    for adults who still want to get access to nicotine.
        But these are not products for children, and we are deeply
    concerned about the youth use and will be taking very
    aggressive steps going forward.
        With respect to your specific question, we did an analysis
    internally with publicly available data to try to estimate what
    percentage of Juul's reported sales are actually sales to
    minors. In all candor, our analytics do not meet the level of
    rigor that I would expect from its sponsor, and that is why I
    have not put out that information. I do not believe it is
    reliable.
        But if you want where we ended up, we ended up with an
    estimate somewhere between 10 or 20 percent of Juul's sales,
    and this was data looking back at last year.
        But, again, I did not believe that based on our ability to
    look at publicly available data and make estimates off of that
    that it was a reliable estimate. That is why we have not
    officially put it out.

                                flavored tobacco

        The Chairwoman. Well, thanks to the chairman.
        I have one other question, but I can tell you I visit high
    schools, junior highs. Every youngster I have interacted with
    tells me 60 percent of the class at a minimum is using Juul,
    and I guess Altria thinks it is pretty good because I read
    about their recent purchase.
        So I am very concerned, and I am glad you are skeptical.
        In my judgment, from what I see, flavored tobacco products
    have flooded the market. According to one estimate, there are
    more than 15,000 e-cigarette flavors available. It should come
    to no surprise that flavors such as Swedish Fish, Fruit Loops,
    Gummy Bear appeal to youth.
        Studies have shown that an estimated 96 percent of 12 to
    17-year-olds who have used e-cigarettes started with a flavor
    product.
        And while I appreciate FDA's announcement that it will
    limit where certain flavored products are sold, to be honest, I
    do not think that is good enough. FDA needs to take a more
    aggressive approach to reduce the youth e-cigarette epidemic.
        Now, you said you do not believe statistics. I am glad
    about that, but what would it take for FDA to ban flavors
    altogether?
        And I ask this question because I go to schools all
    throughout my district, and just one student came to me just
    recently and said, ``You know, one of my classmates takes the
    lunch money, goes to the local bodega and buys these,'' Tutti
    Fruity or Chummy Gummy or whatever you want to call them.
        So what data will it take for the FDA to ban flavors
    altogether?
        Dr. Gottlieb. Well, I hear your stories, Congresswoman. I
    will be speaking at a high school about this next Friday.
        We outlined a series of measures in November. We plan to
    implement that very shortly. I will implement those measures.
        We are trying to thread a public health needle here where
    we preserve some element of the availability of these products
    for adults, while foreclosing them for kids or at least really
    dramatically curtailing the ability of kids to access these
    products.
        But I have said to the industry that this is an existential
    threat, and what I mean by that is that if we are not
    successful at dramatically curtailing the youth use of these
    products, and you are right that the flavors are the primary
    vehicle by which the children are finding these products
    attractive, we will change the application deadlines on these
    products.
        And I am willing to pull them off the market if we continue
    to see the trends going in the direction that they are.
        The Chairwoman. I know you are a father of a couple of
    kids, two I think you said, and I appreciate your
    understanding.
        Dr. Gottlieb. Three.
        The Chairwoman. Oh, three. I made a mistake.
        Dr. Gottlieb. The five-year-old is going to be upset.
    [Laughter.]
        The Chairwoman. Well, I know you are sensitive to this.
        We all make mistakes, but this was a big, big whopping
    mistake. So I look forward to your work in this.
        And I thank you so much, the generosity of the chairman,
    for giving me this time. Thank you very, very much. Thank you.
        Mr. Bishop. Thank you, Madam Chair.
        At this time, I am pleased to recognize the new ranking
    member of the subcommittee, Mr. Fortenberry, who was not here
    to give his opening statements. So I would like to recognize
    him at this time for an opening statement, and if he would
    like, he can proceed with his questions.

                       Opening Statement--Mr. Fortenberry

        Mr. Fortenberry. Thank you, Mr. Chairman.
        I apologize for the delay, but thank you for your
    generosity in allowing me to combine an opening statement plus
    some questions.
        And first let me say though, Mr. Chairman, I have enjoyed
    our pre-meeting conversations and our robust interest in many,
    many things in terms of our own food security in this country
    and how we develop and continue to lead the world in terms of
    food innovation, and I am grateful for your leadership in this
    regard and continue to look forward to working with all of you
    in this space.
        Dr. Gottlieb, welcome. Thank you for your service. We
    appreciate your expertise and your commitment to, again, the
    highest ideals of public service as well.
        I would venture to guess that most Americans do not fully
    grasp the breadth and depth of the agency that you head. The
    FDA's mandate touches our food, our drugs, our medical devices,
    much, much more, regulating roughly 25 cents of every consumer
    dollar spent in America.
        So our work covers not only the expenditures supporting the
    professionals whom you work with overseeing these products and
    services, but we also have to ensure that these resources are
    spent wisely.
        In this coming appropriation that you just received, you
    have got a significant increase, about 9 percent, over the
    previous year. Of course, in Washington, we operate off good
    intention. More money means good outcomes, but we have to be
    careful about that set of working assumptions.
        So I want to hear about what you intend to do about
    outcome, and I will be a little more specific. Tell us about
    your plans regarding faster generic drug approval; advancements
    in digital health technology; the continuous manufacturing of
    drugs; as well as keeping our food safe.
        I think it is important for the panel, and I know it is a
    clear personal interest to you, regarding the grim factors, the
    grim epidemic of drug overdose that is taking 70,000 American
    lives each year. It is a particularly devastating problem among
    young people.
        So but I am particularly interested as well and worried
    about the safety of certain foods. Recently I held an informal
    gathering of agricultural pioneers in my home State of Nebraska
    in which food safety issues were of particular concern.
        While we are increasingly and excitingly getting more of
    our food from local sources where the prominence of the product
    can reliably be determined, we still import a lot of food from
    around the world, where the standards of inspection potentially
    do not match our own.
        So as I understand it, 90 percent of our seafood, over half
    of fresh fruit, and over a third of our fresh vegetables are
    imported, which are certainly staggering numbers.
        Americans, again, are worried about drug prices, and while
    I realize you only play a partial role in debating the policy
    as to how to bring down these prices and increasing values to
    patients, I hope that we will see a robust plan to accelerate
    generic approvals and to minimize the perverse effects of
    circumventing drug and device patents, as well as to encourage
    more safe manufacture of the generics themselves.
        So, Dr. Gottlieb, you have many challenges. So I look
    forward to your responses. Imbedded in that statement, I think
    were enough questions for you to leverage off of.
        Dr. Gottlieb. Should I respond?
        Mr. Fortenberry. It is your time, yes.

                                  DRUG PRICING

        Dr. Gottlieb. Thank you, Mr. Ranking Member.
        Well, let me start with the pricing issue, if that is OK,
    since that is where you ended. I think that when it comes to
    drug pricing, I see three challenges.
        First is that there are situations where we lack product
    competition, and I think there is a lot that I can do to help
    solve that challenge.
        There are situations where we have branded drugs that are
    off-patent, off-exclusivity, but are not subject to the generic
    competition that Congress intended for either because branded
    companies are gaming the system in ways that are blocking
    competition or we do not have the scientific tools to allow the
    genericization of certain drugs.
        The second challenge that I see is once there is
    competition in the market, we have payment systems set up that
    sometimes do not allow government programs to take advantage of
    that competition. And I see that particularly in the injectable
    drug market with respect to Medicare Part B, where the
    government is largely a price taker, and those drugs are not
    competitively bid.
        I think this is particularly acute as we see more
    biosimilars coming to the market where government could be
    taking advantage of effectively generic-like versions of
    biological products, but do not competitively bid those drugs.
        And then the third challenge is that when we do have
    competition in the market and the competition does drive
    discounting, the discounting comes in the form of back-ended
    rebates that do not flow to the consumer. They flow back to the
    health insurer. They are used to offset the cost of everyone's
    premiums, but it effectively means that the patient who is
    using the expensive drug and is either paying full freight or
    is out of pocket for a large portion of that drug is spending
    money that is being paid back later, but paid back in a form
    that is used to subsidize the premium cost of healthy people,
    which is the exact inverse of what we expect when it comes to
    an insurance scheme.
        But we at FDA are focused on the first element of that
    challenge, which is how do we operationalize programs to bring
    more generic competition to the market. The resources we have
    gotten from this Committee will help advance those goals.
        We are putting in place a structured review for the generic
    drug program that is going to make it much more efficient to
    adjudicate the generic review process, and we are also going to
    spend some of those resources proactively updating the labels
    on old generic drugs to try to drive their utilization.
        We have generic drugs that form, for example, the backbone
    of chemotherapy regimens that have labels on them that are
    decades out of date, and there is no sponsor in the market who
    is able to update that label anymore. The branded company has
    long since gotten out of the market or maybe does not even
    exist anymore.
        With the resources that you provided us, we are going to
    proactively take it upon ourselves to update those labels with
    modern information so that we can help drive use of those drugs
    where those drugs are still clinically relevant.
        Mr. Fortenberry. How much will this lower drug costs?
        Dr. Gottlieb. You know, it is a good question, Congressman,
    and we have quantified the impact of our work. The Council of
    Economic Advisors put out a report about 3 or 4 months ago
    where they quantified the impact of the increased rate of
    generic approvals that we have achieved over the last 2 years.
        And if I remember correctly, we have increased the sort of
    run rate for approvals, if you will, by 18 percent a month, and
    we have had incremental improvements in our productivity, and
    they did tie a number around that. I am forgetting it off hand,
    but it was substantial.
        I am hopeful that the resources that you provided and the
    policies we are implementing over the course of this year are
    going to continue to help us advance more generic development,
    not just more approvals, but more approvals of drugs that face
    obstacles being genericized, and what I am talking about are
    particularly the complex drugs, drugs that are either inhaled
    drugs; they are topical drugs; they are injectable drugs, where
    there are complex formulations and cannot be easily measured in
    the blood.
        So the traditional framework of Hatch-Waxman makes it hard
    to copy those drugs. That is where we have been focused. This
    is not a trivial category of spend. One analyst has estimated,
    that that is about $20 billion a year in drug spending for
    drugs that are off-patent, off-exclusivity, but still sold as
    branded drugs because they do not face generic competition
    because they are hard to copy.
        We are focused on that category. EpiPen was one such
    example, and some of the metered dose inhalers for asthma were
    another example, and we have been able to genericize those in
    recent months.
        Mr. Fortenberry. So, Doctor, if you could give an estimate,
    even if it is rough, that you will not be held to if this set
    of policies is fully implemented over a short period of time,
    in the aggregate, what would that impact be on drug prices?
        Are we looking at 10 percent, 20 percent, 30 percent?
        Dr. Gottlieb. Well, the estimate that CEA put out was, if I
    remember correctly, in the billions of dollars. Twenty-six
    billion was the estimate that CEA put out. So over a year they
    estimated----
        Mr. Fortenberry. Maybe we can get a better stat, just the
    percent of how much that will, in fact,----
        Dr. Gottlieb. We could translate it into that.
        Mr. Fortenberry. Throughout the hearing if you could get
    that, that would be helpful.
        Dr. Gottlieb. The stat would be in the aggregate. We could
    translate it into the aggregate.

                            SAFETY OF IMPORTED FOOD

        Mr. Fortenberry. OK. Before my time expires, is our
    imported food safe?
        Dr. Gottlieb. I believe our imported food is safe, and I
    have confidence in it.
        You made the opening statement that about 15 percent of our
    food is imported overall, but to your credit, you made the
    comment that it varies across food types. Seafood is a very
    high percentage. Produce, I think you mentioned, is about half.
        We employ different methods with respect to imported foods
    than we do to domestic food. We have a multilayered approach.
    We rely on foreign regulators. We target inspections very
    carefully with our PREDICT system. We rely on third party
    certification. We rely on verification by importers that they
    have conducted certain audits.
        We have a multilayered system when it comes to imported
    food. I have confidence in the imported food, but across our
    entire portfolio, we still have a lot of work to do to continue
    to provide the assurance of safety that consumers expect when
    it comes to the food that they eat.
        Mr. Fortenberry. All right. Thank you, Mr. Chairman.
        Mr. Bishop. Thank you.
        Mr. Pocan.

                          Opening Statement--Mr. Pocan

        Mr. Pocan. Thank you, Mr. Chairman.
        And, thank you, Commissioner, for being here. I appreciate
    it.
        First just let me say, from what I understand your
    department may be one of the few federally where morale is up
    in the last couple of years, and I want to give you credit and
    kudos for that because it stands out and it is what we are
    hearing talking to folks.
        As you know, a lot of companies in my area work with the
    FDA. I know you know Kevin Conroy from Exact Sciences, for
    example. I would love to extend the invitation if you would
    like to visit some of the companies. Maybe wait a couple of
    months if you are coming to Wisconsin. I would not recommend it
    next week.
        Dr. Gottlieb. Go ice fishing.
        Mr. Pocan. I still do not understand ice fishing, but we
    would love to have you come to Wisconsin.

                                 GENERIC DRUGS

        So I would like to try to get into three different subjects
    if I can. One is around what you were just talking with about
    generics.
        You have talked about that a number of times before the
    committee, and I really appreciate your efforts on that. As we
    know, there are a large amount of drugs that are under the
    generic area. You get one competitor and you can lower the
    price 6 percent; another one, 48 percent; you get six of them
    and you are down to a quarter of the price.
        What are we doing specifically to spur the development of
    multiple generic competitors?
        Dr. Gottlieb. So we have implemented a policy. I will be
    brief. We have implemented a policy to prioritize the review of
    generic applications until we have three generic competitors
    within a category because that is where you see the biggest
    price break.
        And we have actually updated that data. That data was
    developed the last time I was at the Agency back in 2005, when
    we updated it, and it is very consistent. The new findings are
    very consistent with the old findings in terms of where you see
    the sharp price reduction. It is when three competitors enter
    the market.
        Mr. Pocan. So you are working specifically?
        Dr. Gottlieb. We are specifically prioritizing applications
    until there are three competitors within each category.

                                 CBD REGULATION

        Mr. Pocan. Great. Second issue area around some CBD issues.
    It has got kind of an A and a B.
        The first one is you know under the Agriculture Improvement
    Act of 2018, hemp was removed as a Schedule 1 controlled
    substance. I was just wondering if the FDA has plans to work
    with the USDA on CBD regulations.
        Secondly, I know there was recently an issue around CBD and
    food. I think the statement that came out at the end of last
    year said there could be a possible pathway by which certain
    hemp-derived compounds such as CBD might be permitted in food
    or dietary supplements.
        I guess my question is: how actively is the FDA pursuing
    this pathway?
        And what is the likelihood and timeline for the FDA to
    issue a regulation to clarify the lawful circumstances under
    which CBD could be used in food or dietary supplements?
        Dr. Gottlieb. Well, I will say at the outset, Congressman,
    we heard Congress loud and clear with respect to that
    legislation, and I understand Congress wants there to be a
    pathway for CBD to be available.
        This is not a straightforward issue. Congress specifically
    preserved our authority with respect to CBD. Our drug
    authorities in CBD, as you know, exist in a higher formulation
    as a pharmaceutical product and cannot be legally put in the
    food supply at this time not only because it is a drug product,
    but it is also the subject of substantial clinical
    investigation, and we have active INDs.
        So even if it was an approved product, it would still be
    the subject of substantial clinical investigation, and
    statutorily, it could not go into the food supply.
        Now, the law does allow us to go through a regulatory
    process and go through notice and comment rulemaking to
    establish a framework to allow it to be put in the food supply.
    We would have to work through that.
        We plan to begin with a public meeting at some time in
    April. We will be announcing that shortly. We will solicit
    comments, and we have got to work through what that regulation
    would look like.
        You know, I can speculate at a high level about theoretical
    frameworks that you can contemplate. For example, the product
    existing in a high concentration, pure formulation as a
    pharmaceutical product while existing in a different
    concentration as a food product or a dietary supplement because
    we want to preserve the incentive to study CBD as a
    pharmaceutical product. We believe it does have therapeutic
    value and it has been demonstrated.
        But I will tell you this is not a straightforward process.
    There is not a good proxy for us doing this through regulation,
    and if we get comments back and find that this is sufficiently
    complicated for the Agency, we will come back and have a
    discussion with Congress about how we might be able to work
    together on this.
        Mr. Pocan. Great. Thank you.

                                 DRUG SHORTAGES

        And a third one I will try to get in if I can. This is
    around drug shortages. There has been conversation around the
    abbreviated new drug application. It is designated for priority
    renewal when reviews are directed to prioritize the review
    every step of the way beyond the initial priority designation
    stage.
        Is there a way to shorten timelines more aggressively and
    actively communicate and advise folks to get faster approval
    under this issue to address drug shortages?
        Dr. Gottlieb. Well, we have a drug shortages list, and we
    maintain a lot of transparency around that, and that group, it
    is a large group now, works to try to provide timely
    information about where shortages persist in the market.
        Congress gave us very explicit authority to allow us to
    receive notification from sponsors of an impending shortage,
    and we provide notification around that.
        And when we do have a drug that we believe either is going
    to go into shortage or is on the shortage list, we do
    prioritize the ability to get product on the market either
    through other approvals or sometimes we have allowed limited
    reimportation under very specific circumstances to help
    mitigate the shortages.
        Mr. Pocan. And thank you.
        Mr. Bishop. Dr. Harris.

                         Opening Statement--Dr. Harris

        Dr. Harris. Thank you very much.
        And thank you, Dr. Gottlieb. I think we are getting a lot
    of things right over at FDA.
        I have four or five different topics. I will be brief about
    them. First of all, with regard to fiber, I know we have
    communicated about it, and I want to thank you for continuing
    to handle dietary fiber petitions in front of the FDA.
        And I know the food manufacturers in Maryland want to
    comply with the January 1st deadline. They hope that FDA will
    work with them to make sure they can figure out what is a
    dietary fiber and what they ought to do with their labeling, et
    cetera.
        I want to thank you for, you know, paying attention to
    that.

                     FLAVORED TOBACCO

        With regard to the cigar issue, we talk about it a lot.
    First off, I want to say it is great that combustible product
    use is going down in the United States. Clearly, the youth
    usage of cigars goes down year after year, and yet there is a
    plan to ban all of the flavored cigars, which are not really
    used by youth.
        Again, cigar use going down year by year. What is the
    justification for banning all of the flavored cigars?
        Dr. Gottlieb. Well, Congressman, I will be direct on this.
    I do not believe that there should be characterizing flavors in
    combustible tobacco. Data show that the characterizing flavors
    in the combustible tobacco drive use. Congress made an explicit
    decision to take characterizing flavors out of cigarettes, and
    then we saw a lot of flavors go into these cigarillos.
        When you look at youth use patterns of tobacco products,
    cigars is the fastest growing tobacco segment among black
    youth, and a lot of that is the flavored cigar use among that
    population. But we see rising use of flavored cigarillos across
    the board.
        So I have a lot of public health concerns around the
    flavors in cigars. I mean, if I had an optimal configuration
    with respect to tobacco, if adults wanted to get access to
    flavored products, they would get access to flavored products
    that were not combustible products and did not have all of the
    health risks associated with combustion of tobacco.
        Dr. Harris. Well, you talk as though all combustible
    tobacco is equal, and obviously something that is not inhaled
    has a much lower risk profile than something that is inhaled.
        So that is why I say, you know, the one size fits all
    approach I am just not sure is justified here.
        So anyway, the other thing is I know we have worked with
    you on marketing tobacco rolling paper to children. I do not
    think that, you know, the Center for Tobacco Products has come
    to a satisfactory result with this. I think there is still
    marketing going on to children.
        Obviously, rolling paper is not used for anything but a
    combustible product, whether it is marijuana or tobacco, and I
    know you have the authority to regulate and to take enforcement
    action, and I hope you do.

                          CO-PRESCRIPTION OF NALOXONE

        With regards to opioids and the locks on co-prescription, I
    think that your statement yesterday on FDA's policy and
    regulatory agenda to combat opioid abuse did not mention co-
    prescription of naloxone.
        Could you just give me an update on what your efforts are
    and what your thoughts are on allowing co-prescription?
        Dr. Gottlieb. We are actively considering the co-
    prescribing of naloxone with opioids. We had a discussion
    around this at an advisory committee recently, probably about 6
    weeks ago, and we are going through different formulations of
    under what circumstance that would be appropriate from a public
    health standpoint.
        You know, mandating co-prescribing of naloxone across the
    board for all opioids would be costly to the system, but there
    might be circumstances where there is a strong public health
    justification for mandating that.
        Dr. Harris. Thank you very much, and I appreciate the
    thoughtful consideration of that.
        I am going to agree with the gentleman from Wisconsin about
    the CBD, and we have also talked about. You know, I go into
    markets now and see these displays of CBD containing products,
    and it is not at the pharmacy, behind the counter, obtained
    with a prescription.
        So, again, I think this is something that crept up on us,
    and I know I appreciate your answer to Mr. Pocan on that.

                                     SODIUM

        Finally, with regards to sodium, you know, I have asked for
    years, you know, again, if a one size fits all approach is the
    appropriate approach on sodium. I know that your predecessor,
    Dr. Califf, other established scientists, and an American Heart
    Association publication last July have called for perhaps it is
    time to do a randomized trial on sodium and to answer the
    question: where is it harmful? Where is it helpful?
        Yes, the majority of people probably might benefit from a
    sodium reduction, but there are individuals who would not.
    Would not a randomized controlled trial actually help inform
    regulation?
        Dr. Gottlieb. I think we would welcome more research on any
    dietary subject, and there is certain precedent where Congress
    has helped support this kind of research through the NIH, for
    example.
        It is obviously hard to study dietary habits. You cannot
    randomize people carefully in the way you would in a drug
    trial, for instance, but we have done research on diet and have
    gotten good results from those research efforts in the past to
    inform decision making.
        Dr. Harris. Thank you very much.
        I yield back.
        Mr. Bishop. Mr. Cuellar.
        Mr. Cuellar. Thank you, Mr. Chairman.

                                  OPIOID USAGE

        Commissioner, let me ask a question following what my
    colleague asked. Prior to 2001, opioids such as oxycontin were
    solely approved for short-term pain relief. However, in 2001,
    the FDA decided to change the label for that, allowing it for
    daily, around-the-clock, long-term treatment.
        And I think the problem that I have with that is I do not
    think there were any studies that were showing the impact of
    its long-term effects of opioids.
        Now, I do not want you to go back and explain the reasoning
    of the FDA in 2001, but I would like if you can explain why,
    after scientific studies have shown the negative long-term
    effects of opioid usage, why the FDA has not acted or changed
    the wording of oxycontin and issued strong warnings about
    opioid usage.
        Dr. Gottlieb. Well, I appreciate the question, Congressman.
        I have gone back and looked at the history and spoken to my
    staff about what was done in 2001, and in 2001 the specific
    label change that was made that is the subject of some analysis
    now was an attempt to try to restrict or narrow the use of the
    drug.
        I think in retrospect the Agency probably got some of the
    wording in that change wrong. It was an attempt to try to drive
    long-term use away from some of the IR drugs. If you look at
    the utilization of opioids, more than 90 percent of all the use
    of opioids is actually immediate release formulations of the
    drug, not the extended release of the drug. And the Agency at
    the time was trying to obviate the use of extended release
    drugs just to situations where patients had syndromes that
    required longer term use of opioids.
        Now, that said and recognizing that some of that language
    was done in a way that ultimately allowed for promotion that
    was inappropriate and, I think, criminally sanctioned
    ultimately, we have undertaken a process to use the authority
    that we received under the SUPPORT Act to now mandate that the
    sponsors of existing opioids that are on the market, as well as
    opioids in development, must conduct long-term studies looking
    at the long-term effectiveness with chronic administration of
    opioids to see, to demonstrate whether or not there is a
    declining effectiveness.
        If we are able to demonstrate that there is a declining
    effectiveness with prolonged administration of these drugs in
    rigorous studies, which are the types of studies that we are
    mandating, we could act to restrict the labels further to
    contraindicate certain use, to narrow the circumstances when
    opioids could be used in a long-term fashion, to implement
    other risk management measures.
        So we are undertaking that process very quickly, using the
    authorities you gave us under the SUPPORT Act to get the
    evidence we need to support a careful regulatory decision here.
        Mr. Cuellar. Well, I would and I think all of us would
    appreciate it if you can keep us posted on that work. As you
    know, we appropriate billions and billions of dollars to
    address the opiate issue that we have. So we appreciate you
    keeping us informed.

                      COMPOUND PHARMACISTS

        The other question I have has to do with compound
    pharmacists. FDA has heard concerns about health care provider
    groups about the need for immediate access to compound office
    use medications to address health emergency. The FDA
    enforcement action against 503(a) facilities for providing
    office use medications, despite being permitted by State law
    and/or regulation in a majority of States, continues to
    restrict.
        And I understand the history. There was an issue of people
    being killed. I understand that, dying, but I guess my question
    is when we talk about compound pharmacists or the pharmacist
    and how they are regulated, there is a little confusion between
    the State/Federal definitions, especially with the definitions
    of distribute and dispense.
        Are you all looking at trying to somehow align those
    definitions? Because if you have a State and then you have a
    Federal definition, that will cause some sort of confusion.
        Dr. Gottlieb. Well, I think that the intent of Congress was
    clear here and clear in terms of how the Agency is implementing
    it. I think we have been clear that we do not believe that a
    503(a) pharmacy can engage in large-scale manufacturing and
    advanced shipping. A 503(a) pharmacy should be engaged in the
    traditional practice of pharmacy where they are compounding the
    drug in response to an individual patient prescription.
        Now, I understand some 503(a) pharmacies do want to engage
    in larger scale manufacturing and stock local doctors'
    practices and will argue they have done that for years and they
    have done it safely. I recognize that.
        But those are the kinds of conditions that created the
    public health risks that led to the passage of the DQSA and the
    implementation of a new regimen.
        Now, from my standpoint, what I want to do is try to make
    it as efficient as possible for the 503(a) pharmacies that want
    to engage in that activity to become 503(b) pharmacies where
    they are subject to at least good manufacturing practices'
    oversight, to ensure the safety of those products.
        So I am very actively trying to work through policy, and we
    are going to be issuing guidance imminently that I hope will
    make it more affordable for some small 503(a) pharmacies to
    engage in the business that they want to, but to do it as
    503(b) pharmacies.
        So to do that conversion, it does not cost millions of
    dollars. So a smaller pharmacy can do it.
        I will say, and I will close here, from an economic
    standpoint, if a 503(a) pharmacy is doing this on a small
    scale, they might be able to do it and evade notice. But once
    they try to do it on any scale, they are going to get on the
    radar of not just the State officials, but the Federal
    officials. So they are effectively capped.
        If they would convert to be a 503(b) pharmacy, they would
    be able to grow their business into that segment that they want
    be in, and I think it would be a much more enviable position
    for them to be in. I am trying to make it efficient for them to
    get there.
        Mr. Cuellar. Yes. I know my time is up, but I appreciate
    the efficiency on that.
        Thank you.
        Mr. Bishop. Mr. Moolenaar.
        Mr. Moolenaar. Thank you, Mr. Chairman.
        And, Commissioner Gottlieb, thank you for your comments
    today and also your leadership, and especially in the area of
    keeping the price of drugs down and promoting competition and
    reducing barriers to the generic development and promoting
    competition.

                            NON-OPIOID ALTERNATIVES

        One of the areas kind of along those lines I wanted to ask
    you about is that we have invested, I know, in NIH and in other
    areas where there is nonaddictive pain medicine. There is a lot
    of research going on in that area.
        Is that something you are seeing as a potential answer to
    this opioid crisis?
        And what role does the FDA have in that?
        Dr. Gottlieb. Well, it is one opportunity. I think what we
    do to address this crisis is going to be an all of the above
    approach, and there is no silver bullet given the magnitude of
    this public health crisis that we are facing.
        But there are opportunities for us, I believe, to help
    advance the development of non-opioid alternatives for the
    treatment of pain that we will be issuing over the course of
    this year.
        We withdrew our guidance document that delineated what
    sponsors needed to do to get pain drugs onto the market because
    we felt it was out of date and overly burdensome, and in its
    place we are going to be issuing a series of guidance
    documents, at least four, that look at what sponsors need to do
    to develop alternatives to opioids for the treatment of
    specific kinds of pain.
        And we think that that will make the process for trying to
    develop the alternatives that you are talking about much more
    efficient. So we are focused on this.

                           PREMIUM CIGARS

        Mr. Moolenaar. OK. Wonderful. And I want to just change
    gears a little bit to go to your rulemaking area.
        Almost a year ago the FDA announced an advanced notice of
    proposed rulemaking regarding regulatory treatment of premium
    cigars, and can you tell me what the status is of that
    rulemaking?
        Dr. Gottlieb. We received a lot of comments. I forget how
    many in all, but it was a robust administrative record. We are
    continuing to go through those comments, and you know, we will
    keep you updated.
        We specifically asked questions around whether or not there
    were different patterns of use associated with premium cigars
    that would cause us to consider whether we should regulate them
    differently than other tobacco products. That was among the
    questions that we asked.
        So we are still actively engaged in that rulemaking
    process.
        Mr. Moolenaar. Thank you.

                             SUNSCREEN REGULATIONS

        And then yesterday the FDA published a proposed rule aimed
    at strengthening regulations of over-the-counter sunscreen. I
    am 100 percent in agreement we want to make sure these
    sunscreen products are effective and available.
        Some of the concerns that have been raised are that the
    tentative final over-the-counter sunscreen monograph will
    essentially ban all but two of the approved UV filters used in
    sunscreen products. And my understanding is there are only 90
    days to comment and provide data for widely used ingredients
    that have no known safety concerns.
        I am wondering if you could elaborate on where things stand
    on that. Does the FDA have plans to ensure there is no
    disruption in the supply of these critical products as we start
    to approach the summer months?
        Dr. Gottlieb. Right. So they will not be banned, and they
    will not be forced to come off the market. There were 16
    currently marked active ingredients that were assessed in that
    notice of proposed rulemaking. Two were determined to be
    generally regarded as safe and effective (GRASE), zinc oxide
    and titanium oxide. Two were determined not to be GRASE. So
    they have to come off the market, but they are actually not
    currently marketed in the U.S.
        The other 12 ingredients had insufficient data for us to
    make a final determination. In the course of the 90 days, if a
    sponsor wants to, they can ask for a deferral of a decision on
    those other 12 ingredients.
        We expect at least six to eight of those ingredients to
    request and be granted deferrals, and we can finalize the rule,
    allow those products to stay on the market while we continue to
    collect data.
        We did the same thing with respect to the rulemaking on the
    antiseptics. We were under a court order to finalize that rule,
    but we did not have the data we needed to make a final
    determination on all the antiseptic products. So we were able
    to issue deferrals on some of those products and finalize the
    rule while we continued to collect information.
        So they will not necessarily be coming off the market just
    because we have insufficient information to make a safety
    determination at this time.
        Mr. Moolenaar. OK. Thank you.

                                 DAIRY LABELING

        And then one last question I had for you is relative to
    milk. My district is a strong agriculture district, very
    diverse. Dairy is a big part of that, and one of the questions
    I have is, you know, the labeling of milk, what constitutes
    milk, you know, the FDA's definition, and how we protect that
    definition.
        Can you comment on where we are on that? Because I continue
    to hear concerns from my constituents about this.
        Dr. Gottlieb. Well, we are going through a regulatory
    process right now where we are soliciting public opinion about
    the use of the term ``milk'' on non-dairy products, on plant-
    based milk products, which I think is where your question is
    getting at.
        You know, we are going through that process. I do not want
    to prejudge the outcome, but from a public health standpoint,
    the threshold where we would make a decision about that
    standard of identity and when you can use the term ``milk''
    would be, to give you one example, a situation where we are
    able to demonstrate with data or people that consumers perceive
    a certain nutritional content through the use of the term
    ``milk'' that they are not getting with plant-based products,
    and that is having an adverse health impact on them.
        And we have, in fact, seen examples of that where parents
    said their children were using certain milk products, and they
    did not have the vitamins and nutrition of dairy milk products,
    and you saw adverse consequences.
        So that is what we would be looking at.
        Mr. Moolenaar. Thank you.
        Thank you, Mr. Chairman.
        Mr. Bishop. Ms. McCollum.
        Ms. McCollum. Thank you, Mr. Chair.

                              REGULATING COSMETICS

        Sir, I am going to kind of dovetail on a little bit of what
    the last question was about, not milk, but cosmetics.
        A recent New York Times editorial highlighted the FDA's
    role in ensuring of cosmetic products on the market and how
    little authority you actually have in regulating them. It is a
    $70 billion cosmetic industry, which includes not only makeup,
    but products every single one of us use in this room.
        Any of you use toothpaste? Deodorant? Well, it is regulated
    with an $8 million budget only, and 27 staff members at the
    FDA.
        The law giving you the authority to ensure the safety of
    these products is only 2 pages long, and it has not been
    updated since 1938.
        While there have been several attempts to enact legislation
    that would provide the FDA with expansive authority and
    oversight, Congress has been unsuccessful in passing any
    substantial legislation.
        To this day, 80 years have passed. Cosmetic companies still
    do not need to submit safety data to the FDA before marketing a
    product. They are not held to basic good manufacturing
    practices. They do not have to register with the agency. They
    are not required to report adverse events that consumers may
    relay to them.
        Further, the FDA can currently not do a mandatory recall of
    a product even if it is thought to cause serious harm. It
    cannot inspect facilities to ensure that the products are being
    made in a safe and clean environment. And less than 1 percent
    of imported cosmetics are even inspected.
        Clearly, you do not have the authority to meaningfully
    regulate the cosmetic industry the way I am sure most Americans
    assume that you do. In just talking to mothers, fathers,
    elders, and young adults, they think that these have all been
    tested and are safe to use when they go to the store to buy a
    product for themselves or their families.
        The FDA has taken steps with sunscreen, and I applaud the
    FDA for doing that because that is a serious health risk if
    someone is applying something to their skin thinking it is
    going to block or delay or prevent cancer.
        So I am asking you: what are some of your biggest hurdles
    in ensuring the safety of these products? Because I am sure you
    get calls and you do hear from consumers who say, ``Well, I
    thought you inspected this. I thought there was consumer
    protection.''
        So Congress needs to update these antiquated laws, and so
    what are some of the changes that you would suggest that we
    work on in a fashion to make sure that these products are safe
    as many people assume that they are?
        Thank you.
        Dr. Gottlieb. Well, I will just say briefly, Congresswoman,
    I think you outlined some of the challenges very well, and this
    is an area that we want to work on.
        We very much look forward to working with Congress to try
    to modernize not just this framework, but we can always do more
    with more with respect to the resources.
        You are right that it is a small team. Now, when you are
    looking at our portfolio from a risk-based approach, these
    products clearly pose a smaller degree of risk than a
    complicated medical device or a pharmaceutical product. But
    they are not risk-free, and we have not been able to expand the
    scope of what we are able to do commensurate with the expansion
    in the scope of this industry.
        And so we would like to work with you on this and see how
    we can make the system more robust.
        Ms. McCollum. Mr. Chair, as was pointed out, we do not even
    know how much harm these products could be because there is no
    accumulation being reported on it. I know that drugs that we
    take and medical devices, as the doctor pointed out, can have
    an immediate effective, good outcome or a terrible outcome, and
    those are reported, and we do know about it.
        But as with sunscreen, there is a false sense of security
    in the public that they read a label. They think it has been
    inspected.
        So, Mr. Chair, I think it is something that our committee
    should take a look at. I thank the FDA is for looking at this
    issue, and I look forward to working with the chair on this.
        Thank you. I yield back.
        Mr. Bishop. Thank you.
        Mr. Aderholt, the distinguished former chair of this
    subcommittee.
        Mr. Aderholt. Thank you, Mr. Chairman.
        And congratulations on your chairmanship, and on especially
    this first hearing of the subcommittee. It is great to be
    alongside of you.
        And, Commissioner Gottlieb, welcome. Thank you for joining
    us this afternoon.
        Of course, I am no longer chair of the subcommittee, but I
    wanted to remain on this subcommittee and asked to have a seat
    on the subcommittee, and I continue to actively be interested
    in the matters that you work on and this subcommittee works on
    and look forward to working with you.

                          RAISING TOBACCO AGE TO SELL

        I want to follow up on what the chair of the full committee
    was asking about tobacco.
        I think all of us remain concerned about youth access to
    flavored tobacco products, and particularly e-cigarettes, and
    it is not a partisan issue. Democrats and Republicans alike are
    very concerned about that issue, especially with the youth
    access.
        Some members of Congress propose raising the Federal
    minimum tobacco age to sell to 21. What is FDA's position on
    that?
        Dr. Gottlieb. We would support that, and I will tell you my
    position is that I would be supportive of that.
        From my perspective with respect to the e-cigarette
    challenge we are facing right now, where we want to preserve
    this opportunity for currently addicted adult smokers, but face
    a sheer epidemic of youth use of these products, and the
    numbers are going to go up this year as well and perhaps
    significantly.
        A lot of the youth access is not just 14-year-olds and 15-
    year-olds going into convenience stores and buying these
    products. It is enterprising 18-year-olds in high school buying
    them legally and creating a business in their high school
    selling them back to 16-year-olds and 15-year-olds.
        And if we had a 21-age limit across the board on these
    products, it would make it harder for that kind of activity to
    take place.
        And so I think it could help me address the most immediate
    problem that I am facing with respect to tobacco, which is the
    epidemic of youth use of these non-combustible products.
        Mr. Aderholt. Yes. And I have been supportive of that as
    well.
        Of course, raising the minimum tobacco age of sale to 21
    could drive more minors to purchase flavored tobacco products
    online. I think that is one issue that we deal with.

                   AGE VERIFICATION FOR ONLINE TOBACCO SALES

        What does FDA need in terms of authority to implement
    effective age verification policy for online sale of tobacco
    products?
        Dr. Gottlieb. We have all the authority we need and will be
    promulgating guidance that is going to outline age verification
    requirements for online sales that we think are sufficient to
    allow online sales to continue.
        Currently, only a small percentage of the e-cigarette sales
    that are taking place are online. It is actually a small number
    of the products that are being bought online, but I do think
    that the online route provides the opportunity for heightened
    age verification requirements that--while not foolproof,
    nothing is foolproof and that is not the standard that I think
    we are going to be able to reasonably achieve--make it much
    more difficult for youth to get access to those products
    online.
        You see, for example, wine sales online, liquor sales
    online that require adult signature on delivery and very
    stringent verification requirements that, again, while not
    foolproof, are pretty good.
        And we can look for a similar technology with respect to
    online e-cigarette sales.
        Mr. Aderholt. Do you have the authority to mandate age
    verification?
        Dr. Gottlieb. We believe we do. We are going to be
    promulgating guidance that is going to require significantly
    heightened age verification requirements for flavored e-
    cigarette products sold in convenience stores and products sold
    through online channels. And we will be implementing that
    shortly.
        Mr. Aderholt. Juul requires online customers to either
    upload a government-issued ID or the last four digits of their
    Social Security number or other identification information. Is
    this something FDA could require of all the companies that sell
    tobacco products online?
        Dr. Gottlieb. I do not want to judge one process over the
    other. What we are going to do is give some representative
    examples of some processes that could be sufficient and allow
    sponsors to submit other alternatives, other creative
    alternatives.
        But we do believe that there is technology and ways to put
    in place online verification requirements that could be robust
    and could meet a standard that we would think is sufficient.

                               CELL CULTURED MEAT

        Mr. Aderholt. I know my time is running out, but let me ask
    you. Of course, FDA and USDA have signed the MOU outlining how
    both agencies will be involved in this regulating cell cultured
    protein in October.
        What is the status of the MOU?
        Dr. Gottlieb. Very close to completion and public release.
    We will absolutely meet the 60-day deadline that was in the
    appropriations legislation.
        And so I look forward to hopefully having an opportunity to
    brief you on that, and I would just want to close by thanking
    you for the support that you showed the Agency over the years
    when you chaired the Committee.
        Mr. Aderholt. Sure. And one last: will FDA allow USDA to
    play a role in the collection of the cell from animals, both
    post and ante mortem?
        Dr. Gottlieb. I am not sure I am quite understanding the
    question, but the way that we have designed the process is we
    have designed a pre and post-harvest phase, and so the pre-
    harvest phase is the living biosystem. Once that living system
    is basically closed and the meat product is taken out of the
    biological replication process, all of that jurisdiction shifts
    to USDA.
        So there is a handoff there somewhere. USDA plays a role in
    that handoff and then has jurisdiction over all aspects of how
    the product is formed, spiced, packaged, labeled, everything
    else.
        Mr. Aderholt. OK. Thank you.
        Mr. Bishop. Ms. Pingree.
        Ms. Pingree. Thank you very much, Mr. Chair. Thank you, Dr.
    Gottlieb, for being here with us. I also appreciate the time
    you take with our committee and the thorough answers that you
    give on every topic. So thank you. And thank you for your
    vigilance on flavored e-cigarettes. That is an issue that we
    hear a lot about in our communities as well.

                                 CBD REGULATION

        Let me try to fit in two issues and be quick about it. My
    colleague Mr. Pocan already got into the CBD discussion. And so
    he has reviewed quite a bit of that with you. And, as you know,
    we recently sent a letter. And I realize this is complicated,
    but I just want to emphasize the need for some sense of urgency
    around it and, the timing of this because so many of our states
    have legalized hemp.
        As you have heard from many other members, CBD is being
    sold in a lot of places. And it has created an enormous amount
    of confusion. My own state legislature is working on
    legislation around it right now, but the role of the FDA
    confuses everyone. So I guess I am wondering about how soon you
    can do this. Are there resources available or do you need
    further assistance to get this done?
        And maybe this is premature, but I know you alluded to the
    potential for a legislative fix and that you are looking at it
    kind of. And what might be a pharmaceutical component? And then
    what might be other sized doses or products that would not be
    regulated in the same way?
        Dr. Gottlieb. I will tell you that we are deeply focused on
    this. We have taken on other hard challenges before. I think we
    have a good track record of trying to come to resolution on
    other challenges. And you have my commitment that I am focused
    on this one.
        I am going to announce shortly a high-level working group
    that is going to report to me on this with some senior
    officials in the Agency who are going to be chairing that. We
    want to wait for the public meeting and solicit comments and
    get input. I will tell you that if we make a determination that
    the pathway here is going to be a multiyear regulatory process
    that could take two, three, four years, I will come back to
    Congress and have a discussion about whether or not there are
    other frameworks that could help address this.
        Again, I want to preserve the pharmaceutical opportunity
    here while recognizing that Congress intended for there to be a
    pathway for this product to be available in other forms. And I
    think that there are different things we can contemplate
    scientifically. I don't want to get too far ahead of myself,
    but you could think about concentration and formulation and
    other thresholds. That might or might not be something we can
    do in regulation.
        We might need a statute that either addresses this as a
    whole framework or addresses CBD specifically. If that is the
    case, we will work through a process to have a discussion
    around that.
        Ms. Pingree. Great. Well, we will stay in close touch and
    look forward to any decisions that you make soon.

                           PRESCRIPTION DRUG PRICING

        The second question is on the pricing of prescription
    drugs. And you have already had several questions about this. I
    really appreciate your answers relating to generics, rebates,
    negotiating, all of the things that could be done that you have
    some say over. I know in July of 2018, Secretary Azar directed
    the FDA to establish a working group to examine safe
    importation of prescription drugs.
        That is an issue I have been concerned about for a long
    time living in a border state, which Maine is. We have toyed
    with this at a state level and had to go back and forth. So I
    am very interested in what the FDA's working group is thinking
    about this.
        And just to emphasize the point because prescription drug
    pricing is so critical, we called a couple of pharmacies. You
    know, in our state, you can literally cross the border. And if
    you have a duly licensed physician who writes you
    prescriptions, you can buy prescription drugs across the
    border. Advair, which, as you know, is used to treat asthma and
    bronchitis, one of the top-selling drugs, was a cash price of
    $378 at the Maine pharmacy. Across the border, it was $140 in
    Canada.
        Even worse, given the crisis that we have with insulin
    right now, cash price for a vial of insulin, which was first
    used in 1922, was $200 in Maine, a price many families can't
    afford and we are hearing more and more about every day, but
    that same vial of Humalog is available for $35 at the Canadian
    pharmacy.
        You know, I have worked on this issue for so long. And
    people try to raise red flags, you know, Maybe it is not safe.
    I know from living in a border state that Canadians have safe
    drugs and pleasant, well-lit pharmacies where they go to
    purchase them. And you really can't tell the difference in any
    way. So I would love to be updated and follow your progress in
    this.
        Dr. Gottlieb. Canadians have safe drugs. And if you go into
    a Canadian brick and mortar pharmacy and you purchase a drug,
    you are getting a safe and effective drug. I have confidence in
    the Canadian drug regulatory system. The places where we have
    deep concerns is when people go online and buy drugs from
    online pharmacies that are purporting to source their drugs in
    Canada or other First World markets but are not. And we have a
    lot of concerns, and we are seeing a lot of counterfeit drugs
    being sold through those channels. We have a lot of ongoing
    investigative activity and some fairly egregious things that we
    are finding when we look at these websites. And so we have deep
    public health concerns.
        With respect to the workgroup, the work continues to go
    forward. That was designed to specifically address a more
    narrow circumstance of a situation where there is a big price
    increase. It creates an access dislocation, so certain
    situations of hardship that patients might face.
        Ms. Pingree. I am out of time, but I would love to continue
    the discussion with you.
        Dr. Gottlieb. Thank you.
        Ms. Pingree. Thank you very much.
        Mr. Bishop. Ms. Lee.
        Ms. Lee. Thank you very much. Thank you, Mr. Chairman and
    Ranking Member. This is my first hearing, and I am excited to
    be on this committee.
        I get a chance, actually, Commissioner, to drill down on
    two of my favorite subjects: Cuba and cannabis. [Laughter]

                        APPROVAL PROCESS OF HEBERPROT-P

        Ms. Lee. I co-chair the bipartisan Cuba working group and
    the bipartisan cannabis caucus. A couple of issues that I want
    to raise with you about those two issues.
        One is, you know, 30 million Americans, about 9.4 percent
    of the population, has diabetes. For African Americans, those
    numbers are even worse. African Americans are 80 percent more
    likely to get diabetes than their white counterparts. And
    currently 13 percent of African Americans have diabetes.
        Now, as I mentioned in our meeting, Cuba currently has a
    diabetes drug called Heberprot-P. It has helped and prevented
    deep foot ulcers, and it is not just being used in Cuba, but in
    20 countries around the world. It does prevent amputations.
    Seventy-one thousand Cuban patients have been treated. And
    overall, 300,000 patients worldwide have been treated.
        Now, it is my understanding that as of March last year,
    Cuban and U.S. companies came together and signed an agreement
    to begin to look at how to move forward with clinical trials
    and getting approved. They are still waiting, though, approval
    by FDA. And so I am wondering if you could give us a status
    report of this approval process. I have been working on this
    for 10 to 12 years--for this drug. And do you think we will see
    the approval for this in the United States? Because this is a
    very, very serious issue and for everyone, especially in
    minority communities, in terms of diabetes amputations.

                           CANNABIS-DERIVED COMPOUNDS

        Secondly, just in terms of cannabis, it is my understanding
    to date that FDA has approved only one plant-derived medicine
    from cannabis and that it was awarded, quite frankly, to the
    British pharmaceutical company GW Pharmaceuticals because they
    are licensed by the U.K. Government to privately grow strains
    of cannabis for the purpose of drug development. Many members
    of Congress support medical cannabis research to facilitate
    Federally approved clinical trials. And so it is really
    important to understand cannabis therapeutic applications and
    its impact on health and wellbeing. So I am wondering if you
    believe it is possible that under our U.S. Federal system,
    whereby cannabis is still a Schedule I substance, can a U.S.-
    based company similarly bring a plant-derived cannabis-based
    drug to market via the traditional FDA review and approval
    process? Because so many states now have passed medical
    marijuana initiatives, and it is a shame that we haven't been
    able to move forward with the research.

                        APPROVAL PROCESS OF HEBERPROT-P

        Dr. Gottlieb. Well, on the first question, Congresswoman, I
    appreciate our discussion about this when we met. We owe you an
    answer. And I want to be careful because I am not sure which
    aspects of where they are in the application process
    constitutes commercial confidential information that I
    shouldn't reveal in this setting, but I will get back to you,
    one way or the other, on what we can tell you about where that
    process stands. And I look forward to following up with your
    office.
        Ms. Lee. OK. I appreciate that because it has been going on
    a long time and a lot of people are waiting for this.
        Dr. Gottlieb. I understand. We will. I will make sure we
    get you as much information as we can about that. And I
    recognize and appreciate your interest in that matter.

                           CANNABIS-DERIVED COMPOUNDS

        With respect to hemp-derived or cannabis-derived compounds,
    it really depends on which active ingredient you are talking
    about, whether you are talking about THC or CBD, and whether or
    not it is being derived from marijuana or hemp. I think one of
    the active questions on the table is whether or not CBD--so GW
    Pharma was marketing a product that was a purified form of CBD
    derived from marijuana, if I remember correctly, in that case,
    but the active question on the table right now is whether or
    not CBD derived from hemp, which Congress made the decision to
    deschedule hemp, whether or not the CBD derived from that is
    also descheduled and can be studied in a more fluid fashion.
    And I think that that is an active question right now on the
    table.
        I have my own personal opinion reading the plain language
    of the statute, but if I give a legal opinion, my lawyers are
    going to grimace at me. So I won't offer it. But I think we are
    going to have a resolution on that very soon about whether or
    not the CBD derived from hemp doesn't fall under the scheduling
    process.
        Ms. Lee. Yes. OK. Thank you very much, but I want to
    clarify this British pharmaceutical company, GW
    Pharmaceuticals. They are licensed by the U.K. Government to
    privately grow strains of cannabis for the purpose of research.
    Did FDA award this contract to this British company or----
        Dr. Gottlieb. No.
        Ms. Lee. Could you clarify that?
        Dr. Gottlieb. I mean, so it is the case in the United
    States that the ability to conduct research with marijuana is
    more restricted, more heavily regulated. You have to use
    product that is sourced from the government. I don't know all
    the nuance of it. So, you know, over the years, you have seen,
    in all candor, you have seen, companies go overseas to conduct
    research with foreign-grown product that is more easily sourced
    for the purposes of clinical trials. And so the issue that you
    are getting at is a valid one. The only thing I could say is
    that the environment here is changing quickly.
        Ms. Lee. Very quickly.
        Dr. Gottlieb. And we would certainly support more research.
        Ms. Lee. OK. Thank you very much. Thank you, Mr. Chairman.
        Mr. Bishop. Ms. DeLauro.
        Ms. DeLauro. Thank you very much, Mr. Chairman. And
    welcome, Dr. Gottlieb. It is a pleasure to be with you today.
    Just a couple of points, and I have two questions.
        With regard to the issues of prescription drugs, which was
    mentioned, and the issue on generics, I just make you aware--I
    am sure you may be aware--with the renegotiated NAFTA
    agreement, the way it is currently constructed would delay
    generics and biosimilars given the way the patent exclusivity
    has currently been awarded to pharmaceutical companies. So just
    take a look at it because it directly affects where I think you
    want to go.
        With regard to food safety, according to--Centers for
    Disease Control and Prevention studied imported food safety.
    Both the number and proportion of outbreaks from imported food
    has increased. Since 1996, outbreaks associated with imported
    produce and fish were the most common. My two questions have to
    do with both. One is food safety, and then it is the safety of
    imported pharmaceutical drugs.

                  FOOD SAFETY AND POST-OUTBREAK INVESTIGATIONS

        Last year, FDA investigated the outbreak, multistate
    outbreak, of E. coli infections that were linked to romaine
    lettuce from the Yuma growing region. Total reported illness is
    210 people across 36 states, 96 hospitalizations, 5 deaths. The
    outbreak highlighted the devastating effects of FDA's
    inadequate oversight of food safety, particularly among fresh
    produce. The investigation with regard to that, the agency did
    not conduct sampling for the environmental assessment until
    June 2018, more than 2 months after the outbreak started. It
    confirmed that the outbreak's frame was positively identified
    in an irrigation canal used by many growers in the region.
        What was located next to this irrigation canal is a large
    cattle feedlot operation, significant because E. coli is
    naturally found in the intestinal tracts and manure of cattle.
    In fact, FDA sampling at the feedlot found multiple positive
    samples of dangerous E. coli strains, though not an exact match
    to the outbreak strain. Noted in FDA's written environmental
    assessment, the sampling conducted at the feedlot was
    ``limited'' and is ``not possible to draw valid conclusions.''
        I am curious to know why FDA did not conduct additional
    sampling at the feedlot operation, especially given its
    proximity to the irrigation canal and the fact that cattle are
    carriers of E. coli. In your opinion, as a matter of public
    health, should large feedlot operations, like that in Yuma, be
    located near irrigation canals and fields growing fresh
    produce? Given all of these findings, why is FDA still pursuing
    its delay of the agricultural water testing requirements under
    the produce safety rule?
        Dr. Gottlieb. Well, there is a lot that we could have a
    discussion around on these issues, and I know my time is brief.
    Look, we have gotten a lot better when it comes to these post-
    outbreak investigations. And if you look at what we were able
    to do with respect to romaine lettuce in California, we were
    able to make much more rapid determinations about what the
    potential source was of that outbreak. So I think we are
    getting better and continue to get better. The resources that
    this Committee provided is going to go specifically, at least
    in part, to building out the teams that do these post-outbreak
    investigations because this is a very important part of our
    overall approach to food safety and public health.
        With respect to the Concentrated Animal Feeding Operation
    (CAFO) and its proximity to the irrigation canal, there have to
    be measures put in place to make sure that there isn't direct
    proximity that can lead to the kinds of contaminations that you
    talked about. There are rules in place. They need to be
    reexamined in terms of what measures farmers are taking.
        And with respect to the agricultural water rule, you know,
    we have implemented most of the major parts of the Food Safety
    Modernization Act (FSMA). The ones that we have either delayed
    or still have to implement are the ones that are really hard,
    and this one is really hard. Trying to get in place
    agricultural water standards that are not only rigorous and are
    going to provide the measure of safety that you expect and
    want, and that I want for the American people, but that can be
    actually implemented across a very diverse array of farmers
    where, if you look in the Pacific Northwest, they trade water
    on a daily basis, and we have to make sure our testing
    requirements accommodate much different practices with respect
    to where farmers get their water in different parts of this
    country.
        Ms. DeLauro. Well, I hope we will move on these issues and
    take a look at where we go with dealing with feed lots.

                       SAFETY OF IMPORTED PHARMACEUTICALS

        I've got about 27 seconds left, but the issue is safety of
    imported pharmaceutical drugs. Largest prescription drug
    recalls in recent history, class of blood pressure medications
    manufactured in China found to be contaminated with impurities
    that cause cancer; the bigger issue outsourcing pharmaceutical
    manufacturing to countries like China--they don't have the same
    level of consumer protection and safety laws of those in this
    country; long been concerned about FDA's oversight of foreign
    drug manufacturers. GAO released their findings on the issue
    and found that with despite the foreign offices that have been
    opened, FDA has not assessed these offices' contributions to
    drug safety. Nearly half of their authorized positions are
    unfilled. GAO made recommendations, I will not go through that,
    I am sure you know what it is.
        Foreign offices--why are they not being utilized as they
    can for the safety of pharmaceuticals coming into the United
    States? Are we on track to meet previous targets of inspections
    of foreign drug facilities?
        My time has run out, but I think that these are important
    issues I am suspected I can not----
        Dr. Gottlieb. May I take 15 seconds, Mr. Chairman? Foreign
    inspections have gone up, Congresswoman, in recent years. The
    number of warning letters that issued have gone up
    substantially as a result of us targeting our inspections
    better. They will continue to go up. The other thing I would
    add is that we will be undertaking the first significant
    modernization of our Good Manufacturing Practice (GMP)
    standards with respect to active pharmaceutical ingredients,
    particularly with respect to generic firms, in probably over 20
    years. I share your concerns. I have confidence in the
    manufacturing of generic drugs, but we can always be doing a
    better job.
        Ms. DeLauro. If you can just get back to me on the pursuit
    of this largest prescription drug recall in recent history and
    where we are going on that.
        Dr. Gottlieb. Absolutely. Absolutely.
        Ms. DeLauro. Thank you so much. Thank you, Mr. Chairman.

                             THIRD-PARTY LOGISTICS

        Mr. Bishop. Dr. Gottlieb, let me just ask you about third-
    party logistics. As you know, the Drug Supply Chain Security
    Act of 2013 was enacted to protect patient safety, and ensure
    security of the drug supply chain through a single, national,
    uniform product serializing and traceability system. Despite
    the passage of federal legislation in 2013 that would provide
    third-party logistics companies who have the preemption from
    state licensing requirements, FDA's failure to right
    implementing regulation has resulted in states trying to fill
    the void by introducing new licensing regulations.
        The Drug Supply Chain Security Act required the FDA to
    issue final regulations for the licensing of third-party
    logistics providers and wholesale distributors by November
    2015. However, as of today, not even the proposed license of
    standards have been issued. Where is the rulemaking package
    related to licensure? When can we expect to see the proposed
    licensure standards? And don't we need to have some
    uniformative (sic) licenses secured to keep the supply chain
    moving?
        Dr. Gottlieb. That rule is moving through the Agency and
    through the process. I can get back to you with an exact target
    date on when it will be displayed. I have been briefed on it
    recently. It was crafted in a way that is going to provide
    uniformity across the country and a federal preemption
    standard.

                                  E-CIGARETTES

        Mr. Bishop. I wanted to go back to a subject that you and I
    have frequently discussed, and that is e-cigarettes. On the
    comprehensive plan for tobacco and nicotine regulation that you
    announced July 2017, the deadline for noncombustible e-
    cigarette market applications has moved to 2022. That was 19
    months ago.
        I continue to be concerned about how smaller companies that
    make these products are going to be able to afford the cost of
    the required applications. I fear that they are going to have
    to go out of business unless we find a way to address this. If
    we do not, we will have a smaller market controlled by big
    companies with fewer choices for adult smokers, higher prices
    and probably less innovation. If adult smokers who wish to use
    e-cigarettes to reduce or end their use of combustibles cannot
    find the products that they like, they may not make that
    change, and the public health will suffer.
        What have you done to address the costs that may devastate
    the smaller companies in this industry, and what do you plan to
    do going forward?
        Dr. Gottlieb. Well, we are cognizant of this concern, Mr.
    Chairman, and in part, you know, our desire to extend the
    application deadlines on these products and give them until
    2022 is to give us the time to put in place the implementing
    regulations and guidance that would not only provide the rules
    of the road for how to effectively traverse the PMTA process,
    but also take into consideration the kinds of challenges that
    you bring up about how we can build into our regulation and
    guidance accommodations for small manufacturers. We have tried
    to do that in other areas of tobacco regulation. We will try to
    do that in this context as well.

                                   GE SALMON

        Mr. Bishop. Thank you. AquAdvantage Salmon was approved by
    FDA in November 2015 after an exhaustive and rigorous review.
    Despite FDA approval, the company is still not able to market
    its salmon in the United States. As you know, our bill over the
    past few years has carried language from the Senate that
    prohibits market and production of genetically engineered
    salmon until FDA issues final labeling guidelines ``for
    informing consumers of such content.'' Your website says the
    FDA has determined that no additional labeling of food from
    AquAdvantage Salmon is required.
        Am I correct in believing that as the law stands now, FDA
    will not do what the Senate language asks it to do, and
    therefore the product will continue to be barred from entering
    the United States?
        Dr. Gottlieb. This is a very active area of discussion
    inside the Agency right now. We hope to have something to say
    on this very shortly, hopefully within a matter of weeks, not
    months, but we are working through the question of whether or
    not the final rule that USDA put out in conjunction with the
    2016 law where they are now assuming jurisdiction over the
    labeling of these products, what that does to the language that
    is in our appropriations rider, and what, if any, continued
    jurisdiction or obligations FDA has in this regard.
        Mr. Bishop. Thank you very much. Let me call on my
    colleague, Mr. Fortenberry.

                           IMPORTED FOOD INSPECTIONS

        Mr. Fortenberry. Thank you, Mr. Chairman. I want to go back
    to the discussion that Ms. DeLauro had raised regarding
    imported food. You said 13 percent of our consumption, as I
    recall, you said is imported.
        Dr. Gottlieb. Fifteen.
        Mr. Fortenberry. Fifteen? How much of that comes from
    China? And you may recall some years back the head of China's
    Food and Drug Administration was executed because of tainted
    pet food. Now if you make an error we're not going to do that,
    but nonetheless I understand we have about 50, at most, 50
    inspectors worldwide for food and drugs, and then how much of
    our food comes from China? How many inspectors do we have?
        Dr. Gottlieb. We do not have inspectors that are just
    dedicated to foreign inspections versus domestic inspections.
    We do have a foreign inspectional cadre, but we do use
    inspectors across both domestic and foreign inspections. We
    conduct about 1,600 foreign inspections a year of facilities.
    About, as I said, 15 percent of the food that we eat is
    imported. I do not have an overall number of what percentage of
    food comes in from China offhand. I can get back to you on
    that. What you will see is that it is going to vary by food
    product. So for example, a high percentage of fish might be
    imported from China; other products, a high percentage might be
    imported from other regions of the world.
        We put out this week a framework for how we intend to try
    to improve our overall oversight of foreign inspection of food
    products. I recognize this is an area of concern for Congress;
    it's an area of concern for me, as the percentage of the food
    that we eat grows from imports. I have confidence in the system
    right now, but that is only because we continue to invest in
    this, and I believe that we are going to continue to do a good
    job by modernizing these approaches.
        Mr. Fortenberry. So how many inspectors do we have in
    China? Or elaborate on the framework of inspection in China.
    How does that work?
        Dr. Gottlieb. I would have to get back to you on that. We
    have a dedicated office in China that I think has allocated 26
    FTEs. I believe that there are six FTEs there right now and six
    more that are in the process of being on order, but that is not
    really the operative number of people because inspectors that
    we would use to do Chinese inspections would be domestic
    inspectors that would be based here and going over to do
    foreign inspections.
        What I could tell you is the number of inspections that we
    conduct by country. That might give you an indication as
    opposed to FTE levels allocated to country. But we can get back
    to you with all that data. I just do not have it offhand.
        Mr. Fortenberry. Yes, I am assuming FTEs means outcomes. If
    there is some other metric that determines safety levels, that
    would be helpful to know.
        Dr. Gottlieb. Number of inspections by region relative----
        Mr. Fortenberry. Obviously it is a variable but, so, yes,
    help us understand is it robust enough? That is my concern.
        Dr. Gottlieb. I understand. I would just, if I may, I would
    just say that the metric that I would--I would not use the
    metric of inspections by region or inspections by percentage of
    imports coming from an area because so much of our foreign
    oversight is contingent upon shared oversight with foreign
    regulators, third-party audits, requirements we impose on
    importers, and so it is a multi-layered system. So for example,
    we rely on regulators in New Zealand, Canada and Australia. We
    have joint agreements with them, and we are negotiating one
    with the UK, so in those countries we may conduct fewer
    inspections because we trust the Canadian regulators, we trust
    their inspections. So it is going to depend by the region and
    what other tools we have----
        Mr. Fortenberry. Even China's inspections?
        Dr. Gottlieb. China currently is not on the list of
    regulators whose inspections we recognize.
        Mr. Fortenberry. No?
        Dr. Gottlieb. No.

                            NON-OPIOID ALTERNATIVES

        Mr. Fortenberry. All right, thank you. Let me go two other
    quick questions. It was touched on earlier I believe by Mr.
    Moolenaar. What is your plan to develop abuse deterrent
    formulations to replace opioids, the current opioid?
        Dr. Gottlieb. We continue to feel that this is an
    opportunity, both non-opioid alternatives for the treatment of
    pain, as well as abuse deterrent formulations of opioids, is an
    opportunity as one of the tools to address this crisis. We
    promulgated guidance just this last year on some of the
    standards for developing generic versions of abuse deterrent
    formulations. We are working through a process to readjudicate
    the nomenclature that we use to describe the abuse deterrent
    formulations, so we are trying to get in place a robust
    regulatory framework to allow these products to go forward.
        You know, one of the conditions that we would consider if
    we were to sweep the market of a non-abuse deterrent
    formulation to allow just abuse deterrent formulations within a
    category of drugs, is could you have the availability of
    generic versions of that drug, and that is why the guidance on
    allowing generic versions of the ADF drugs to come forward was
    so important. It opens the door to our ability to convert the
    market to ADFs.
        Mr. Fortenberry. So that would replace the immediate-
    release opioid?
        Dr. Gottlieb. Well, you know, the abuse deterrent
    formulations that have been put in development, to my knowledge
    right now are the extended release, long-acting formulations.
    But there are early development with some abuse deterrent
    formulations of the immediate-release drugs. And you are right
    in pointing that out because 90 percent--more than 90 percent
    of utilizing are the IR drugs. That is where the exposure is
    happening.
        Mr. Bishop. Mr. Cuellar.
        Mr. Cuellar. Thank you, Mr. Chairman. Commissioner, on the
    question that I asked you about, the oxycontin and the work
    that you all want to do about possible relabeling, and then on
    the compound pharmacist's efficiency work that you all want to
    do, what is the time table on each of them just so we can get
    an idea? What are you talking about? Months? Years? Decades?
        Dr. Gottlieb. So on the guidance that I believe will help
    to find a more efficient pathway for 503A compound is to
    convert to being 503B compounders, days to weeks. With respect
    to the studies, the studies to look at the implications of the
    long-term use of opioids and whether or not this diminished
    effectiveness with chronic administrations of opioids, that
    will be a multi-year process. I think that those studies, once
    we put the mandate on the companies, which we are going to do
    in the next several months, I think those studies can
    potentially be conducted within a year, and you are looking at
    potentially another year to read out the results. And so it is
    a multi-year process.
        As much as it seems intuitive that there is declining
    efficacy with prolonged administration of opioids, and there is
    some evidence in the literature to suggest that there is an
    evidence that meets the statutory standard that we are required
    to meet in order to effect regulatory change. We need to
    conduct rigorous perspective randomized trials. These are going
    to be randomized withdrawal studies. And so those do take time
    to conduct, but they can form the basis of the enduring
    regulatory change, which is what I think we need in this space.

                               APPROVAL OF DSUVIA

        Mr. Cuellar. OK. I sit on the Defense Approps so I have a
    question dealing with that and your agency. Last November the
    FDA announced the approval of another opioid, Dsuvia, a drug
    that is 10 times more powerful than fentanyl. Commissioner, you
    admitted to the potential dangers of this drug but have said
    that Dsuvia could be beneficial for the military in use in the
    battlefield situations because the drug can be administered
    under the tongue. You have stated that it ``fills a specific
    and important but limited unmet medical need in treating our
    nation's soldiers on the battlefield.''
        My question, Commissioner, is has the military given you a
    requirement for this type of drug? Have you talked to the
    military about the need for this potent of a drug on the
    battlefield? And you said that the main benefit will be to the
    military, but how do you intend to limit the drug's use to
    solely military battlefield environments? And again, I do not
    want to see, with all due respect, a 2001 situation again.
        Dr. Gottlieb. I understand. And so let me just give a
    little bit of a table set if I may, and I will be quick here.
    It is a very potent formulation of fentanyl but it is a very
    small piece of the drug. So it is actually the equivalent of 15
    milligrams of morphine, which is not a trivial dose of morphine
    but it is not an extremely large dose of morphine. If I have a
    patient coming in with a kidney stone, I would routinely use 15
    milligrams for morphine.
        The reason why you need to use a very potent formulation of
    the drug in order to deliver 15 milligrams of morphine, which
    is really a standard dose of analgesia for a bedside surgical
    procedure, is because you want it to be absorbed quickly. If
    you were using something that was not potent, it might be this
    big and it is not going to be absorbed under the tongue. So you
    had to use a very potent formulation of fentanyl in order to
    allow sublingual delivery of that drug.
        With respect to the Department of Defense, in particular,
    we made a commitment to Congress as part of the MDAA that was
    passed last year that we would prioritize drugs and medical
    products that were important to the frontline soldiers and to
    the DOD and give them priority status and soft touch from the
    FDA. Dsuvia was on the list of products that the DOD
    prioritized. That list was about 10 products and so this was
    important to the DOD, at least as they identified it to us, and
    so we did work collaboratively around this product.
        Mr. Cuellar. So they did give you a requirement for this
    type of drug?
        Dr. Gottlieb. Not a requirement, but they did flag this as
    something that was a priority of theirs on the priority list
    that they gave us of, if I remember correctly, around 10
    products.
        Mr. Cuellar. So how do we make sure that this stays on the
    battlefield? Because I mean you have soldiers, they became
    veterans, they might need some help afterwards and we--with all
    due respect, I do not want to see a 2001 situation.
        Dr. Gottlieb. I understand, and I will tell you that this
    is--Dsuvia is going to be, as it is used in hospital settings--
    and it does play a role there, too. If you are a doctor and you
    need to do a bedside surgical procedure, and I have been there
    where I had to put in chest tubes and could not get a line in
    the patient and could not give them any analgesic, and that is
    not a comfortable position to be in, this can be a useful
    product for that niche kind of circumstance. This is a product
    that will be dispensed in hospitals under tight controls. It
    will probably be secured in Pyxis systems. That does not mean
    that there is not opportunity for some diversion in hospitals.
    The kind of diversion you are talking about would typically be
    among healthcare providers, unfortunately. We do see some abuse
    of drugs by anesthesiologists and other physicians and
    providers in the hospital setting, that goes on. But there are
    much tighter controls on that kind of activity and it does not
    go on as much as it used to, and I am not saying it is not
    going to happen.
        When it comes to fentanyl, this is a challenge, but this is
    a challenge where perhaps dozens or maybe hundreds of people
    can potentially be exposed, and I am not trying to trivialize
    that. The biggest challenge we face with fentanyl, quite
    frankly, is the illicit fentanyl that is pouring across the
    international mail facilities and God knows where else, but we
    are----
        Mr. Cuellar. Do not say the southern border because we
    know----
        Dr. Gottlieb. Yes, no, I am talking about the international
    mail facilities where I have jurisdiction. That is where I am
    also focused, Congressman.
        Mr. Cuellar. Thank you so much, Commissioner, thank you.
        Mr. Bishop. Thank you. Dr. Harris.

                                 DIETARY FIBERS

        Dr. Harris. Thank you very much. Just one follow-up on the
    fiber question I had. How many dietary fiber petitions do you
    currently have in review? And what is the timeline for that
    response, again? And will you respond by rulemaking or are you
    going to be communicating directly with the petition?
        Dr. Gottlieb. I believe we have three to five petitions
    currently in house, and we will be communicating directly with
    the petitioners. You know, we are doing what we can to try to
    get as many people over the line as possible, and that has been
    our goal from the outset.

                             RECALL STANDARDIZATION

        Dr. Harris. OK, good, again, because, you know, I know that
    our food manufacturers really want to comply with that January
    1st deadline. With regards to recall standardization, the USDA
    has standardized its food recall communications, particularly
    with respect to disclosure of retailers, and that streamline
    approach has been pretty effective at disseminating consistent,
    accurate retail information to consumers. It would probably
    be--I think it might be helpful for the FDA to take the same
    approach.
        Is there an initiative to do that? And are you also
    considering an online submissions process like Canada has that
    would negate the differences that you see now between what
    different FDA regional offices are requiring?
        Dr. Gottlieb. When I look at food safety, Congressman, I
    look at it from the perspective of the consumer, what the
    consumer wants. They want timely recalls and adequate
    information, and able to know whether or not they have a
    violative product. They want effective track trace so they can
    know where their products are coming from, and they want the
    assurances and safety that we provide through things like the
    inspections.
        We have taken steps in recent years to try to make our
    recall process more robust, including providing information
    about where a product may have come from, if you went to a
    local store and a recalled product was purchased in that local
    store, highlighting the stores where products may have been
    sold. We are going to continue to try to modernize that product
    because I think this is one of the core pillars of what
    consumers want when they think about food safety.
        Dr. Harris. Sure, and, again, do you think it would make
    sense to unify the process between the FDA regional offices so
    it is a uniform requirement?
        Dr. Gottlieb. Yes, I am not aware that it is not, and I can
    get back to you on that in terms of specifically what concerns
    you may have about where there may be discrepancies about what
    we do from region to region, because we do try to have, you
    know, nationalized standards in place to these kinds of core
    elements of our food safety approach.

                            FISH CONSUMPTION ADVICE

        Dr. Harris. Sure, no, thank you. I appreciate you getting
    back to me on that. Finally, one issue that has come up is
    the--and I know this is an issue personally in the family
    because my oldest daughter is expecting my eighth grandchild,
    and I just talked with her yesterday--two days ago, actually,
    about fish consumption and how the potential benefits of fish
    consumption, both on neurological development, and now the
    latest on basically resulting in--increasing fish consumption
    especially after 24 weeks resulting in an increased body
    weight, but lean body weight, as a child.
        Has the FDA calculated an updated benefits of fish
    consumption on fetal development? And why aren't--why isn't the
    FDA actively encouraging fish consumption for pregnant women
    given the scientific evidence that it is actually beneficial?
        Dr. Gottlieb. First of all, congratulations. We do actively
    encourage fish consumption, and we think fish is under consumed
    by pregnant moms, expectant moms, and we have taken steps to
    try to encourage more fish consumption. And the changes we made
    to how we define what fish is safe to eat during pregnancy was
    intended and designed to try to promote more fish consumption.
    This continues to be a goal of the Agency.
        Dr. Harris. And, for instance, on your website available to
    the public, I mean, does it mention the calculated benefits of
    fish consumption, or does it just say eating some fish is good?
        Dr. Gottlieb. I believe it does. We can get you the
    specific language that we use on the website, but I believe it
    does, and we have had campaigns in the past. I see your chief
    of staff shaking his head no, but we can take a look at that
    and there may be more that we can be doing there because this
    is a public health goal of ours, we share your concern.
        Dr. Harris. I thank you very much, and again, thank you for
    appearing before the subcommittee.
        Mr. Bishop. Thank you. We are winding down and I think last
    question, I will recognize Mrs. DeLauro.

                                IMPORTED SEAFOOD

        Ms. DeLauro. Thank you very much, Mr. Chairman. Just to
    respond to, if I can, my colleague Mr. Fortenberry. First of
    all, 94 percent of our seafood is imported into the U.S. In
    terms of top imports from China: tilapia 78 percent; cod 51
    percent. I might add to that that is farmed. They farm their
    fish. I do not have to describe what that process is about. I
    might also add that most of our shrimp comes from Malaysia or
    Thailand, and in fact, that is farmed as well.
        So I would just say to my colleague from Maryland, I would
    be wary of what kind of fish my pregnant daughter was eating
    and where it was coming from, know where it is coming from.
    Apple juice is 50 percent from China; mushrooms 34 percent;
    garlic is 31 percent. This issue, at a longer discussion, gets
    into equivalence and what are the standards under which this
    regulatory framework, whether, yes, Australia, Canada, et
    cetera, but we do business with a whole lot of other countries
    who do not have the kind of regulatory framework we do, and
    that, I think, presents a problem for food safety.

                            IMPORTED PHARMACEUTICALS

        Another point, again, in terms of the safety of the
    imported pharmaceutical drugs, just let me highlight that it is
    about the outsourcing of pharmaceutical manufacturing to
    countries, which is something I think we have to talk about,
    and that's like China. They don't have the same level of
    consumer protection and safety laws as those of this country.
    It is estimated that as much of 80 percent of active
    ingredients in U.S.-branded pharmaceuticals and over-the-
    counter drugs originate from either China or India. I think
    that is an area that we have to explore and to find out, what
    again--we've got food, we've got pharmaceuticals coming from
    places that have potentially--I'll just say potentially--I
    believe it puts our people at risk.

                                  E-CIGARETTES

        I, too--because we're all going down the vaping and e-
    cigarette road, Dr. Gottlieb--I happen to believe that that is
    the growing epidemic of youth vaping has reversed decades of
    progress that we made in reducing youth nicotine addiction. In
    2019, the vaping industry is still exempt from any meaningful
    FDA oversight and regulation. Your tweet December 2018 on
    riding CEOs of e-cigarette manufacturers asking them to meet to
    discuss commitments they made last month and why some are
    changing course. This is an urgent matter. January 4, 2019, New
    York Times, Juul and Altria made very specific assertions in
    their letters and statements to the FDA about the drivers of
    the youth epidemic. Their recent actions and statements appear
    to be inconsistent with those commitments. Altria--industry
    actions coupled with Altria recently purchasing 35 percent
    stake in Juul demonstrate to you that the industry cannot be
    relied upon to take voluntary action to solve the epidemic.
        Why has the agency refused to implement mandatory rules
    which the industry must follow? Let me ask that question.
        We also have deeply false and misleading and frankly
    illegal marketing advertising of e-cigarettes and vapor
    products. Family smoking and prevention of tobacco products
    prohibits health claims about reduced risked tobacco products
    where such claims are not scientifically proven or would cause
    net public harm. FDA continues to allow e-cigarettes to make
    implicit, explicit, unauthorized, modified risk claims. FDA, as
    I understand it, you tell us, FDA has not granted such
    authorization for such modified risk claims, nor has the FDA
    approved any e-cigarette as a cessation device.
        You are on their website, Dr. Gottlieb, of Juul's website.
    It's called harm reduction. You are quoted. This is about--they
    talk about potential harm reduction, less risky products, and--
    read it if you haven't read it. So Altria is quoting you on
    that promotional website. What about these claims that they are
    making? Why are we refusing to implement mandatory rules on
    this industry?
        Dr. Gottlieb. Well, Congresswoman, I share all your
    concerns. This is the biggest challenge I face right now that I
    don't feel we have all the policies in place to deal with it.
    The biggest public health crisis we face is clearly the opioid
    crisis. I feel like we have policies in place that allow us to
    try to address it within the scope of what we are capable of
    doing. With respect to e-cigarettes, we still don't have those
    policies in place. We will. This is one of my highest
    priorities right now. I am working through my own process
    within my own administration to get these rules and guidances
    out. I am hoping they will be out very soon.
        Ms. DeLauro. Watch their advertising because in my state of
    Connecticut the radio ads are on about harm reduction and there
    are billboards now going up, full page ads in the Washington
    Post, Wall Street Journal, New York Times from July. The
    advertising has to got be watched and very, very closely. Thank
    you very much, and thank you, Mr. Chairman, for the time. I
    appreciate it.

                         Closing Statement--Mr. Bishop

        Mr. Bishop. All right, well, I think this meeting has been
    a very, very exhaustive hearing. I appreciate your patience,
    Dr. Gottlieb. You have been very helpful and forthcoming. And
    if any members would like to submit anything to the record or
    would like to submit questions to Dr. Gottlieb that he can get
    back with us, please feel free to do so. With that we will
    adjourn this hearing of the Agriculture, Food and Drug
    Administration, Rural Development Committee, Appropriations.
        [Questions and answers for the record follow:]

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                                               Tuesday, March 12, 2019.

                        OFFICE OF THE INSPECTOR GENERAL

                                   WITNESSES

    PHYLLIS K. FONG, INSPECTOR GENERAL, USDA
    GIL H. HARDEN, ASSISTANT INSPECTOR GENERAL FOR AUDIT, USDA OFFICE OF
        INSPECTOR GENERAL
    ANN COFFEY, ASSISTANT INSPECTOR GENERAL FOR INVESTIGATIONS, USDA OFFICE
        OF INSPECTOR GENERAL

                        Opening Statement by Mr. Bishop

        Mr. Bishop. The subcommittee will come to order. Let me say
    good afternoon and let me apologize for my delay. There was a
    moment of silence in remembrance of the 23 people who lost
    their lives in the tornado in Alabama on March 3. That tornado,
    of course, killed 23 people in Lee County, Alabama, which is
    adjacent to my district, but the tornado also came across from
    Alabama, the west side in Alabama, the Chattahoochee River over
    into Harris County and into Talbot County, which is in my
    congressional district.
        And I was standing with my colleagues from Alabama as we
    remembered and had our thoughts and prayers going out to those
    people impacted. So I apologize for keeping you waiting, but I
    think it was for a worthy cause, and I appreciate your
    patience.
        Let me just welcome everyone to today's hearing, especially
    our witnesses. Ms. Fong, Mr. Harden, Ms. Coffey, thank you for
    appearing before us again. I have an abiding interest in your
    work and in what you do. We have to do everything that we can
    possibly do to eliminate fraud, waste, and abuse and
    mismanagement. And we have to do all we can to assure that USDA
    programs, over which our subcommittee has oversight, are
    operated with the best possible efficiencies in order to create
    the best possible outcome for those who use the agency.
        I was particularly pleased to see your annual plan for
    fiscal year 2019 focuses on many of the concerns that the
    subcommittee has, from enforcement of the Animal Welfare Act to
    food safety threats to oversight of disaster assistance
    programs. We rely on you to conduct audits and investigations
    to ensure that the programs we fund are run efficiently and
    that issues are addressed in a timely manner.
        While I am glad that you have an active oversight profile,
    I do have some concerns about the number of recommendations
    that remain open and the agency's efforts to close them out.
    Based on your last semiannual report, there are recommendations
    pending final agency actions going back to 2005. We would like
    to hear your thoughts on how to incentivize the agency to act.
        So today I would like to hear more about your plans to
    conduct adequate oversight of USDA programs as well as the
    challenges that you face in ensuring agreed-upon
    recommendations are implemented. In addition, I want to ensure
    that civil rights issues are getting thoughtful and appropriate
    attention throughout USDA. I look forward to discussing that
    with you as well as other important issues, and I thank you
    again to you and to all of the OIG staff for all that you do.
        Now let me ask our distinguished ranking member, Mr.
    Fortenberry, if he has any opening remarks, and I would like to
    recognize him at this time.

                      Opening Statement by Mr. Fortenberry

        Mr. Fortenberry. Yes, sir. Thank you, Mr. Bishop, Chairman
    Bishop.
        And we appreciate all of your willingness to appear before
    us today. Ms. Fong, nice to see you again. I think the last
    time we had direct interaction was on the Agriculture
    Subcommittee on Nutrition, but I really do appreciate your
    intensive work and the entire team here, am very grateful.
        You have a very experienced team, and obviously we are
    looking forward to your testimony today to understand the
    progress that you have made to correct any problems, policies,
    or practices that may be of concern. So that is the primary
    intent that I have to learn more about what you are doing
    today.
        On the one hand, you are our police force out there, making
    sure that billions are spent legally and effectively. On the
    other hand, you must audit the programs managed by 29 agencies
    to ensure that they are operating as designed, everything from
    commodity to conservation to school meal programs to rural
    development loans. You have a big portfolio.
        I would like to delve a little bit deeper into a couple
    major areas of your work, particularly the investigative work
    involving fraud and waste and any abuse of taxpayer funds as
    well as the audit work which helps determine if USDA programs
    are operating as designed and if you think we need to be in
    more robust partnership with you in that regard.
        While certainly the vast, vast majority of farmers and
    ranchers and participants in Nutrition Assistance Programs are
    honest people, someone out there will always try to game the
    system, which makes your work all the more important. And,
    frankly, sometimes I am amazed at the amount of scheming that
    certain people will do to commit fraud, as in your testimony
    you point out one Detroit store defrauded the WIC program alone
    by $2 million.
        Someone else stole $174.7 million from the Rural Business-
    Cooperative Service, as I understand it, Business Industry Loan
    Program. So I will be very interested to hear what tools you
    have in place to identify and act upon these types of fraud and
    abuse situations sooner. It is not just about improper use of
    taxpayer dollars. When this type of activity happens, it
    actually takes money away from those in need who we are
    actually trying to help. That is what is so deeply abusive and
    scandalous here.
        One program in particular, I want to talk about food safety
    and bring this to your attention, and why a producer was able
    to break the law and put millions of pounds of meat and poultry
    into the marketplace without safety inspection and not be
    caught for years. I think this would be a good thing to delve
    deeper into, and maybe we can revisit that after your
    testimony.
        So it is my understanding that for the year the budget
    request is $98.2 million, the same level of funding you
    received last year. Of course, we will decide if your agency
    deserves or--and you can point out if you desire more resources
    to oversee such a massive portfolio, although there are $200
    billion in assets.
        So, again, Ms. Fong, your real dedication to public service
    speaks for itself, and we are grateful to have you and your
    impressive team here.
        Thank you so much, Mr. Chairman. I yield back.
        Mr. Bishop. Thank you, Mr. Fortenberry.
        And before Ms. Fong begins, a reminder to members that, as
    is customary with our subcommittee, members will be recognized
    by seniority for those who were here when I gaveled the hearing
    to order and then in the order of arrival after that. I will
    alternate majority/minority members and we will adhere to the
    5-minute rule.
        Ms. Fong, without objection, your entire written testimony
    will be included for the record. And I recognize you now for
    your statement, and then we will proceed with questions. You
    may summarize or you may give the entire statement. It is
    completely up to you.

                         OPENING STATEMENT BY MS. FONG

        Ms. Fong. Thank you very much, Mr. Chairman and Ranking
    Member Fortenberry and members of the committee. It is a real
    pleasure to be here again this year to talk with you about our
    work at USDA, and we appreciate your invitation.
        I want to start out by thanking this subcommittee for the
    support that you have given us over the years. In addition to
    our fiscal year 2019 funding level, which is very helpful to
    us, you also included the OIG in the disaster recovery
    supplemental last year, and that has been very, very helpful to
    us in terms of planning oversight of the Department's disaster
    work. So we appreciate that ongoing support.
        And as you all know--you have referenced it--our job within
    USDA OIG is to help the Department deliver its programs more
    effectively and with integrity. And we do that through a number
    of different products, and I think today we may be able to
    highlight some of the new approaches that we are taking in
    addition to audit and investigation. But in the end, as you
    mention, we make recommendations, and it is up to the
    Department officials to implement those recommendations that
    they see fit to implement. And I think that is where the rubber
    really hits the road.
        As you have my written statement, you see the range of
    things that we are working on. So I just want to mention a few
    highlights that struck me as we were preparing for this
    hearing. I want to emphasize that the safety of USDA employees
    is a very significant and top priority for our office. We
    recently issued an audit report on sexual misconduct and
    harassment concerns in Region 5 of the Forest Service and what
    the Forest Service is doing to address those issues. But I want
    to highlight the fact that these issues and our work extend
    beyond the Forest Service.
        Within USDA as a whole, we want to send the message that we
    take very seriously any allegation or complaint of sexual
    misconduct. Our investigators can and do respond immediately in
    many instances to allegations of sexual assault and other
    criminal misconduct, and we have had some very good results,
    very quick results working with Federal prosecutors in some of
    these cases.
        Turning to another part of USDA, as has been mentioned, we
    do focus significant resources on oversight of SNAP and the
    Nutrition Programs. And we are in the middle of issuing a
    series of reports on the summer food summer feeding program,
    which provides meals to students during the summer when school
    is not in session. We have a series of audit reports in this
    area as well as very significant investigative results due to
    bad actors in this program.
        Finally, I want to note we have summarized a number of
    reports in the farm Program, Conservation Program, and Rural
    Development, as well as Crop Insurance, and we also focus quite
    bit of attention on management issues affecting the Department
    as a whole, namely financial management, financial statements,
    cybersecurity and improper payments. Progress in these areas
    requires continued attention by all of us.
        So, in closing, I want to thank the subcommittee for your
    support, your ongoing interest in our work, and we look forward
    to responding to your questions.
        [The information follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        I89open audit recommendationsMr. Bishop. Thank you very
    much, Ms. Fong. As I mentioned in my opening statement, I am
    grateful for all the work that your office does, so I don't
    want any of it to go to waste. Looking at your last semiannual
    report, as of September 30th, 2018, there were 359 audit
    recommendations awaiting final action by USDA agencies. Two-
    thirds of these pending items were for 2017 and prior years,
    with the oldest from 2005.
        Why do so many take years to be implemented, what are your
    plans to call attention to those issues, how can you help the
    agencies or maybe shame them into action, and what do you need
    from us to help close these recommendations?
        Ms. Fong. OK. Let me make a few comments, and then Gil may
    have some comments as well.
        We make a priority to follow up with the Department on our
    recommendations. This is a joint responsibility between the
    Office of the Chief Financial Officer and the program agencies
    and then our office as well. And we have over the years tried
    to think of initiatives to assist the Department in this area.
    A year or two ago we issued a report taking a look at the CFO's
    office and how it was managing that whole system of closing out
    final audit recommendations. We made a number of
    recommendations to that office, which I think they agreed with
    and are in the process of implementing.
        In addition, we asked the question, what can we ourselves
    do to shine more light on this? And so we have started a new
    line of products, which we call final agency verification
    reports, where we pick several audits from the past each year
    and we go in and we take a look at the agency actions to see if
    the agencies really accomplished what they said they were going
    to do or whether there is still work to be done. I think the
    first two that we issued looked good. The agencies were doing a
    good job. Obviously, there is still more progress that can be
    made.
        Mr. Harden. And I would add there is a significant number
    of outstanding recommendations without final action. That is a
    discussion we have had with the Department for the last several
    years to bring focus to that part of the process. We have a
    continuing dialogue with them to see how that is progressing,
    but we are also using these final action verification reviews
    as ways to do an additional check to see that they implemented
    what they agreed to implement.
        We also, for significant audits, we do followup audits. We
    go in and see how effectively they implemented the
    recommendations. We have several in that line over the last
    couple years related to food safety. We have upcoming work
    related to animal care, where we will look at how they
    addressed prior recommendations as well.

                        INFORMATION TECHNOLOGY SECURITY

        Mr. Bishop. OK. In April of 2018, the Council of the
    Inspectors General on Integrity and Efficiency issued its
    first-ever report on top management and performance challenges.
    At the top of the list was information technology security and
    management.
        I am glad to see that you will devote some of your 2019
    resources to that issue. Last fall, your office issued an audit
    of USDA's efforts to improve security of its information
    technology systems and, in short, you gave USDA an overall
    score of, quote, ``ineffective,'' end quote, for IT Security
    Program. There was also another audit where you found USDA did
    not fully implement federally mandated security requirements.
        What is the primary cause of USDA's ineffective security
    posture? Is it complacence, lack of management priority, lack
    of resources, or is it just an impossible problem to fix?
        Our subcommittee invests hundreds of millions of dollars a
    year on IT for USDA agencies to deliver their programs. And
    based on your audits, would you put money into systems that
    have ineffective security protection?
        Ms. Fong. I think IT systems are a fact of life for
    managing and delivering complex programs, and our job here is
    to make sure that those systems are as good as they can be and
    they meet all standards. We do look at these systems every
    year, as you mentioned, and USDA is making what I would
    characterize as slow progress forward.
        There is a commitment to attacking these issues at the
    Department level. The challenge that we have seen over the last
    5 to 10 years is that there is a commitment on the part of the
    CIO's office, but then it needs to trickle down to all the
    agencies, all the program managers, and that is a difficult
    thing in a complex, large organization.
        Mr. Harden. I would add that they have made changes
    recently to centralize at the agency level, at the mission area
    level CIO activity, so there is more of a connection between
    the Departmental CIO and agency CIOs to try and bring that
    together. This would be the first year that that has been in
    effect.
        And so as we go through doing FISMA, the IT security review
    that we do every year, as well as other IT reviews that we do,
    that is a question that we are asking to see how well that is
    helping them do that.
        Mr. Bishop. Ms. Coffey, anything to add?
        Ms. Coffey. I am going to say that the IT expertise lies
    with my colleague as opposed to the investigation side of the
    house. I mean, periodically we do see some issues that arise
    with IT, but not from really the security perspective from
    investigations.
        Mr. Bishop. Thank you very much. I think my time has
    expired.
        Mr. Fortenberry.

                                  FOOD SAFETY

        Mr. Fortenberry. Let's return to the case that I brought up
    earlier, where you had a massive recall of meat and poultry
    that was on the market for a number of years. So what broke
    here? What was not enforced? Why was it not enforced? Why did
    it take you a long time to catch it?
        Ms. Fong. Well, let me offer a couple of----
        Mr. Fortenberry. And let me step back further and I will
    ask you one more question: Is our food safe? Now, in all
    fairness, I asked Dr. Gottlieb last week at the Food and Drug
    Administration the same thing. There are overlapping
    responsibilities here. But it ultimately is that question.
        Ms. Fong. Our mission in OIG is to deal with the problem
    situations. I would hesitate to say that the problems are
    pervasive, but when they occur they do occur and they have a
    significant impact. Millions of pounds of recalls, as you
    mentioned.
        Mr. Fortenberry. Do you think this is--I would assume this
    is an isolated incident, but to the degree that we do not want
    this isolated incident generalizable to a trend or principle, I
    think you need to speak to how isolated is it.
        Ms. Fong. And I think that is a very good point. The
    questions that we always like to ask are, was this a systemic
    issue, was there a breakdown in controls, or was it just a real
    bad actor who got very creative?
        This particular fact situation I think was perhaps a little
    unusual, and Ann can comment. My understanding of it is we had
    a processor in California who had a grant of inspection for a
    facility and had a second facility and was processing meat at
    both of those facilities, did not have a grant of inspection at
    the second one and was labeling the products from the second
    facility as coming out of the first. And so on its face----
        Mr. Fortenberry. He shouldn't do that.
        Ms. Fong. No, he shouldn't do that, and I am sure FSIS is
    not happy.
        Mr. Fortenberry. So walk through the mechanism by which
    this was caught, and then why did it take several years?
        Ms. Coffey. So, in terms of how we get the information,
    normally we have to obtain individuals who step forward.
    Obviously, FSIS was not aware that there was a second facility
    that was operating illegally until it obtained information. And
    I can't really get into the specifics in a public setting as to
    how we came across that information.
        But we identified the fact that there was a second facility
    that was alleged to be producing this--misbranding the meat
    that had not gone through Federal inspection.
        Mr. Fortenberry. I think the question though is, again, did
    we have enough internal robust controls to find this out or
    did--look, I understand it happens a lot of times in law
    enforcement. There is a tip or you stumble upon something
    inadvertently. I get that.
        But, again, I think the heart of the question is, are the
    controls, the system robust enough to have caught something
    like this so that we know that it is not systemic, or is this
    such a peculiar, isolated case that everything that we have in
    place still wouldn't have caught it?
        Ms. Coffey. I would say that in this particular instance,
    it is falling under the realm of more peculiar instance where
    you don't normally--when we have had recalls that you may have
    seen that have been public previously, they are usually because
    there has been some sort of outbreak or illness that has come
    about and it is not necessarily due to a fraud that has
    occurred. There may be some internal controls within a
    particular plant that may have broken down that led to that.
        In this case, FSIS, if they are not aware that there was a
    second facility that was operating----
        Mr. Fortenberry. It just seems the level of volume is high
    enough to have drawn suspicion, or it is just peculiar that no
    one would have known that there is some second facility, given
    the volume here.
        Ms. Coffey. Yes. I mean, it depends--that would be really
    something that FSIS, in terms of investigations, we look at
    sort of how the fraud was perpetrated and then proving that it
    actually occurred and then pursuing prosecution of those
    individuals.
        Mr. Fortenberry. So this came to you from external sources?
        Ms. Coffey. That is correct.
        Ms. Fong. But you do raise a good point. We will go back
    and look at our investigative file and see if there is any
    indication there that a control may have been bypassed that we
    can pass on to FSIS, in terms of addressing the issue for the
    future. We will take a look at that specifically.
        Mr. Fortenberry. Yes. I am just trying to imagine what a
    second meat processing/packing facility looked like that
    escaped anybody's notice. It just is, again, a peculiar kind of
    thing. And it begs the question is the system that we have in
    place adequate to catch this, or do we defer to that very
    random peculiar incident that this one fell through the cracks.
        Ms. Fong. We will take a look at that and see if there is
    anything there that we can offer to FSIS in terms of analyzing
    trend data, perhaps, that might be useful.
        Mr. Fortenberry. Thank you.
        Mr. Bishop. Ms. Pingree.

                            ERS AND NIFA RELOCATION

        Ms. Pingree. Thank you very much, Mr. Chair.
        Thank you so much for the work that you do and for being
    here with our committee today.
        I have a lot of concerns about the proposed relocation and
    reorganization of NIFA and ERS, and I think every Democrat on
    this subcommittee and I have expressed our opposition to the
    plan. And we have heard from farmers, university, former
    leaders of these research agencies who are also opposed.
        I guess everybody kind of wants to know why this proposal
    seemed to come out of nowhere, and it just seems like the
    agency is still pulling things out of thin air to justify it.
    Stakeholders have suggested to me that the ERS reorganization
    was proposed because research coming out of the agency didn't
    align with the administration's views on topics such as SNAP or
    climate change. That would be of great concern to me, and I
    think we should take those allegations seriously.
        So I am wondering if the OIG's report on the reorganization
    and relocation of USDA research agencies will look into these
    allegations.
        Ms. Fong. As you mentioned, we have an ongoing review of
    the relocation/reorganization, and we had set out our scope and
    objectives very succinctly at the beginning of our review.
    Until very recently, we had not heard any information that
    there may be a concern about research not aligning with the
    administration's views. That is a very new piece of information
    that we have just heard. It is not part of our audit scope,
    because it is new.
        If there are allegations that are of concern on that
    matter, we would be very interested in discussing that with
    anybody who has any information on that. In the meantime, our
    audit inspection is going forward, and I think our fieldwork is
    just about done on that. Gil?
        Mr. Harden. Yes. We are closing in on the end of fieldwork
    for that and we will start discussing what issues we have and
    whether we have recommendations to make with the Department in
    the very near future and proceed after that reporting.

                               DIETARY GUIDELINES

        Ms. Pingree. OK. Well, we will follow up with you on that
    so that, you know, any allegations that are being raised will
    be clear to you and you can proceed.
        So another question: Last month, my colleague Congresswoman
    DeLauro, who is not here with us right now, and I sent a letter
    to the Office of Inspector General for the Department of Health
    and Human Services. And there, we were requesting an
    investigation into reports that the food and beverage industry
    had inappropriately influenced public health policy through
    relationships with high-level CDC officials. There were
    specific concerns about agencies setting priorities based on
    industry-funded research.
        As I know you know, DHHS and USDA work together to jointly
    publish the dietary guidelines for Americans every 5 years. The
    Ninth Edition of Dietary Guidelines will be published in 2020,
    and the first meeting of the Advisory Committee was just
    announced yesterday. The Dietary Guidelines have important
    implications for Federal nutrition programs and inform other
    health and food policies.
        So has your office previously looked into whether and how
    the food and beverage industry has influenced the Dietary
    Guidelines, given that there were just reports of potential
    inappropriate influence at DHHS? How do we make sure that the
    Dietary Guidelines are based on objective, scientific
    information and not industry-funded research?
        Ms. Fong. To answer your first question, we have not done
    work on Dietary Guidelines in the past. Gil is confirming that.
        In terms of moving forward, we would have to give that some
    thought as to how we could design work to evaluate that. We
    would welcome a chance to dialogue on that issue. Since it is a
    new issue for us, we have not spent time thinking about that.
        Ms. Pingree. Great. Well, I am very happy to raise two new
    issues for you.
        Ms. Fong. Thank you.
        Ms. Pingree. And I will follow up on both so that we can
    pursue the conversation a little more than just today. But
    thank you again for your work.
        And I will yield back. Thank you, Mr. Chair.
        Mr. Bishop. Mr. Moolenaar.

                           OPEN AUDIT RECOMMENDATIONS

        Mr. Moolenaar. Thank you, Mr. Chairman.
        And thank you for being here and for the work you are doing
    to ensure that the USDA is open and transparent and producing
    recommendations to eliminate and limit fraud within the agency.
        I wanted to ask about--according to your written testimony,
    the OIG in 2018 issued 42 final audit reports and made 203
    recommendations to strengthen and improve USDA programs and
    operations. And you highlighted certain cases where agencies
    generally agreed with your findings or recommendations.
        It is hard to imagine agencies wouldn't follow up with your
    recommendations aimed at improving their operations or
    programs, but are there certain agencies or programs that you
    find are on your radar screen that don't seem to follow up with
    your recommendations?
        Mr. Harden. I guess the way I would start that is that we
    do have a very good I think professional relationship with all
    the agencies in the Department, in terms of us bringing the
    concerns that we have through the audits that we do. We have
    good healthy dialogue and debate as we are coming to what
    caused the problems and what would be the appropriate
    recommendations.
        Where, you know, we have seen breakdowns in the past is
    that the agencies agreed with what we were wanting to do, they
    went about implementing that, and when we went back in
    sometimes it wasn't as effective as they wanted it to be and so
    we may have had some additional work.
        But even though there are a large number of recommendations
    that they are working on, it is not a relationship where there
    is constant, you know, pushback on what should be implemented
    at the root of the problem.
        Ms. Fong. I would offer that when we have very productive
    dialogue and there may not be agreement on a recommendation, it
    is not confined to a particular agency or group of agencies. It
    would be very topic-specific or recommendation-specific, in the
    sense that it may be a particular policy that that agency feels
    strongly about.
        Mr. Moolenaar. OK. And does OIG have internal enforcement
    mechanisms to ensure compliance, or it is all based on
    recommendations and then, as you mentioned, you have the final
    agency verification reports that kind of report as to whether
    it is being followed up on?
        Ms. Fong. Yes, that is exactly right. We have the power of
    persuasion.
        Mr. Moolenaar. OK.
        Ms. Fong. And that is it.

                           FOOD AND NUTRITION SERVICE

        Mr. Moolenaar. OK. In the audit of the Food and Nutrition
    Service's financial statements for fiscal year 2017 and 2018,
    the finding states that the FNS high-risk programs were not
    compliant with the requirements of the Improper Payments
    Information Act.
        Were there recommendations that you had, or what was it
    that they weren't in compliance with?
        Mr. Harden. Yes. Annually we do work on the compliance with
    improper payment reporting, and that focuses on the ten
    departmental programs that are high-risk programs. Five of
    those programs are FNS Nutrition Programs. It is SNAP, school
    lunch, school breakfast, WIC and CACFP. And they have not met
    one or more of the requirements over the seven years that we
    have reported on that compliance.
        And so we had a series of recommendations over the years
    and made recommendations this year. Although we have seen
    progress at the Department level in terms of reporting it, it
    is just a matter of for some of the FNS programs that they get
    some of their data up to date so that they have ways of
    producing the estimates of what the improper payments should be
    and reaching their targets.
        Mr. Moolenaar. And in your written testimony, you mentioned
    that OIG makes recommendations to improve how programs operate.
    During fiscal year 2018, your audit and investigative work
    resulted in potential monetary results totaling more than $368
    million. That is significant. If there had been--if the
    recommendation had been made for the audit of FNS' financial
    statements, how would that dollar amount be affected?
        Mr. Harden. The information coming behind that does not
    result in what we would have as a questioned cost, or funds to
    be put to better use. That is driven by what the agency is
    doing to comply with those reporting requirements.
        We have done work in the past to look at the quality of
    those improper payment estimates and have found weaknesses,
    particularly with the SNAP program. We issued a report in 2015
    where FNS agreed to kind of retool the whole way that it did
    the error rate for that program.
        Also, we have done work in school lunch and school
    breakfast, which has very high error rates, so that they can go
    in trying to look at how they come up with that number and if
    there are ways that we can offer a better way to get at that
    number. And they were receptive to recommendations on both of
    those fronts.
        Mr. Moolenaar. OK. Thank you.
        And thank you, Mr. Chairman.
        Mr. Bishop. Ms. McCollum.

                       FOREST SERVICE MINERAL WITHDRAWALS

        Ms. McCollum. Thank you, Mr. Chair.
        In 2018, the Forest Service was doing an environmental
    review on proposed mineral withdrawals of the National Forest
    System lands. Methow Headwaters in Washington State, an area in
    the heart of the North Cascades and important for water
    quality, wildlife protection, recreation and salmon recovery
    and restoration; the Emigrant Crevice in Montana in former
    Secretary Zinke's backyard; 30,000 acres of public land just
    north of Yellowstone National Park, where mining could damage
    the environment and hurt the area's tourism-based economy; and
    the Rainy River Watershed in Minnesota just outside the
    Boundary Waters Canoe Wilderness Area, the most visited
    wilderness area in the country.
        Sulfate or mining pollution could cause irreparable harm to
    these pristine waters, and you don't have to take my word for
    it. In a letter that I have, former Forest Service Chief Thomas
    L. Tidwell issued a denial of consent to renew two leases in
    the withdrawal area. In December 2016, he concluded, and I
    quote: ``The inherent potential risk of mining near the BWCI,''
    I quote again, ``might cause serious and irreplaceable harm to
    this unique, iconic, and irreplaceable wilderness area.''
        I point this out because the Forest Service completed the
    studies in Washington and in Montana, but on September 6, 2018,
    Secretary Perdue issued a one-page press release stating that
    USDA was canceling the proposed mineral withdrawal study
    impacting the Boundary Waters 20 months into a 24-month study.
    I am concerned that a different standard was neither fair nor
    consistent as it applied to the Boundary Waters as compared to
    the other two mineral withdrawals.
        USDA and the Department of the Interior followed the
    established process when assessing the other two applications
    for mineral withdrawals. The Forest Service completed and
    released a full environmental assessment, and the assessments
    were submitted to the Bureau of Land Management as part of a
    complete withdrawal package. It is unclear why the Forest
    Service deviated from the established process for the study
    impacting the Boundary Waters. And a one-page press release
    from the Secretary is not adequate substitute for a full
    environmental assessment and submission of a complete
    withdrawal application to the BLM.
        I would ask you, do you agree that canceling the study with
    just 4 months left seems like an efficient use of time, energy,
    and taxpayers' dollars? And are you aware of the Forest Service
    ever canceling a mineral withdrawal in this manner before? If
    not, can you report back to us who ultimately made this
    decision to cancel the Forest Service study and how a decision
    like this was made, based on the other two studies going
    forward in the good faith in which the BWCA and Rainy River
    Watershed should have been given the same due consideration.
        Ms. Fong. Thank you for raising that. We have not done any
    work in that area so we are not familiar with the study. It is
    a very interesting set of circumstances. We would be happy to
    talk with you and your staff to get more information and figure
    out what assistance we can provide.

                      FOREST SERVICE WORKPLACE MISCONDUCT

        Ms. McCollum. That would be helpful. It was very much in
    the press.
        Mr. Chair, I know my time is limited, but I would like to
    ask any comments you would like to make on what the Forest
    Service has been doing in its initiatives to address workplace
    misconduct. I also am the chair of the Interior Committee where
    there is overlapping jurisdiction. I am very concerned about
    what is going on and if you think that there is any work that
    we should be following up on.
        Mr. Harden. As you know, we just recently issued our report
    on sexual harassment and misconduct for Region 5. It was
    designed around the agreement that Forest Service had with the
    Department at the Assistant Secretary for Civil Rights level
    and OGC, in terms of a plan for making the workplace better in
    Region 5.
        We found that they had been implementing what they had
    agreed to in the plan, but there were some other areas where we
    saw improvements to the workplace that they could make. One of
    them, notably, was doing better background checks or reference
    checks on people that are being hired. They weren't asking
    direct enough questions to know that people had, you know,
    sexual misconduct/harassment issues in their past, and then
    they were promoted into other supervisory positions.
        In response to questions that we got in a hearing related
    to that subject last November, one of the things that we are
    currently doing is that we have asked--I have polled my
    counterparts in the oversight community to draw out reports
    that everybody in the community has done related to this issue
    so that we can possibly talk to Forest Service about best
    practices or other standards that others have applied that they
    may need to consider.
        I know that we will be in continuing discussion with Forest
    Service as well as members and their staffs, because of the
    interest in this area and in additional work that may be
    considered.
        Ms. McCollum. Thank you.
        Thank you, Mr. Chair. It looks like we have some work to do
    together.

                            ERS AND NIFA RELOCATION

        Mr. Bishop. Thank you, Ms. McCollum.
        Last September, Majority Leader Hoyer and Congresswoman
    Norton asked your office to look at USDA's proposal to relocate
    the Economic Research Service and the National Institute of
    Food and Agriculture, and to reorganize ERS under the Office of
    the Chief Economist. Your written testimony indicated your
    office will be performing this review.
        Can you briefly tell us about the scope of the project and
    what the status is, when do you expect to issue your results,
    and can you give us a preview of what you found so far?
        Ms. Fong. I will be happy to comment on that. We have
    started work on that in response to the request. The scope of
    the work is to look at the Department's legal authorities to do
    a reorganization and a reprogram of those funds, and a
    relocation; to look at the Department's budget authority to do
    those actions; and third, to determine if the Department
    followed any procedures that it has governing relocations and
    reorganizations. So we are looking at those three issues in
    particular response to the request.
        We have just about finished our fieldwork. We have been
    working very diligently to obtain all the information that we
    need. We have been talking to and interviewing witnesses. I
    think we are almost at the stage where we are going to start
    drafting a report. And at that point, we will be talking with
    all of the stakeholders about what we are seeing. We are also
    very aware of this committee's interest in those issues.

                           ANIMAL WELFARE INSPECTIONS

        Mr. Bishop. Thank you. I am happy to see that your 2019
    audit plan includes a review of animal care programs overseen
    by the Animal and Plant Health Inspection Services,
    specifically on animal breeders and exhibitors. Our news
    reports indicate that there has been a dramatic drop in APHIS
    citations in 2018 over previous years. Will you be looking into
    the reasons for that drop?
        Mr. Harden. Yes.
        Mr. Bishop. Do you have any indications at this point what
    some of those reasons might be?
        Mr. Harden. No, I don't have anything on the reasons, but
    we are aware of what has been reported in the media. But, you
    know, this work will follow up on work that we did and
    recommendations that we made to this program in an earlier
    audit. And knowing what they are reporting is part and parcel
    to understanding how they are running the program for both the
    breeders as well as the exhibitors.

                              GOVERNMENT SHUTDOWN

        Mr. Bishop. Thank you. We just had the longest shutdown in
    history during which food inspectors were working without pay.
    And USDA issued SNAP benefits for February early, causing most
    recipients to have a gap of up to 50 days while waiting for the
    March benefits to be issued. This resulted in increased demand
    for food at food pantries and other assistance outlets. Some
    FSA employees were called back to work.
        Do you have any plans to review any agency operations
    during the shutdown?
        Ms. Fong. That is not in our current work plan. As you
    mentioned, we published our fiscal year 2019 work plan, and we
    published that before the shutdown. I think as we go through
    our work, as it touches those agencies and those programs, if
    an impact from shutdown surfaces we will certainly address
    that. And if there are other concerns that come forward, we are
    happy to consider any other concerns.

                               HOTLINE COMPLAINTS

        Mr. Bishop. According to your last semiannual report, your
    office received almost 5,000 complaints through the OIG hotline
    between April and September of 2018. You reviewed 137 of those
    complaints, under 3 percent of the total. The majority of the
    complaints, 91 percent, were referred to the USDA agencies for
    responsive tracking.
        Do you have a process to follow up with the referred
    entities to see if they took appropriate actions, how do you
    ensure the agencies did their due diligence, and what do you
    need from us so that legitimate hotline complaints are properly
    dealt with?
        Ms. Coffey. Sir, the hotline falls under investigations. We
    do have a process in place. For the entire year of last year,
    we received over 12,000 complaints that came into the OIG
    hotline. The majority I would say, probably about 96 percent of
    those were related to SNAP recipients, individuals who were
    calling in to report that there is some sort of fraud in either
    the eligibility status of individuals who are receiving
    benefits or that they are misusing their benefits.
        In those instances, we usually work with FNS to follow up
    on those. The ones that we do refer to the program agencies
    other than FNS, we do have a process in place where the
    agencies are required to respond to our office to provide
    information, whatever information they have identified based on
    the complaint when they have looked into the matter, and we are
    looking at those responses and making a determination whether
    or not we believe that that has resolved the matter or they
    have adequately looked at it or if we need to raise it to a
    higher level within the agency. So we do follow up on those
    investigations.
        Mr. Bishop. Thank you. My time has expired.
        Mr. Fortenberry.

                            EPHEMERAL GULLY EROSION

        Mr. Fortenberry. Thank you, Mr. Chairman.
        Who is the expert on ephemeral gully erosion?
        Mr. Harden. I don't know that I would use the word
    ``expert,'' but yes, there was a report that had those words in
    it.
        Mr. Fortenberry. The Natural Resources Conservation Service
    issued new guidelines. This can happen to farmers
    inadvertently. There is an issue about tilling, concern
    expressed by the agency that this would put someone out of
    compliance. I support the conservation compliance requirements,
    but I want to make sure that farmers have time to comply with
    the new requirements and do not get disqualified from Crop
    Insurance or other farm programs because there may not either
    have been time for information, training; or secondarily, is
    there enough flexibility built into the program, given
    different regional considerations and different weathering
    conditions in regions, to make it viable for farmers to
    actually respond appropriately with enough time, with proper
    agency notification? Can you comment on these matters?
        Mr. Harden. I will take it from the aspect that yes, we had
    concerns with that portion of the program and made
    recommendations to NRCS to make improvements. We relied
    basically on their management expertise, in terms of what they
    needed to do to fix it and if they had a timeframe that they
    wanted to do that in. We didn't on our side have a way of
    saying, well, it should have been 10 years or 5 years or 3
    years. We usually try and work with them and their expertise in
    knowing that.
        Now, if they went about implementing those recommendations
    or those changes in response to the recommendations and
    realized, hey, this wasn't going to work as well as it could
    have been, if it is related to something they agreed to with
    us, there is a process in place for them to come back to us and
    say, hey, what we have agreed to really won't work. We need to
    change what we are doing so that it doesn't impact the farmers
    that you are talking about.
        Mr. Fortenberry. So is it fair to say that NRCS should have
    to go through a notice and comment period before having these
    conservation compliance changes go through so that, again,
    farmers aren't inadvertently caught in a system that may result
    in the loss of farm program eligibility?
        Mr. Harden. I would have to go back and find out.
        Mr. Fortenberry. I think it is an important question. It is
    the heart of the matter.
        Mr. Harden. OK. I would have to go back and find out why
    they did or did not go through a notice and comment period.
        Mr. Fortenberry. OK. Based upon what is in front of me,
    that is not clear to me either. But let's presume there was not
    a comment period. I think, again, the issue, given certain
    complexities of different regions and certain weather patterns,
    of having proper advance notice before there is an enforcement
    against a farmer is only fair.
        Mr. Harden. That makes sense to me, yes.
        Mr. Fortenberry. OK. Well, I have learned, Mr. Chairman,
    how to take yes for an answer, so that is all I have. Thank
    you.
        Mr. Bishop. Ms. McCollum.

                              CROP INSURANCE FRAUD

        Ms. McCollum. Thank you, Mr. Chair.
        There has been a lot of political angst and discussion over
    fraud and abuse in the SNAP program, but the fraud and abuse,
    if there is to be found much in the SNAP program, would pale in
    comparison to the amount of money that appears to be involved
    in the Crop Insurance when fraud is happening.
        So last year, your office was involved in a few
    investigations involving crop insurance fraud. The one case,
    the party in question was found guilty of defrauding taxpayers
    out of more than $5.6 million in false insurance claims,
    sentenced up to 25 months in prison, is prohibited from
    participating in Crop Insurance Program for 5 years.
        Another, the party was sentenced to 13 months in prison for
    illegally obtaining crop insurance and claiming crop losses for
    land he did not farm. He had to pay a half a million dollars in
    restitution.
        Crop Insurance is a vital tool for our farmers in Minnesota
    and throughout this country, but reports of fraud at this level
    are very troubling. In the budget that was released yesterday,
    the administration calls for some Crop Insurance reforms,
    including new means testing that would limit the program to
    producers with an adjusted gross income of $500,000 or less.
        Do you think reforms like these, based on the information
    that you have been learning, the one proposed in the
    President's budget in particular, would help address some of
    the fraud that we see in the Crop Insurance Program, or can you
    talk about any other work your office is doing to address fraud
    within the Crop Insurance Program or other subsidy programs for
    the authorizers to deal with and to make sure that the
    appropriators make sure every penny is spent appropriately?
        Ms. Coffey. I have not had a chance to look at the
    information that was in the President's budget with respect to
    the Crop Insurance Program. I will say that in a general
    comment just in terms of both the food assistance programs as
    well as the Crop Insurance Programs that we are utilizing data
    analytics, and that is really helpful. It is a significant help
    for us to be able to identify the fraud that you see, and
    obviously there are large dollar amounts.
        And what we typically have seen in terms of the Crop
    Insurance is that there are usually multiple individuals that
    are associated with or engaged in the fraud schemes. It is
    usually not just one producer. There is usually an agent, a
    producer. There is a very extensive network of individuals that
    are involved in those programs. And obviously, we are working
    with RMA in trying to identify the fraud. And obviously, we
    will be looking at the means testing that was put in place to
    see if that would have an impact with respect to perhaps
    reducing the fraud.
        Mr. Harden. And on our side, we do have an audit in process
    that is looking at adjusted gross income requirements for FSA
    and NRCS programs. We are in the middle of fieldwork on that
    right now, but that may shed some light on those types of
    requirements as well.
        Ms. McCollum. One of the things that I am finding in the
    other committee that I chair with the EPA, we don't have enough
    people doing inspections and enforcement. Did you uncover any
    concerns about inspection and enforcement and if that needs to
    be beefed up no matter what the reforms are?
        Ms. Coffey. We have not looked at that. Again, we really
    come in sort of at the tail end where there has been an
    identification that something has occurred, and we proceed to
    investigate to substantiate those allegations. But I will say,
    obviously, the use of data analytics has helped significantly
    in helping us in that particular aspect. I am not sure if Gil
    has looked at that aspect.
        Mr. Harden. Not that particular aspect, but a running theme
    through a lot of our work is looking at how the agencies
    oversee the various programs they have in place. And one of the
    main management challenges that we have pointed out year after
    year for the Department is maintaining that accountability and
    oversight and having the right type of focus not only on
    program delivery, because that is very much important, but also
    having somebody there in the oversight role knowing that the
    money is going where it is intended to go for eligible
    purposes.
        Ms. McCollum. Thank you.
        Mr. Chair, any kind of reform has to have good oversight
    with it, and what seems to be a pattern that I am starting to
    notice within this administration is that there are jobs that
    are posted--there are jobs that could be filled, but they are
    never posted to be filled, especially in enforcement.
        So just having the number there without having actually
    gone out and even sought out the individuals to fill the post
    will leave the fraud and abuse no matter what reforms you come
    up with continue to happen.
        Thank you, Mr. Chair.

                       SMALL AND DISADVANTAGED BUSINESSES

        Mr. Bishop. Mr. Fortenberry.
        All right. I have just a couple of questions and we will be
    ready to, I think, wrap it up.
        Ms. Fong, small businesses are the cornerstone of our
    economy, and Federal support is especially important for small
    and disadvantaged businesses in rural areas. That is why I was
    disturbed to read your audit from last October that found that
    over $42 million went to small businesses that could not
    support their claim of being certified as small or
    disadvantaged businesses. That means over $42 million could
    have gone but did not go to businesses that were at least 51
    percent owned by a woman, by a veteran, by a minority, by other
    socially or economically disadvantaged individuals.
        The audit included three recommendations for USDA to help
    them do a better job of getting money to those who are actually
    eligible. Have you followed up with USDA to see what actions
    they have taken, and how confident are you that USDA has
    improved in getting much-needed Federal dollars to the
    businesses that should be getting this help?
        Ms. Fong. Yes, I remember that audit very well. It is a
    very interesting situation. As businesses want to get into the
    Federal sector, they work with SBA to get certified as to their
    status. Then once they are certified, they can participate in
    USDA and other programs.
        And I think one of the findings that we had was that over
    time businesses who may have been eligible initially may have
    graduated or lost their eligibility because they grew or
    something might have changed. And we saw that there would be a
    need there to partner with SBA to figure out how to get to
    those situations.
        We made some recommendations. It hasn't been 6 months yet.
    So I think the agency still has a little bit of time to
    implement, but we will be following up on that.
        Mr. Harden. But one of the most novel things about that
    recommendation was to get that dialogue going between USDA,
    asking the questions of people that are part of the program,
    and sharing what they will learn with SBA and GSA.

                                  2501 PROGRAM

        Mr. Bishop. Well, it is important that we monitor that
    closely, because we want to make sure that those dollars go to
    the small and disadvantaged businesses as they were intended
    to.
        The 2018 omnibus included $3 million of discretionary funds
    for the Outreach and Assistance to Socially Disadvantaged and
    Veteran Farmers and Ranchers Program known as the 2501 Program.
    These funds were intended to supplement $10 million of
    mandatory funding and be used for grants to support minority
    and veteran farmers and ranchers.
        Our understanding is that only a third of the $3 million
    went to grants, that USDA used over $2 million for training and
    for a website. Your current annual plan listed an audit of the
    grants awarded with this money.
        Can you tell us what the status is of the audit, when the
    audit will be completed, and what can you share about whether
    the funds were used properly?
        Mr. Harden. We can definitely take that information into
    consideration as we are planning the scope and objectives. The
    original plan for this audit was to follow up on the 2501 Grant
    Program, because we had issued two reports in I think 2012 and
    2015 where there had been serious concerns with how the program
    was run. We would want to, of course, take a look at current
    operations to see if they have strengthened the program. That
    is slotted to begin I think in the fourth quarter of fiscal
    year 2019, so it will be kicked off before October.
        Ms. Fong. If you or your staff have particular concerns or
    objectives that you would like us to look at, we would welcome
    dialogue on that as we design the audit.

                               Closing Statement

        Mr. Bishop. Thank you. Ms. Fong, Mr. Harden, Ms. Coffey,
    thank you all for being here today. I know that there are a few
    things on which you are going to get back with us. We will also
    forward additional questions for the record, and we appreciate
    your diligence in getting your responses to us in a timely
    manner. Thank you again for your testimony. We look forward to
    working with you as we continue the fiscal year 2020 process.
        With that, this subcommittee is adjourned.

                                               Tuesday, March 26, 2019.

                                  MEMBERS' DAY

                                   WITNESSES

    HON. GLENN THOMPSON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF
        PENNSYLVANIA
    HON. JENNIFFER GONZALEZ-COLON, A DELEGATE IN CONGRESS FROM THE
        COMMONWEALTH OF PUERTO RICO
    HON. NEAL DUNN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF FLORIDA
    HON. SHEILA JACKSON LEE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF
        TEXAS
    HON. JAMES P. MCGOVERN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF
        MASSACHUSETTS

                         Opening Statement--Mr. Bishop

        Mr. Bishop. The hearing will come to order. Let me welcome
    everyone and say good afternoon. I am very pleased to have this
    hearing and allow Members to present testimony on their
    thoughts and priorities for the fiscal year 2020 Agricultural,
    Rural Development, Food and Drug Administration, and Related
    Agencies bill.
        As I remind people all the time, the work of this
    subcommittee is far-reaching and it touches the lives of every
    citizen and millions abroad throughout our international food
    delivery programs, everything from research to conservation to
    food safety to domestic and foreign nutrition to food and drug
    safety to commodity futures.
        So this subcommittee has a lot to consider. We are still at
    the beginning of the process, but this is an important day as
    we hear from our colleagues. Testifying today, we have a number
    of Members from each party that represent different parts of
    the country. The subcommittee has a reputation for working
    across the aisle, and I expect that bipartisan spirit to
    continue this year.
        I look forward to hearing from all of you today and working
    with us as the process moves forward. And at this time I am
    happy to recognize my colleague Mr. Fortenberry for any opening
    remarks that he might have.

                       Opening Statement--Mr. Fortenberry

        Mr. Fortenberry. Well, thank you, Mr. Chairman. I really do
    appreciate your emphasis on bipartisanship. Agriculture is one
    of the areas that can, when there is the will, transcend any
    perceived divides. And that is why I think it is good that the
    general perception of the public is countered by the way in
    which this committee operates under your leadership. So thank
    you very much.
        I want to also welcome the Members--Mr. Thompson, you are
    here first, and others who will join us. Agriculture represents
    a cross-section of diverse constituencies and regions affecting
    us all. The food security space is an absolutely critical part
    of America's public policy and one that is often overlooked.
    And yet, as we all saw last year, we came together and passed a
    bipartisan farm bill, and now we are in the process of
    implementing that.
        But it is great to be here again. I thank you for your
    emphasis on the bipartisan dynamic of the committee, and look
    forward to hearing from our Members.
        Mr. Bishop. Thank you, Mr. Fortenberry.
        I will now recognize the gentleman from Pennsylvania, Mr.
    Glenn Thompson, for five minutes.

                        Opening Statement--Mr. Thompson

        Mr. Thompson. Mr. Chairman, thank you. Chairman Bishop,
    Ranking Member Fortenberry, members of the subcommittee, thank
    you for your leadership and your service with the
    appropriations process. Very much appreciated. And I want to
    thank you specifically for the opportunity to be here this
    afternoon to share my priorities for the agriculture
    appropriations bill for the fiscal year 2020.
        The programs under this subcommittee's jurisdiction play an
    integral role in supporting our farmers, ranchers, and, quite
    frankly, rural America, while also ensuring that America will
    always have the world's most abundant, safest, and most
    affordable food supply.
        As a lifelong Pennsylvanian, agriculture has always been a
    critical segment of the Commonwealth's economy. It remains our
    No. 1 industry today. However, times have been tough for many
    farmers in Pennsylvania and many other farmers around the
    Nation over the last decade.
        In fact, average farm income has been cut in half for the
    past 5 years for a variety of reasons. The dairy industry in
    particular has been hit hard over the past decade as we lost
    markets, and milk consumption has decreased over that period.
    With this in mind, I am pleased that we were able to get the
    2018 across the President's desk this past December, and I
    thank all of you for your support through the process.

                                   FARM BILL

        The farm bill provides strong support for our bedrock
    agriculture conservation programs, and that is where I would
    like to start. These include the Conservation Stewardship
    Program, the Environmental Quality Incentive Program, the
    Agriculture Conservation Easement Program, and the Regional
    Conservation Partnership Program.
        Now, these programs help provide farmers and ranchers the
    tools to be able to implement best management practices on
    their operations to improve water quality, soil health, and the
    environment, along with farm productivity. In short, these
    programs are good for the environment and the long-term
    sustainability and fiscal health of our Nation's farms and
    ranches.
        In Pennsylvania we are also continuing our efforts to
    restore the Chesapeake Bay watershed, which makes these
    programs all the more important. That said, I request full
    funding for our agricultural conservation programs and the NRCS
    in accordance to the 2018 farm bill.
        From conservation to crop insurance and energy programs to
    emergency loans, the Farm Service Agency, FSA, provides the
    boots on the ground for farmers. Because of this important role
    in providing local expertise and outreach, I request robust
    support for FSA.
        Similarly, we must continue to fund and support agriculture
    research and extension activities. Agriculture is science and
    technology and today, and we need that support at both our
    land-grant universities but also other higher education
    institutions.
        So much important research is performed at our
    universities. But without the necessary funding and resources,
    such work would not get out to actually benefit farmers and
    ranchers. As such, I strongly support full funding for both the
    Agriculture Research Service and the National Institute of Food
    and Agriculture.
        In terms of Animal and Plant Health Inspection Services, or
    APHIS, like all farm areas, Pennsylvania continues to have
    serious challenges with invasive species. While we have had
    some success in dealing with these threats over the years, our
    latest pest wreaking havoc is the spotted lanternfly.
        First identified in 2014, this insect has been spreading in
    Pennsylvania. It attacks a variety of plants and trees, fruit
    trees, hardwoods, hops. And it is a great treat to farmland.
    Now, for several years now our State Department of Agriculture
    has been working hand in hand with USDA, Penn State, and others
    to contain and eradicate this invasive.
        Along with this coordination, USDA and this committee have
    been supportive with funding. As more work remains, I strongly
    urge the committee to support the APHIS work on invasives
    through the plant pest and disease program and request
    continued resources to deal specifically with the spotted
    lanternfly.
        In addition, as in other States with prominent cervid
    populations, Pennsylvania continues to search for a cure for
    Chronic Wasting Disease. For those not familiar with Chronic
    Wasting Disease or CWD, it is a neurological disorder impacting
    deer, elk, and moose populations, and as the name suggests,
    contracting the disease always ends in fatality.
        While much research and on-the-ground identification has
    been happening in Pennsylvania, Wisconsin, and Louisiana, just
    to name a few States, more funding and research is needed to
    manage and ultimately cure this disease.
        The 2018 farm bill recognizes this issue and actually
    includes language I proposed providing priority status for
    Chronic Wasting Disease within APHIS animal health programs.
    For these reasons I request that the committee provide full
    funding for animal disease research, particularly Chronic
    Wasting Disease.
        And finally, I would like to register my strong support for
    the Rural Development and Rural Utility Services programs in
    general.
        Again, I want to thank you for the opportunity to be here
    today, and I look forward to working with you as the
    appropriations process for fiscal year 2020 moves forward.
        Mr. Bishop. Thank you very much, Mr. Thompson.
        Next we will hear from Mr. Neal Dunn of Florida. I am
    sorry. Mr. Fortenberry.
        Mr. Fortenberry. Mr. Thompson, if you could for just a
    moment, all I wanted to do is just thank you for your long
    leadership on the Agriculture Committee. You have been a
    stalwart there. The voices that represent agriculture in the
    Congress have a long continuity of tradition, and you have
    carried that tradition very honorably and well. I want to thank
    you.
        Mr. Thompson. Well, thank you. As you know, agriculture
    is--we need a strong farm team.
        Mr. Fortenberry. Yes.
        Mr. Thompson. And I think we have it through this
    appropriations subcommittee and the work of the Agriculture
    Committee. That partnership of authorization and appropriations
    has always been strong, and I look forward to continuing that.
        [The written statement of Mr. Thompson follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Fortenberry. Thank you.
        Mr. Bishop. Thank you very much.
        Mr. Dunn.

                              Testimony--Mr. Dunn

        Mr. Dunn. Thank you very much, Chairman Bishop, Ranking
    Member Fortenberry. I appreciate the opportunity to testify
    before you today. I am here to advocate on behalf of our
    Nation's farmers, ranchers, and foresters, and the programs
    that ensure the continued prosperity of rural America.
        Most importantly, and as Chairman Bishop knows all too
    well, the Southeastern agricultural economy was absolutely
    devastated by Hurricane Michael in this last year. Hurricanes
    cause billions of dollars of damage, including $1.5 billion in
    Florida alone.
        While I remain hopeful that Congress will pass a
    supplemental appropriations for fiscal year 2019 as soon as
    possible, these disasters illustrate the critical importance of
    the farm safety net. We must ensure adequate funding to allow
    our producers the certainty that when future disasters occur,
    the Federal Government has programs in place to keep them going
    until help arrives.
        Unfortunately, due to a longer growing cycle, timber
    producers many times do not have access to these critical
    programs as other farmers do. I look forward to working with
    this committee as well as my colleagues on the House
    Agriculture Committee to correct this going forward.
        I would also like to urge the committee to continue to
    prioritize important agricultural research programs like the
    Agriculture and Food Research Initiative, and the land-grant
    universities' research and extension capacity programs. In
    addition, the 2018 farm bill established the framework for
    investment in our Nation's research infrastructure.
        I support the administration's request for a new $50
    million competitive grant program for facilities improvement at
    land-grant universities. Programs like this support the
    scientific innovation at the institutions like the University
    of Florida, Florida State University, and FAMU in Tallahassee.
    And there are other great schools, obviously, all over the
    country.
        Recently, Secretary Perdue announced the first down-select
    list of communities across the country vying to host the USDA
    Economic Research Service and National Institute of Food and
    Agriculture. I strongly support his efforts to ensure that the
    USDA is the most effective, most efficient, and most customer-
    focused agency in the Federal Government. This decision to
    bring important USDA resources closer to many stakeholders and
    improve the USDA's ability to attract and retain highly
    qualified staff is another great step forward toward achieving
    that very goal.

                              ERS/NIFA RELOCATION

        I would also like to commend the Secretary for his
    commitment to ensure that no ERS or NIFA employee will be
    involuntarily separated during that transition, and I trust
    that this committee will provide him with the resources to
    honor that promise. I request that the committee support the
    transition and ensure that the relocation is completed as
    smoothly and efficiently as possible.
        Thank you very much, Mr. Chairman, Mr. Ranking Member, and
    I yield back.
        Mr. Bishop. Mr. Dunn, are you aware that there is a
    tremendous amount of opposition to that movement of ERS and
    NIFA?
        Mr. Dunn. I had a chance to discuss it with Secretary
    Perdue, and he was really enthusiastic about it. And he won me
    over.
        Mr. Bishop. Actually, the committee is going to be holding
    a hearing tomorrow on it and we will have, of course, a
    representative from the Secretary's office as well as other
    stakeholders who will have a say. We will hear from him
    tomorrow. So I would like to invite you to come and listen.
        Mr. Dunn. I will make every effort to be there, Mr.
    Chairman.
        Mr. Bishop. Thank you.
        Mr. Fortenberry.
        Mr. Fortenberry. Thank you, Mr. Chairman. Yes. The Chairman
    rightly points out that this is not yet a settled issue. It is
    still under debate. We have been forthright in our exchange,
    and I have a university system that is vying potentially for
    the site. So we have some differing perspectives.
        But tomorrow there will be a hearing to unpack objectively
    the pros and cons of this and some other considerations. So if
    you can make it, I think you might gain helpful insights.
        Mr. Dunn. Thank you very much for your concern.
        Mr. Fortenberry. Yes. And we remain very grieved by what
    happened to your district, and are continuing to try to think
    creatively as to the appropriate types of assistance that can
    be applied.
        Mr. Dunn. It cannot come soon enough, Mr. Ranking Member.
    Thank you.
        Mr. Bishop. Thank you very much, Mr. Dunn. I appreciate
    your taking the time to come and share your interests with us.
        Mr. Dunn. Always an honor to be here, sir. Thank you. I
    yield back.
        [The written statement of Mr. Dunn follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Bishop. OK. At this time we would like to invite
    Representative Jenniffer Gonzalez-Colon to the podium--I should
    say to the table. Thank you very much.
        Welcome.

                         Testimony--Ms. Gonzalez-Colon

        Ms. Gonzalez-Colon. I really appreciate to have the time
    today to express our requests coming from Puerto Rico. I am the
    sole representative for 3.2 million American citizens on the
    island. I do represent them in Congress, so I want to thank
    you, Chairman Bishop and Ranking Member Fortenberry, for
    actually allowing this to happen.
        As you are probably aware, Puerto Rico does not participate
    in the Supplemental Nutritional Assistance Program, or SNAP,
    like our counterparts in the 50 States, District of Columbia,
    U.S. Virgin Islands, and Guam, since 1981. Instead, Puerto Rico
    has a capped block grant called Nutrition Assistance Program,
    or NAP, which is typically funded to 1.8 to $1.9 billion per
    year.
        The hurricanes in 2017 revealed the many challenges tied to
    NAP, starting with the remarkable difference in the benefits
    our people receive. To give you just an idea of the program on
    the island, a household of one in Puerto Rico receives $112 per
    month, while a household of one in the continental States and
    the District of Columbia receives $194 per month.
        The amount of funding tied to NAP has proven to be
    insufficient, especially in the aftermath of both hurricanes,
    when people were experiencing extreme financial hardships.
    Additionally, the $600 million that we are requesting for NAP
    this year in additional disaster funds--I have been advocating
    for that--included both in the House version and in the Senate
    version of the upcoming disaster bill are not yet available to
    my constituents. And that is the reason the Government of
    Puerto Rico is cutting more of those $112 per month to the
    beneficiaries so they can receive some kind of assistance.

                          NUTRITION ASSISTANCE PROGRAM

        It becomes clear that we need to improve the Nutrition
    Assistance Program on the island. And with this in mind, I am
    requesting your consideration for including report language in
    the upcoming appropriations bill for the fiscal year 2020
    related to the Puerto Rico NAP program.
        My first request is tied to the Thrifty Food Plan. The
    calculation of our block grant is heavily influenced by the
    Thrifty Food Plan calculation of the contiguous 50 States. It
    is totally different for Puerto Rico. However, we import more
    than 80 percent of the food items we are consuming, and this is
    being factored into the price consumers pay when they are
    purchasing those items.
        The proposed language would require USDA to measure the
    cost of the Thrifty Food Plan in Puerto Rico and give us a
    better idea of how this calculation will be better addressed
    and reflect the reality of purchasing food on the island.
        The second request directs the USDA to publish information
    of the NAP program on their website. One of the reasons why NAP
    is a challenging program for many to understand is due to the
    lack of access to reliable data. Having USDA publish
    information, including basic program rules, monthly enrollment
    and disbursement data, and other program information will
    increase the transparency and will inform us on how we
    potentially can change the program and improve the program,
    make informed decisions.
        Like right now, I am pushing for a complete transition from
    NAP to the SNAP program for Puerto Rico to have the same way as
    the U.S. Virgin Islands, Guam, and DC.
        I want to just thank you for the consideration of those
    requests. We are pushing for the $600 million for the disaster
    bill that are included specifically for NAP for a year. And
    believe me, the people of Puerto Rico are really in need.
        Thank you, and I yield back.
        Mr. Bishop. Thank you very much for your testimony. And I
    want you to know that we are very much aware of the specific
    needs of Puerto Rico. And I am in agreement with my colleague,
    our colleague, Jose Serrano, who is a very strong advocate for
    the territories getting equitable treatment with the States.

                                DISASTER FUNDING

        And I know that I have every intention for every piece of
    legislation that we offer that offers anything for States that
    the territories be placed in the same condition and be treated
    with equal dignity. Hopefully we will be able to implement that
    policy for the Government because I do understand that it is
    not an even-handed treatment.
        With regard to the disaster and the $600 million, as you
    know, we are doing our very best to get that disaster bill
    passed. It is my understanding that the Senate will take up
    their disaster bill and will offer that as an amendment to it
    either tomorrow or, at the latest, Thursday. We are hopeful
    that that will happen.
        Of course, the consequences of--I should say the results of
    what has happened weather-wise in Nebraska and the Northwest
    over the last week is going to require some additional
    amendments and considerations for the losses of the grain and
    the cattle that occurred there. So that could possibly delay
    it.
        We hope that it will not. But as of now--I think Mr.
    Fortenberry would agree--we do not know what the full estimate
    is going to be for Nebraska and for the Midwest. And we expect
    that there will be some significant additional damages. And we
    are not really in a position to allocate, I believe, an
    adequate amount to deal with those disasters.
        So I am hoping that we can go ahead and finish the disaster
    bill that we passed through the House on the 16th of January,
    get that done, and at the appropriate time be able to do
    another supplemental to deal with what is inevitable for the
    Northwest. It is tragic. There has been a lot of loss there.
        And we do not yet know what the full losses are going to be
    because snows have not melted, and the waters have not gone
    downstream fully, and we are not fully aware of what the impact
    is going to be. But we want to get started on that. We are
    mindful of that, and our thoughts and our prayers go out to all
    of those who are impacted. And of course, as far as Puerto Rico
    is concerned, we hope that we can get that taken care of
    forthwith.
        Ms. Gonzalez-Colon. Thank you, Mr. Chairman. I want to
    express the same solidarity with our brothers and sisters from
    Nebraska. We know how difficult it is. In any way we can help,
    not just with prayers but with actions, we would be more than
    glad.
        And I want to thank the committee, this committee, for
    actually approving the first $600 million. And we have been in
    conversations with the Senate side, with Senator Perdue and
    Secretary Scott, to the $600 million that are included already
    in the Senate version.
        I would love to have the Senate version approved, and then
    in the conference we can put together whatever is missing,
    because at this time the bill is at a standstill and the people
    are not receiving the same benefits, even we receive less than
    the rest of the people living on the mainland. But thank you
    for that.
        [The written statement of Ms. Jenniffer Gonzalez-Colon
    follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Bishop. Mr. Fortenberry.

                             NEBRASKA FLOOD DAMAGE

        Mr. Fortenberry. Thank you, Mr. Chairman and Ms. Gonzalez-
    Colon, about the people I represent and others who are so
    adversely impacted by this flooding.
        I will tell you a quick story. I was in a place called T-
    Bone Cafe, which is in Columbus, Nebraska. And I saw the
    ``before'' pictures before I got there. The wall had a line
    about 4-foot high where the water and muck came in, and it was
    just an absolute disaster.
        By the time I got there, though, a lot of things had been
    shoveled out and cleaned up. And they looked at me and said,
    ``This is T-Bone's. We do not mess around. We are Nebraskans.
    We get it done.'' Right outside of there they have good humor;
    there is a sign on the fence that said, ``Mud wrestling
    tomorrow.'' [Laughter.]
        But of course you ride down the road a little bit and there
    is dead cattle on the side of the road. You are exactly right,
    Mr. Chairman. The ag losses are going to mount. It is unclear
    as to what they were, as people just pull themselves together
    and start cleaning up.
        The Air Force base there, which I represent, Offutt Air
    Force Base, was a third underwater. I am not sure many people
    realize that here. It did not affect our readiness, as planes
    were able to be moved. And that facility also houses Strategic
    Command, which is our nuclear nerve center, which was
    unaffected, thankfully.
        But nonetheless, the damage is very high and real. I think
    the chairman has it right. There is movement in the Senate to
    add potentially some new language that will make a
    conferenceable item with what we did in the House, or the House
    did last year. And then maybe all of this gets tied up. If
    there is some good news out of bad, I think additional problems
    actually perhaps create more momentum to get something done
    quickly.
        In regards to your testimony about report language, what
    you said seemed to me to be eminently reasonable. So I hope
    that we can potentially work with you on that, and that may
    land in the bill. And thank you. I do not think most people--do
    you mind if I reference you as Jenniffer?
        Now, we were talking this morning. Jenniffer represents 3.2
    million people. Now, you get to run every 4 years; it is a
    little bit different. But 3.2----
        Ms. Gonzalez-Colon. I will change that in a minute if I can
    vote on the floor. [Laughter.]
        I do not mind that.
        Mr. Fortenberry. Every 4 years. Right? But the enormity of
    her job, to represent that many constituents, only elevates my
    respect for her intensity to continue to be engaged here at the
    table. So thank you very much.
        Ms. Gonzalez-Colon. Thank you.
        Mr. Bishop. I might point out that one of the problems with
    the Senate bill that I hope that we can fix in conference or
    prior to the time they bring it to the floor is that they do
    not add any additional money for the Nebraska or the 2019
    disasters. And that is a problem because we were hardly able to
    adequately fund relief for the 2018-2017 storms that we need.
        And of course, we have got to add some additional resources
    to make good on our capacity to help the folks in the Midwest
    and Nebraska as well as the people who are already long-waiting
    in a critical stage for relief from the hurricane that occurred
    back in the fall of 2018.
        So we have got to do that, and we have got to do it
    quickly. People in the Southeast are at planting season right
    now, and if we do not get this bill passed, we are soon going
    to have a lot of people that will not be able to plant, will
    not be able to service their operation loans from last year,
    and will find themselves out of business.
        Lenders are very, very concerned because they do not know
    what to do. They do not know what resources will be available
    to give to the farmers who will then be able to service that
    debt. So we have got a real critical situation, and I am
    hopeful that by the end of this week that we can have it
    addressed and get something to the President for his signature.
        Ms. Gonzalez-Colon. I agree with that, Chairman. And I just
    want to add my being very grateful to you guys and for
    Congressman Jose Serrano. I know he is not running for
    reelection after yesterday's announcement in the family, having
    the Parkinson's disease.
        But he has been a great advocate for the people of Puerto
    Rico for many, many years. And he has always been more than a
    friend to me, like a mentor. He has been helping us out on
    equality issues across the island for many, many years. And I
    know everything that we have managed to include during the last
    5, 10 years has been because of his hand in the committee.
        So please, I want to thank him, but I want to thank all of
    you for having Puerto Rico in your hearts.
        Mr. Bishop. Thank you.
        The committee will stand in recess.
        [Recess.]
        Mr. Bishop. The committee will come to order.
        We welcome Mr. McGovern. We know that you have a very busy,
    busy schedule, and so we appreciate your being able to break
    away and come and to spend a little time with us.
        Mr. McGovern. Thank you.
        Mr. Bishop. And we would be happy to entertain whatever
    thoughts you may have on our 2020 appropriations bill review
    process.

                            Testimony--Mr. McGovern

        Mr. McGovern. Thank you very much. So, Chairman Bishop and
    Ranking Member Fortenberry, and my colleague Mr. Pocan, and
    members of the Agriculture Subcommittee, thanks for allowing me
    to testify here today. I appreciate it.
        As your subcommittee begins drafting the appropriations
    legislation, I strongly urge you to provide robust funding for
    programs that work to end hunger across our country. You know,
    as one of the--we are the richest country in the history of the
    world, and yet we have close to 40 million Americans who are
    food insecure, who do not know where their next meal is going
    to come from.
        And I believe that hunger is a political condition. I think
    we have the power and the resources to end hunger in the United
    States. What we need is the political will.
        A few weeks ago, I testified before the Budget Committee in
    support of the Supplemental Nutrition Assistance Program, known
    as SNAP, which is a mandatory program. I urged the committee to
    protect the structure of SNAP, which is our Nation's first line
    of defense against hunger, and oppose any efforts to diminish
    participation of able-bodied adults without dependents.
        Today, I urge this committee to provide at least $3 billion
    for the SNAP contingency reserve account to ensure that all
    participants have continued access to benefits, even if the
    program incurs unanticipated expenses or events.
        The Special Supplemental Nutrition Program for Women,
    Infants & Children, WIC, provides 6.8 million low-income
    pregnant and parenting women and children access to nutritious
    food, education, and other services. And I strongly urge the
    committee to continue to fully fund WIC at $6.1 billion,
    including, at minimum, $67 million for the breastfeeding peer
    counseling program.
        I also want to highlight the work of charitable
    organizations like our food banks in alleviating hunger across
    the country. But the truth of the matter is, Mr. Chairman,
    charities alone cannot solve hunger. It takes a strong federal
    commitment as well.
        The Emergency Food Assistance Program, known as TEFAP,
    provides highly nutritious food that food banks pair with
    donated items to craft packages for their clients. Although
    TEFAP commodities funding is mandatory, TEFAP storage and
    distribution funds are discretionary, and I urge the committee
    to continue to provide robust funding for the storage and
    distribution account.

                         FUNDING FOR NUTRITION PROGRAMS

        I also urge this committee to increase funding for
    nutrition programs administration. Staff morale at the U.S.
    Department of Agriculture's Food and Nutrition Service has
    shown need for improvement in recent years. Staff at FNS are
    largely focused on SNAP integrity.
        But at the same time, other programs, including child
    nutrition and regional operations, often suffer. I urge this
    committee to continue to provide robust funding for nutrition
    programs administration, so that they can expand adequate
    coverage to all of their programs.
        Mr. Chairman, I just would like to next say a few words
    about our international food aid programs. As you know, I led
    the effort to create the George McGovern-Robert Dole
    International Food for Education and Child Nutrition Program.
    Congress established the program in the 2002 farm bill, and
    since that time it has provided literally millions of the most
    vulnerable children in the world with a nutritious meal in a
    school setting for over a decade.
        Each year, USDA receives more proposals than it can fund,
    highlighting the need to expand the program, rather than reduce
    or eliminating funding.
        I have visited many McGovern-Dole programs in Latin America
    and Africa, and you may have as well. I can testify that these
    programs advance the health and productivity of children, they
    improve their school performance, increase attendance rates,
    especially among girls, and solidify community support for
    education, health, and nutrition.
        And I am very grateful to this committee for maintaining
    level funding or providing modest increases each fiscal year,
    often under very tight budget constraints. For fiscal year
    2020, I and many of my colleagues on both sides of the aisle
    are asking for $235 million for McGovern-Dole, an increase of
    $25 million.

                                 FOOD FOR PEACE

        Second, Public Law 480, Title II, Food for Peace, is our
    most important humanitarian food aid program, as well as
    supporting projects that address chronic food insecurity. As
    the world faces its greatest refugee crisis since World War II,
    and increasing numbers of natural disasters, we cannot cut
    funding for this program. It is simply unfathomable to think
    otherwise.
        This program supports American farmers, whose commodities
    literally save tens of millions of lives each year. The program
    is now even more effective in getting food to those in need
    rapidly and effectively, combining Meals-Ready-to-Eat,
    vouchers, cash grants, local purchase, and U.S. commodities.
        And for the past couple of years, Food for Peace has
    received about $1.7 billion each year. And for fiscal year
    2020, it needs to receive at least that level funding, and I
    would recommend a more substantial increase to $1.9 billion,
    given the many existing crises requiring urgent attention and
    the knowledge that more are surely likely to come in the next
    12 months. McGovern-Dole and Food for Peace advance U.S.
    national interests and reflect the very best of American
    values. I urge continued, robust funding, and marked increases,
    if possible, for each.

                                 APHIS FUNDING

        And, lastly, Mr. Chairman, I just want to speak briefly
    about another issue unrelated to food and nutrition. Since
    2008, my hometown of Worcester, Massachusetts, has been dealing
    with the largest Asian Longhorned Beetle infestation in North
    America. More than 35,000 trees have been cut down, and
    eradication and replanting efforts continue.
        I urge this subcommittee to provide at least $54 million
    for tree and wood pests under USDA's Animal and Plant Health
    Inspection Service, including at least $42 million for efforts
    to eradicate the Asian Longhorned Beetle, ALB, with no state or
    local cost share requirement.
        I can just tell you that my neighborhood was literally
    transformed overnight. When I left for Washington one day,
    there were trees everywhere. When I came back, it was--I could
    not see a tree in sight. That is how dangerous these Asian
    Longhorned Beetles are. And we have made progress, but we need
    to make sure they do not return.
        And I would just say, finally, you know, I think that the
    best of America is in our--is represented in our food and
    nutrition programs. And I think without them, you know, we
    would see hunger around the world increase dramatically, and we
    would see more instability around the world. So I think these
    are smart investments, and I thank you for your consideration.
        Mr. Bishop. Thank you, Mr. McGovern. I think over the past
    several years this subcommittee has been very thoughtful in
    supporting both of those programs and the SNAP program as well.
    The nutrition programs are vital. It is a key part of our
    mission, and I think the committee has been very supportive.
    And that has been on a bipartisan basis.
         I think last year I was the ranking member, Mr. Aderholt
    was the chair, and we worked very well in trying to assure
    adequate funding for both programs. And I think we were
    successful in doing that, and I am hopeful that this year we
    can continue to support them. They are sound programs. They do
    a lot for the people that are the recipients, but they also do
    a lot for us in terms of our foreign policy, so I will be
    supportive.
        Mr. Fortenberry.
        Mr. Fortenberry. I just want to thank you, Mr. McGovern,
    for your long-held advocacy in this ever-critical space of food
    security. And we call it the farm bill, but it really is about
    food security, risk mitigation, processes, policies for our
    farmers and ranchers, and for those who are in vulnerable
    circumstances, access to nutritious, good food.
        So I recall fondly the days when we worked together in
    leadership on the Nutrition Subcommittee on Ag. But, again,
    appreciate your passion and consciousness around this most
    critical of American issues. Thank you.
        Mr. McGovern. I appreciate that. And I just want to point
    out, you know, these programs are not extravagant. The average
    SNAP benefit is about $1.40 per person per meal, and most SNAP
    recipients end up going to food banks midway through the month
    in order to have enough food for their families.
        So, you know, these are vital and as I said before, I mean,
    nobody in this country should ever have to go hungry, and I
    think this program goes a long way in dealing with that.
        Mr. Bishop. Thank you very much, Mr. McGovern.
        Mr. McGovern. Thank you. I appreciate it. Thank you.
        [The written statement of Mr. McGovern follows:]

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            Mr. Bishop. All right. At this time, I am happy to
    recognize the gentlelady from Texas, the Honorable Sheila
    Jackson Lee, one of the most hardworking members of this
    Congress.
        Welcome, Ms. Lee, to our subcommittee, and we would be
    delighted to hear your thoughts about 2020 appropriations
    process for agricultural development, Food and Drug
    Administration, and related agencies.

                           Testimony--Ms. Jackson Lee

        Ms. Jackson Lee. I thank the chairman for his gracious
    comments, and to the ranking member. I have had the opportunity
    to work with both of you, as well as my chair, Mr. Pocan, on
    the CPC. But let me just say that my view of America is that we
    are the breadbasket for both our Nation and around the world.
        And over the years, I have worked with so many
    organizations dealing with the issue of hunger. And certainly
    there--more to that, as I look at your regulation over food and
    drug, I am reminded of an incident that is occurring with those
    of us who have been breast cancer survivors in the utilization
    of a certain implant that has caused great illness or
    recurrence of breast cancer.
        So your appropriations is important on many levels, and I
    want to thank you for your very important work. I also want to
    thank you, generally speaking, for your important work for
    farmers and for the agricultural community. Interestingly
    enough, my district, as large as it is, has been--have added
    areas that can be subjected to the rural development funding.
    And I can assure you that is powerful to small communities.
        So let me just quickly say that I am supporting the $85
    billion for Supplemental Nutrition Program. I would always
    argue for more because SNAP is a cornerstone of the Nation's
    nutrition assistance. It is a safety net, and it really goes to
    the question of hunger. Many of you know my predecessor, the
    Honorable Mickey Leland, who was the founding co-chair with
    Congressman Emerson, the late Congressman Emerson from the
    Midwest, to deal with hunger in America. We are still there. We
    are still there.

                         FUNDING FOR NUTRITION PROGRAMS

        I support $6.5 billion for Special Supplemental Nutrition
    Program, the WIC Program, and I think I heard Mr. McGovern say
    that these are not handout programs. These are programs that
    give families--in equal stair steps for families who get it
    just automatically because of their status in life. They
    provide for their infants, their children. They provide good,
    clean milk for their infants and toddlers, and we need to do so
    for our children who are not as economically advantaged.
        I support $329 million for Emergency Food Assistance, and I
    support $55 million for USDA Summer Electronic. Let me say to
    you that during Hurricane Harvey, my community, people were
    starving. I am being very frank with you. They were not able to
    access, either because of their resources, the devastation of
    their home, this catastrophic event.
        And thank you to the state, working with the U.S.
    Department of Agriculture, to be able to give us that emergency
    disaster food dollars. And we served, in addition to those who
    had already gotten it, when we determined that people were
    still in need around the October timeframe, we were able to
    provide 30,000 more new people, because of these resources, the
    ability to access food that took them through the November and
    December timeframe. This is a lifeline to people, and I attest
    to its importance.
        I support $35 million for grants under section 105 that
    deals with--and $22 million for the Senior Farmers Market
    Nutrition Program. And this provides low-income seniors with
    coupons that can be exchanged for eligible food.
        I support the $240 million for the Commodity Supplemental
    Program used in my district, and I support the $100 million for
    the TEFAP storage/distribution, $36 million for the pollinator,
    which focuses on research and decline in pollinator
    populations, and I support that, most notably that of
    commercial honeybees.
        I support the $62 million for the Evan Allens Program that
    deals with awards to African Americans in agriculture. We have
    black farmers in Houston and Texas, and I have worked with them
    over the years.
        I support $35 million for the Healthy Food Finance
    Initiative, and then I support all of the programs dealing with
    animal protection, national veterinary medical at $6.5 million,
    $70.5 million for horse protection, and $28.7 million for the
    Animal Welfare Act.
        As relates to the rural development, the $350 million for
    Commodity Futures trading I support, and I support the $40
    million for the Hispanic-Serving Agricultural Colleges, which
    we worked together with my colleague who was here previously,
    we worked on HSIs--will play a critical role, crucial role in
    addressing this education, enrolling 57 percent of the Hispanic
    college students.
        I support the $16.9 million for the USDA Circuit Rider
    Program, and I certainly support the work that the agricultural
    funding is doing for the HBCUs and working extensively with
    them, and I know your commitment.

                                CHILDHOOD HUNGER

        Finally, let me say, as I mentioned, I am the successor to
    the Honorable Mickey Leland, so we have been talking about
    hunger for a very long time. It is tragic that there are
    children that go to bed hungry here in the United States, and
    anything that we can do to provide--I will use the word
    ``small'' not because it is small, but because in the measure
    of the largest of this appropriation, the largest of this
    budget, and the largest of our economy here in the United
    States, to stop these children from going to school and going
    to bed without the right kind of nutrition.
        I am an almost predominantly--one of my school districts,
    Title I school, we have breakfast, lunch, and dinner. It is
    only through your funding. And in the summertime, we are able
    to open our parks to feed our children only through this
    funding.
        And I believe that was Mickey's passion. Of course, he saw
    hunger around the world, but it was his passion that people not
    go to bed hungry. As you know, he organized the Mickey Leland
    Hunger Center. That is still going, training young people how
    to deal with hunger in terms of going into communities and
    finding creative ways to not have to have people suffer because
    of their status, their economic status, or non-status, and
    their ability to provide for their family.
        And it should be made known that people do not do this
    purposely. They do not do this purposely. They do this because
    they are in need.
        My final point is I represent something called the
    Interfaith Ministries. They are the largest Meals on Wheels
    Program, which is so very important to our seniors. And I have
    gone out with the meals, knocked on doors, and see what a vital
    program the Meals on Wheels Program is.
        So I want to thank you for your work. I have tried to cover
    things that are so important to my constituency, but as you
    support our farming industry, our small farmers, large
    entities, I think it should be reminded that you are feeding
    people who otherwise would not eat without the various programs
    that are under your umbrella and the rural development that
    helps so many communities like mine get an ambulance and help
    build a devastated police station after the hurricane. Small
    towns that benefit from these programs.
        Thank you.
        Mr. Bishop. Thank you very much, Ms. Lee. You were very,
    very thorough. You touched upon all of the programs, and you
    certainly remind us that we live in a country where we produce
    the highest quality, the safest, the most abundant, and the
    most economical food and fiber anywhere in the world. And there
    is absolutely no reason why we should have food deserts, or why
    there should be hunger.
        And I hope through this committee and the subcommittee that
    we will do our dead-level best to try to reduce that and
    eliminate it, is possible, so that we can really have a healthy
    nation, and that we can have healthy people, and we can help
    our friends outside of our country to be healthy also.
        So thank you very much for your comments, and I yield to
    Mr. Fortenberry for any comments that he might like to make.
        Mr. Fortenberry. Well, let me echo what the chairman just
    said in terms of your breadth of not only understanding but
    advocacy for a whole range of agricultural policies that are
    essential to both sides of the agricultural question.
        The idea of the support mechanisms that create the
    conditions by which we have the lowest grocery prices in the
    world, and yet combining that with the humanitarian impulse
    that Americans have to help those most in mind, to the idea,
    you are exactly right, of seeing or hearing about a child going
    to bed hungry in America is heart wrenching, given our
    abundance and largesse, and yet, at the same time, we respond
    because we have the capacity to respond and the humanitarian
    impulse to do so as well.
        So thank you for reminding of that essential public policy
    that is borne out of conscience.
        If I could divert one moment. You talk about your
    interfaith ministry work, how is Pastor Rudy?
        Ms. Jackson Lee. Doing very well.
        Mr. Fortenberry. Do you remember when I told you I met him
    on a plane?
        Ms. Jackson Lee. Yes. Yes. Rudy Rasmus----
        Mr. Fortenberry. Is his part of this?
        Ms. Jackson Lee [continuing]. St. John's--yes--trying to
    build more housing for the unhoused, actual homeless people on
    the streets.
        Mr. Fortenberry. Would you give him my regards, please?
        Ms. Jackson Lee. I will certainly do so. Still working.
    Let's put it that way.
        Mr. Fortenberry. Is he? All right.
        Ms. Jackson Lee. Still working.
        Mr. Fortenberry. Thank you very much.
        Ms. Jackson Lee. Still working, still feeding, still
    working.
        Mr. Bishop. Mr. Pocan.
        Mr. Pocan. Nothing really to add, other than Ms. Jackson
    Lee is such a fierce advocate for her values. Thank you,
    Sheila. I appreciate it.
        Ms. Jackson Lee. Thank you very much. Thank you for the
    time.
        Mr. Bishop. With that, I think we have----
        Ms. Jackson Lee. Thank you for your patience.
        Mr. Bishop [continuing]. Completed our business, and this
    committee will stand adjourned.
        [The written statements of Ms. Jackson Lee and Mr. Posey
    follow:]

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                                             Wednesday, March 27, 2019.

        OVERSIGHT HEARING ON U.S. DEPARTMENT OF AGRICULTURE'S PROPOSED
    RELOCATION OF THE ECONOMIC RESEARCH SERVICE AND THE NATIONAL INSTITUTE
                            OF FOOD AND AGRICULTURE

                                   WITNESSES

    KRISTI J. BOSWELL, SENIOR ADVISOR TO THE SECRETARY OF AGRICULTURE, USDA
    GALE A. BUCHANAN, PH.D.
    JOHN E. LEE, JR., PH.D.
    KATHERINE SMITH EVANS, PH.D.
    CATHERINE E. WOTEKI, PH.D.

                        Opening Statement by Mr. Bishop

        Mr. Bishop. Good morning. I would like to welcome everyone
    to today's hearing. Today we will hear from two panels as we
    discuss the department's proposal to relocate the Economic
    Research Service, ERS, and the National Institute of Food and
    Agriculture.
        On our first panel, we will have Ms. Kristi Boswell, senior
    advisor to Secretary Sonny Perdue. She advises the Secretary on
    a wide array of issues, including intramural and extramural
    food and agriculture research, and she interacts with all
    levels of USDA management and stakeholders in the food and the
    agriculture community.
        Our second panel consists of four senior, former USDA
    officials. Two are former Under Secretaries for Research,
    Education, and Economics and two are former Administrators of
    ERS. Combined, they have 70 years of experience at USDA. They
    bring unparalleled understanding of the agencies' operations.
        All of our witnesses' insights will be valuable to the
    Subcommittee as we discuss the Department's proposal, and I
    would like to thank you all for your participation here today.
        Last August, with very short notice, employees and
    stakeholders heard that the department announced a plan to
    relocate ERS and NIFA outside the National Capital Region.
    Since that announcement, this committee has heard from many,
    many stakeholders. But to date there has been little or no
    debate of the proposal in a public forum.
        So despite multiple requests for information, USDA has
    continued to move full speed ahead. And at the moment, there
    appear to be far more questions than there are answers. And of
    course, since the proposal was announced last August, we have
    sent written communications and held phone calls and meetings
    with USDA and the Secretary and asked for more information, and
    we have continued to air our concerns about the lack of
    justification for the proposal and the lack of a cost-benefit
    analysis showing that it is a good move. In fact, I cosponsored
    a bill to stop the move, and we included report language in the
    2019 Omnibus Appropriations Bill--all of that to no avail as
    USDA continues to move forward.
        That is why we are holding this hearing today. And in fact,
    it would be irresponsible for us not to have a hearing on this
    proposal because it has far-reaching implications. Today we
    will drill down deeper and examine USDA's intentions and any
    analysis that was done by the Department about the consequences
    associated with relocating NIFA and ERS.
        I am concerned that the method for rolling this proposal
    out, and the lack of clear, transparent communication with ERS
    and NIFA employees, has already done irreversible damage to the
    Department's reputation. I am concerned that the cost-benefit
    analysis and input from stakeholders was not done prior to the
    decision. There are questions of how the Department will
    attract and retain highly qualified staff for ERS and NIFA if
    its current workforce loses trust in its leadership.
        One of the justifications the department provided for the
    proposal is that it will place important USDA resources closer
    to its stakeholders. However, neither the public nor
    stakeholders were given the opportunity to weigh in and
    comment. Further, wherever you relocate those agencies, it
    would be inconvenient for someone. Stakeholders who have
    limited resources for travel, such as schools and universities,
    our land-grant schools, moving the agencies outside of DC would
    mean additional expenses they would have to incur in order to
    maintain collaboration.
        Now, let me suggest that in deciding where to locate a
    Federal agency, it should be the purpose and the mission of
    that agency, and the mission of the agenda can best be
    accomplished. And we understand that not all Federal entities
    have to be located in the Nation's capital.
        In the case of ERS, there were reasons 50 years ago for
    some of its staff to be located away from Washington in the
    department's agriculture, economics, and land-grant
    universities. And those staff worked mainly on economic
    adjustments that were faced by small and family farms.
        But huge changes have taken place in agriculture, and farms
    are large and efficient and farmers now get their management
    and marketing technology information from private and public
    sources worldwide. What they need most today is the unbiased
    data and the research that provides the bigger picture, the
    larger economic context within which business decisions are
    made.
        What are the trends in global markets? What factors will
    affect those trends? How do policies in other countries affect
    market opportunities? How do changes in patterns of consumer
    behavior change market opportunities for producers in various
    commodities?
        The answers to these and hundreds more questions like that
    need to be known and understood by decision-makers in all parts
    of the trillion-dollar food industry as they consider their
    management strategies and long-term investments. And it is
    equally important that Federal policy-makers know the answers
    to these same questions as they consider--as we consider--
    policy effectiveness, changes, and alternatives just to
    understand what is happening in our food system.
        This is what ERS does, and ERS is very heavily linked to
    other Federal agencies that both supply and use ERS information
    and research. There are regular staff interactions, sometimes
    through joint working committees, with examples of the Commerce
    Department, Defense Department, intelligence agencies, Bureau
    of Economic Analysis, Energy, Census, and multiple USDA
    agencies.
        Partly through these interactions, ERS remains constantly
    reminded of the key policy issues and industry concerns, all of
    which help shape the ERS research priorities. The data and the
    research produced by ERS inform USDA officials and USDA
    agencies, Members of Congress, and food and agriculture
    organizations that are headquartered in Washington. In short,
    moving ERS out of the Washington area will move it away from
    its most direct stakeholders and strategic partners.
        Let me say that, Ms. Boswell, in your testimony, you
    acknowledge there were missed opportunities to engage
    stakeholders. And referring to this as a missed opportunity is,
    I believe, an understatement.
        The biggest unknown of this proposed relocation is what
    analysis the department has done that shows a benefit to
    stakeholders, department efficiencies, and any potential
    savings. Instead of providing hard data, the department asserts
    that there will be savings, and we are not sure how that is
    going to be determined. I also find it ironic that a proposal
    involving research and data-driven agencies that keep our
    Nation well-informed with objective, well-researched data on
    agriculture in this country and in the global sphere seems to
    have no hard data supporting it.
        If this move were to happen, there is no question that it
    will disrupt normal operations at each agency. Our Nation's
    agriculture industry cannot afford delays to the vital economic
    data that ERS provides and the technological innovations that
    researchers and universities develop through NIFA support. We
    must be really careful not to give our farmers and researchers
    a raw deal by possibly weakening a well-established
    infrastructure for research that has kept American agriculture
    number one in the world.
        Finally, the Department has proposed to realign ERS under
    the Chief Economist. Our focus today, however, is on the
    proposed relocation because Congress has spoken on that issue
    in the 2019 omnibus.
        I want to make very clear that my strong opposition to the
    realignment is not conflating realignment with relocation for
    the purpose of halting progress on relocation. I, along with
    many others more knowledgeable than I, believe that the
    relocation of these two agencies is simply a bad idea.
        So for today, I would like to welcome a robust discussion
    on this issue, and I know there will be continued interest as
    we move forward. I deeply appreciate your interest and your
    active participation.
        With that, I would like to ask our distinguished ranking
    member, Mr. Fortenberry, if he would like to have an opening
    remarks. Mr. Fortenberry.

                      Opening Statement by Mr. Fortenberry

        Mr. Fortenberry. Yes, Mr. Chairman. Thank you very much for
    convening this very important discussion and hearing today. Ms.
    Boswell, welcome. I understand you are from Shickley? Yes. I
    was hoping that you might be in the 1st Congressional District,
    we just missed you, but it is the neighborhood. Welcome to the
    hearing.
        When the USDA rolled out this proposal last August, the
    department, it is my understanding, has generated interest from
    136 locations from around the country, and is now down to 68.
    In response to the proposal, USDA energized a handful of
    groups, mostly in DC, in opposition.
        I believe that the concept Secretary Perdue proposed could
    produce positive outcomes and results, but you do clearly, as
    the distinguished chairman said, have some work to do to
    convincing all members of the merit of the proposal.
        I should in full disclosure, state that I have signed a
    letter, along with the Nebraska delegation, commending the
    prospects for the proposal and asking that we be given due
    consideration in Nebraska because Nebraska would be good, we
    think. But we could perhaps submit that to the record, along
    with a letter here from I believe it is 35 members--is that
    correct--35 members on the minority side supporting the
    proposal who sit on the Agriculture Committee.
        While there might be some higher priority matters for the
    subcommittee to consider, such as international trade or
    biotech foods or the safety of imported food or medical
    products, I do agree that it is important for us to have this
    hearing and review the proposal today. As I mentioned to the
    chairman yesterday, my goal here is to have a fair and open
    discussion of the merits of the move.
        So I would like to acknowledge some other USDA actions and
    proposals related to this relocation in order to give a full
    context. To Secretary Perdue's credit, he has taken a number of
    actions over the past two years to increase effectiveness at
    the department and improve the delivery of services to our
    constituents, from farmers.gov to the merger of the Grain
    Inspection and Packers and Stockyards Administration, GPSA,
    into the Agriculture Marketing Service, to the Farm Credit/Farm
    and Production Service Center consolidation.
        It is important to note that the proposed relocation of
    NIFA was prompted by the agency losing its office space by the
    newly remodeled harbor on the Potomac River, and new office
    space at that location would not be economical, and the
    Economic Research Service in a very costly office space, much
    higher than other rates in the field.
        The idea of moving out of Washington, DC is not a
    Republican idea. The idea has been floated, past and present,
    by both parties; in fact, one of the members of our current
    Appropriations Committee once said, ``The technology available
    to us today allows for seamless communication and collaboration
    regardless of geographic location, and is already allowing a
    web of Federal offices and agencies across the U.S., such as
    the Centers for Disease Control in Atlanta, to perform their
    work without being inside the DC Beltway.''
        I believe, again, given the diversity and dispersement of
    agricultural production around the country, again, it lends
    itself to the prospect of a dispersement of the USDA as well.
        I also want to point out that Congress included report
    language accompanying the final fiscal year 2019 appropriation
    law. The language requested further documentation in the fiscal
    year 2020 budget to justify this move. And to my knowledge, and
    the chairman and I discussed this yesterday, we are still
    waiting for some information and expect USDA to promptly
    deliver supporting documentation when it is available.
        It is also important to note that neither the 2019
    agricultural appropriation nor the 2018 farm bill forbade the
    USDA from moving forward with this proposed relocation when
    Congress had the opportunity to actually prohibit it.
        So the department has an opportunity now to convince more
    Members of Congress that the relocation is the right thing to
    do, both from an efficiency standpoint and benefit to service
    delivery. So we look forward to hearing from you today.
        I yield back, Mr. Chairman.
        Mr. Bishop. Ms. Boswell, I invite you to give whatever
    statement you would like on behalf of the proposal representing
    Secretary Perdue. Thank you very much for your participation,
    and the floor is yours.

                            Testimony by Ms. Boswell

        Ms. Boswell. Mr. Chairman, ranking member, and members of
    the committee, thank you for providing me the opportunity to
    testify before you today.
        USDA is committed to being the most effective and efficient
    customer service department in the entire Federal Government,
    and as a result, we have looked critically at the way we do
    business. As part of that department-wide evaluation, USDA
    assessed the Economic Research Service and the National
    Institute of Food and Agriculture's mission functions and
    operating courses within each agency.
        That review led to the 2018 announcement to begin the
    process of relocating most of ERS and NIFA outside of the
    National Capital Region. That announcement resulted in 136
    expressions of interest from 35 States. USDA has retained Ernst
    & Young to assist in those relocation efforts.
        Briefly, I would like to mention that in August, we also
    announced the intent to realign ERS from the Research,
    Education, and Economics Mission Area to the Office of the
    Chief Economist. While the focus of this hearing today is on
    the proposal to relocate, we generally believe those opposing
    realignment appear to be conflating realignment with their
    opposition to relocation.
        USDA is committed to answering any continued questions
    about the proposal for realignment, but appreciates the
    committee's recognition that these are two separate issues and
    bifurcating them today at this hearing.
        Improving mission function and limiting impact on our
    current employees during the transition are top priorities for
    USDA. The relocation allows ERS and NIFA to be closer to the
    broad array of customers and stakeholders who live and work
    outside and DC so that our team can hear ground-level upcoming
    issues and developing research needs.
        Significant research priorities and issue development occur
    outside of Washington, DC. USDA could have and should have been
    more agile in setting priorities to address emerging issues
    like farmer stress and mental health, organic research and
    extension development, and rural prosperity and hardship.
        We also recognize that both NIFA and ERS have many
    stakeholders here in DC. To that end, we have identified
    critical functions that will remain in the DC area to fill
    these important roles, and we have recently shared that
    information with employees.
        Relocation will also improve our ability to attract and
    retain highly qualified staff with training and specific
    interest in agriculture, many of whom come from our land-grant
    universities. Additionally, much of the recruited talent are
    new Ph.D. and Masters graduates.
        The well-documented and empirically understood high cost of
    living and long commutes of DC limit the ability for some to
    take these jobs. In a new location, employees will be able to
    live closer to their workplace, lower their commute times, and
    improve their overall quality of life.
        Additionally, the decision to relocate will benefit the
    American taxpayer, ultimately allowing for savings on
    employment and facility costs, which can be more effectively
    put straight back into research and programs and allow more
    employees to be retained in the long run, even in the face of
    tightening budgets.
        The heart of any agency is its people. The talented
    employees of both ERS and NIFA provide our customers valued
    service and research every single day. Each of those permanent
    employees will have the opportunity to relocate and remain in
    their position at a new location, and we hope that many do.
        However, we know that this process is hard, and we know
    that we are affecting real lives and we are affecting real
    families. And that is not something that we take lightly. We
    are engaging our employees throughout every step of this
    process in the site selection analysis, and is why we have
    established what many have called an ambitious timeline to
    limit this limbo period of uncertainty.
        Lastly, USDA would like to directly address some
    misconceptions that you may hear today. First, we are confident
    that both ERS and NIFA will remain trusted and objective
    sources of information for the food and ag sectors, and ERS
    will remain a Federal statistical agency. We only need to look
    at the Centers for Disease Control and Prevention as a clear
    example of a leading, respected, objective scientific agency
    that resides outside of Washington, DC.
        Second, this decision was not made rashly. The August
    announcement was the beginning of a still ongoing process led
    by an expert team at Ernst & Young to perform the site
    selection analysis. USDA values stakeholder input in this
    process immensely, and since the August announcement has
    consistently met with stakeholders, answered questions, and
    provided for opportunity for feedback at REE listening sessions
    to ensure those concerns are reflected in the complete
    evaluation.
        Those efforts have occurred at the Secretary, deputy
    secretary, mission, mission area, agency leadership, and staff
    levels. We are confident that the completed analysis will show
    we can be more efficient with our dollars and be in a community
    that provides for a high quality of life for our employees.
        Third, attrition during this transition period is something
    that we too are monitoring closely to ensure we are delivering
    our mission effectively. We cannot reiterate enough how much we
    value ERS and NIFA employees and the work that they do. We plan
    for a rolling transition of staff to the new location, and have
    already begun focused hiring to fill any vacated positions to
    ensure as little disruption as possible.
        In closing, we fully believe that by relocating, we can
    better carry out our mission, placing more dollars on research
    than overhead, and providing a better quality of life for our
    employees. Moving forward, we will continue to implement this
    process in the most transparent way possible, and will continue
    to keep Congress apprised every step of the way.
        Thank you for the opportunity to present this testimony. We
    look forward to a continued dialogue and answering the
    committee's questions.
        [The information follows:]

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               REALIGNMENT OF THE ERS

        Mr. Bishop. Thank you very much. Let me begin the
    questioning. I will go to the realignment first. Perhaps we
    will not dwell on that too long.
        ERS, as I understand it, removing it from Research,
    Education, and Economics and putting it under the Chief
    Economist would appear to reduce assurances of the scientific
    integrity and the objectivity of the ERS statistics and
    research, and perhaps would threaten the accuracy of its
    statistical products.
        It is my understanding that the Code of Federal Regulations
    says that the Office of the Under Secretary for Research,
    Education, and Economics and the Chief Scientist is explicitly
    and exclusively charged with upholding scientific integrity.
    And a number of actions by various REE undersecretaries have
    countered attempts to prevent or delay publication of ERS
    research reports or statistical updates.
        By contrast, the delegations of authority to the Chief
    Economist's Office have no such responsibility for scientific
    integrity, and in fact, it requires consideration of the USDA
    secretarial policy positions via the requirement that the Chief
    Economist's Office ``oversee and clear for consistency analyst
    assumptions and results of all domestic matters applying to
    man, including such estimates and analyses prepared for public
    distribution by the Foreign Agriculture Service, the Economic
    Research Service, and by any other agency of the department.''
        Those seem to be pretty distinct responsibilities. And I
    would think that to move the agency under the Chief Economist
    would make it have less integrity and less independence.
        Do you not agree with that?
        Ms. Boswell. Thank you for the question. First, I would
    like to address the scientific integrity policy. USDA is a
    science-based, facts-driven agency. And the Scientific
    Integrity Officer and the work of that team, and under the
    office of the Chief Scientist, monitors and ensures that
    department-wide, we are operating with scientific integrity.
        That is not exclusive to the REE mission area. As you can
    expect, throughout the department in all mission areas, there
    is scientific research being done, economic analysis being
    done, and that role not only dictates the work done in REE, but
    again department-wide. And that will continue to operate
    department-wide.
        Secondly, in regard to the claim and criticism that this
    realignment would somehow diminish the credibility of this
    research, we fundamentally disagree with that. In fact, we
    believe that there is more potential for politicization, if
    there is potential, remaining under REE.
        The reason for that is because the ERS administrator is a
    career SES employee. The Chief Economist is a career SES
    employee who reports to the Secretary. Under the current
    position----
        Mr. Bishop. Excuse me. But do they not have different
    functions? One has the obligation to maintain the integrity
    under the CFR or the research, and the other has the obligation
    to carry out the secretarial policy.
        Ms. Boswell. That is inaccurate.
        Mr. Bishop. Pardon me?
        Ms. Boswell. That is inaccurate, with all due respect.
    Again, the scientific integrity policy applies throughout the
    department. The Chief Economist currently implements WASDE,
    which is a statistically regulated report that is done under
    the purview of the Office of Chief Economist. That has not been
    called into question, as far as I am aware, of that integrity
    of that report. Also, the REE undersecretary is a political and
    also reports to the Secretary.
        Again, if there is a view that there could be impropriety,
    we believe that this actually is sheltering ERS through another
    layer of a career SES employee.
        Mr. Bishop. Thank you. I will yield at this time to Mr.
    Fortenberry. My time is about expired. We will have another
    round.

                             THE SELECTION PROCESS

        Mr. Fortenberry. OK. Thank you, Mr. Chairman.
        Can you give the timeline of the Ernst & Young process?
        Ms. Boswell. Thank you for the question. USDA, as a Federal
    Government Agency, had to undergo a little bit of a unique
    process rather than how maybe a private company would do that.
        When the opportunities that we saw to benefit our mission
    came forward, we knew that we needed expert help to make sure
    that this was done objectively and that it was done with the
    expertise that this type of decision warrants. We also knew
    that we had to notify Congress. And we also wanted to make sure
    that we were transparent and engaging with our employees.
        So the August decision began that process, the process that
    is still ongoing today. Ernst & Young was retained and is
    implementing an agency-driven analysis. Employee committees are
    reporting to their agency leadership, and then agency
    leadership is coordinating with mission area leadership all the
    way through the deputy secretary and Secretary's office. That
    dialogue is consistently occurring. In fact, we have even
    designated a specific staff to do touchpoints with our
    employees to make sure that their feedback is delivered to
    Ernst & Young in this process.
        The timeline, as I have mentioned, has been viewed as
    ambitious. But the rationale for that is that we know that this
    period for uncertainty for our employees is only causing more
    angst and anxiety. We were a little bit delayed with the
    shutdown, but we expect a--we have just released a middle list,
    from 136 to 67 expressions of interest.
        We will have a shorter list determination presented to USDA
    in the coming days, actually, and through April Ernst & Young
    will conduct more discussions with submitters. Employees will
    be able to attend site visits. And ultimately, with a site
    recommendation and full cost-benefit analysis that we began
    before the initial decision to start the process, but always
    anticipated that, again, that was the beginning of a long
    process that we are still undergoing. And that analysis will be
    presented in an ultimate site recommendation.
        Mr. Fortenberry. So its precise timeline is unclear. I
    understand you are leaving some purposeful ambiguity here. But
    six months?
        Ms. Boswell. We anticipate that we will have a site
    recommendation to the Secretary in early May.

                              AGENCY TRANSPARENCY

        Mr. Fortenberry. Regarding the ongoing process, you
    mentioned in your testimony that you very much value
    stakeholder input, and reemphasized that here, particularly
    within the department. Perhaps you noted, though, the
    chairman's complaint about the slow walk of information to him.
    And I would like to hear you address that.
        Ms. Boswell. The Secretary is transparent in everything he
    does. It is why we are here today, to make sure that we can
    have an honest and transparent discussion in front of you and
    answer your concerns. The Secretary has committed to the
    chairman personally to answer all questions related
    specifically to the realignment, and we look forward to
    receiving that from your staff so we can respond to your
    constituent and stakeholder concerns.
        We have consistently engaged and answered questions as they
    have come before us. We have also voluntarily participated in
    stakeholder events, specifically a webinar, where we could
    answer concerns even though we were not initially invited.
        We want to be transparent and we want to be open in this
    process and hear that feedback. And truthfully, that feedback
    is going into the Ernst & Young analysis to make sure that we
    can ultimately fulfill our goal, which is benefitting our
    mission of providing better and more diverse research.
        Mr. Fortenberry. You mentioned that there are certain
    critical functions to remain here. Can you define those?
        Ms. Boswell. Yes. We have announced this to employees and
    provided additional information in a briefing to the
    appropriator committee staff. This was an agency-driven
    analysis. Both ERS and NIFA conducted this through engagement
    with their employees, and the administrator of--acting
    administrator of ERS and director of NIFA evaluated that and
    presented those options to the Secretary.
        Because they are two separate and distinct agencies, they
    are different approaches. For ERS, there will be approximately
    76 critical function--employees holding critical function
    remaining in the National Capital Region. That is nearly a
    third of the agency.
        NIFA, because again they have different roles and different
    missions, had a different approach, and they are having
    approximately 20 critical functions and employees holding those
    positions, remaining in the National Capital Region.
        Again, that analysis is based on----
        Mr. Fortenberry. Out of a total of?
        Ms. Boswell. For ERS, 253 would be relocated, and under
    NIFA, 315. And that is based off of current appropriated
    staffing levels.
        Mr. Fortenberry. Thank you very much.
        Mr. Bishop. Ms. Pingree.
        Ms. Pingree. Thank you very much, Mr. Chair, and thank you,
    Ms. Boswell, for being here with us today and for the work that
    you do at the USDA.
        I have been one of the people who has been very concerned
    about this move. And just to mention a couple of things, I do
    not feel like it has been a transparent process. Back in August
    when we first learned about this, we sent a letter--all the
    Democrats on the committee sent a letter--to the USDA, and we
    got a two-page response. So that did not feel thorough to us,
    as the committee that has oversight on the budget.
        We also have not been able to find out how many staff--we
    do not have much data about it--how many staff have actually
    left since the proposal was announced. And while I understand
    there is some argument to be made that if people are going to
    have to go through this dramatic change, leaving them in limbo
    for as short a period of time as possible is helpful.
        On the other hand, a move this dramatic with this many
    moving parts and this much money associated with it requires
    more in-depth thinking, in my opinion. And so we should be much
    more engaged. And I appreciate the point of the hearing today,
    but I would say up until this point we have not been able to
    access a lot of information such as how many people have left.

                                REASONS TO MOVE

        I guess let me just ask you a couple of questions from your
    perspective. When the Secretary did announce this in August, he
    identified three reasons for the relocation. But one of them
    was not advancing agricultural research. And I think we should
    all be able to agree that advancing agricultural research
    should be one of our top priorities, particularly when farmers
    are dealing with so many challenges--strained markets, climate
    change, just a lot of variables out there and a lot of threats
    to their livelihood.
        So why was improving agricultural research not a
    consideration in this proposal?
        Ms. Boswell. Thank you for the question. And first, I do
    want to apologize if there is a feeling that we have not been
    transparent. I actually have answers to some of those specific
    things that you raised, and am happy to provide that, either if
    our time remains here or following.
        Mission function was the key focus, and the Secretary
    viewed a lot of opportunity when we were reviewing the cost of
    overhead in these two agencies. And he believes that the
    mission function will ultimately be enhanced by the three
    specific access: More access to be in the forefront of emerging
    issues, and being more agile to set priorities; being able to
    attract and retain the highly talented individuals with ag
    backgrounds that are all across the country that,
    unfortunately, do not want to or cannot afford to live in DC;
    and third, being more efficient in our spending of our taxpayer
    dollars to allow more dollars into research and programs, and
    even retaining more staff in the long run, than on overhead
    cost.
        Ms. Pingree. So I am not sure I agree with you on
    everything, but I do appreciate that you have answered your
    perspective on how that would improve agricultural research.
    But I am not sure we will attract better staff or any of the
    other things that you said.
        Based on that middle list--and while I am sure--and I know
    the ranking member has left the room, but I am sure that
    Nebraska is a fine place to locate this. And you are from
    Nebraska, and I fully believe that it would be a wonderful
    place to be.

                              INPUT ON RELOCATION

        All that said, Nebraska does not get any closer to Maine
    farmers. To Maine farmers, accessing it in DC is actually more
    helpful. So if USDA is truly interested in providing
    stakeholders with the best service, why did Maine farmers not
    get a chance to have some input in all this, and what is to say
    that they would rather have to deal with an agency in Nebraska?
        Ms. Boswell. Thank you. Well, first, the expressions of
    interest notice that went out in the Federal Register allowed
    for any interested entity, group, university, or all of the
    above to submit, express interest. And we received broad
    response from that, 136 in 35 States, of groups of individuals
    that believe science can be done objectively outside of DC, and
    that there is a lot of talent that does not live here.
        But we do also recognize again that there are important
    stakeholders and communities like your constituents that would
    easier access Washington, DC, and that is why we have----
        Ms. Pingree. Let me ask you one more--thank you for that.
    And let me ask you one more quick thing before I am out of
    time.
        And Mr. Fortenberry, I do want to say that I did
    acknowledge that although I am opposed to this, I am sure
    Nebraska would be one of the ideal States, based on your
    service and Ms. Boswell as well.
        On the same day the Secretary announced the relocation, the
    ERS administrator was reassigned. This administrator was a long
    time and highly qualified employee. Why was the ERS
    administrator reassigned on that same day the proposal was
    announced? I think we deserve some clear answers from the
    department on that particular fact.
        Ms. Boswell. I appreciate that question. However, personnel
    matters cannot be discussed.
        Ms. Pingree. All right. Well, we will take that up at
    another time. And I yield back my time. Thank you.
        Mr. Bishop. Dr. Harris.
        Dr. Harris. Thank you very much, and thank you very much
    for appearing before the subcommittee.
        As you know, I represent a rural area in the Eastern Shore
    of Maryland, and agriculture is one of our most important
    products, of course. And I appreciate the Secretary being
    interested in actually helping those kinds of communities.

                      RELOCATION FROM A RURAL PERSPECTIVE

        And I will tell you, in this day and age I do not
    understand why either of these agencies cannot relocate. We are
    not in a day and age where you need to be physically present
    anywhere for a lot of things. And our rural communities need
    the--and I think that is an important point that is made, is
    our rural communities really do need the economic boost from
    having a government agency, especially one that serves the
    local community like these two agencies do in our agricultural
    communities, from being there.
        That being said, as you know I have actually had three
    rural areas in my district that were very interested. I am
    going to say I am disappointed that the two locations that made
    the medium list from Maryland are not rural areas. The bottom
    line is, if one of the objectives is to move out of the
    Washington, DC area and then to pick Montgomery County and
    College Park--I know they have representatives, but I have got
    to tell you, you do not see corn growing in College Park.
        But from all those three locations that I recommended, you
    could look out and see grain fields. And they are ones where
    the cost of living is lower, and again, the economic boost
    would have been much appreciated.
        So that being said, I know that other agencies have--in the
    government, I know that CJIS, for instance, the FBI's Criminal
    Justice Information Service, moved out of Washington to West
    Virginia last year. Our understanding is that that move
    actually resulted in a higher retention rate at that facility
    and they did not have much attrition.
        I guess, interrupting the narrative that unless something
    comes inside the Beltway it is not going to work or it is not
    going to operate or people are going to flee, which I think is
    a narrative that, again, I think is rapidly--the falsehood of
    that narrative becomes very apparent once you get outside the
    Beltway and actually go into communities where people actually
    think it is nice to be able to own a home instead of having to
    rent for your entire life. It is nice to actually be able to
    walk to things or to have short drives, no traffic, all the
    things associated with rural communities.
        So can you address--are you familiar with the move of the
    FBI's CJIS to West Virginia? And it seems parallel. The only
    difference is, actually, there is no nexus of the Department of
    Justice into West Virginia. But there is certainly a nexus of
    USDA agencies into a rural area or a more rural area.
        Ms. Boswell. Thank you for that question. I am not
    personally as familiar with the intricacies and the background
    of that particular relocation, but definitely agree that
    especially considering 90 percent of our employees are
    currently outside of the National Capital Region, and in fact
    these two agencies are the only agencies that do not have
    representation outside of the National Capital Region, there is
    synergies there.
        And we are--we believe that this relocation is going to
    maximize the opportunities to hear on-the-ground feedback and
    to be at the forefront of emerging policy issues just as your
    constituents inform you of emerging policy issues, that we will
    be able to attract the best and brightest with ag backgrounds
    that may still want to participate in their family operation,
    or have some ties to their rural communities.
        We also believe that we can be more efficient. The work
    that these two agencies are doing is exceptional already. But
    we can be better, and the Secretary expects us to be more
    efficient and provide better service for our customers,
    ultimately.
        Dr. Harris. And again, just to reinforce, again part of my
    disappointment with looking over the middle list, or I guess
    you call it the middle list, of relocation sites, again, they
    are not all rural areas. Again, I am just--and speaking for my
    State, like I say, you can drive up through College Park today.
    It is not rural. There is no nexus with USDA except obviously
    there is the University of Maryland there.
        But I would urge the--I think this is exactly the way the
    Federal Government ought to go. I think we ought to move the--
    we ought to take advantage of the internet age and move these
    agencies out among the people because as you know, if you go
    outside the Beltway, there is a reason why it is the phrase
    ``outside the Beltway,'' because people outside the Beltway
    look and say, ``Look, this is not the real world that goes on.
    People do not understand what the real concerns are.''
        And I think this kind of policy decision by the Secretary
    is a good policy decision, and I yield back.
        Mr. Bishop. Mr. Moolenaar.
        Mr. Moolenaar. Thank you, Mr. Chairman.
        And thank you for your testimony today. I appreciate you
    explaining this process. I have just a few pcs-type questions
    for you, and it has to do with the criteria.
        You have mentioned that you have 67 expressions of
    interest. Are there certain criteria that are public that you
    are saying, OK, these are the 10 most important things that we
    are looking for in a new location?

                            SITE SELECTION CRITERIA

        Ms. Boswell. I appreciate the question. We have retained
    Ernst & Young. A very talented team is working on this for us.
    No USDA political official has seen the expressions of
    interest. We turned all of them that we received over to Ernst
    & Young for their evaluation. And because we are a Federal
    agency, we did have to do this a little bit differently.
        I will tell you Ernst & Young typically would do all of the
    work that they are doing right now in secret. But because,
    again, we needed to put out the public notice and get that
    feedback from all across the country, the criteria that they
    are using was based on the high-level criteria that was in the
    Federal Register notice: transportation logistics, workforce,
    community quality of life, and capital operating costs.
        Because the 136 is such a large list, they then took a cut
    at it with five other criteria that were based specifically on
    mission operations. And that feedback came directly from the
    agencies on what were the we have to have/we need to have type
    of criteria.
        And that related to compatibility with business schedules,
    transportation scheduling, labor force statistics--which is
    critical not only for our employees but our employees'
    spouses--and then filtering within the EOIs within the National
    Capital Region.
        We were inclusive. Again, we sent everything to EOI even
    though the intention is to relocate outside of the National
    Capital Region. And they conducted an analysis based on
    proximity to headquarters and comparing that to the Beltsville
    location.
        But as we go forward, now they can do the deep diving. Now
    they can really get into the weighted criteria that is from
    feedback from our employees through their agency leadership to
    the mission area. We have all sat together and went through
    what is important.
        And the following criteria in the weighted order that they
    will be evaluating them in their model is: quality of life,
    including diversity index, residential housing cost, access to
    healthcare, and home and community safety rankings; cost,
    include cost of living, commercial real estate costs, land
    costs; wage rate growth, workforce, labor force growth rate,
    labor force population; and then logistics and IT
    infrastructure; lodging availability is especially important
    for NIFA and our peer review panels; our proximity to
    stakeholders; and travel time to and logistically from those
    headquarters.
        Also I would note, in ERS, access to a census data center
    is part of that criteria, and also ensuring the IT
    infrastructure, as they will remain a Federal statistical
    agency. That is the nuts and bolts modeling that they are using
    with their expertise. But there are a lot of qualitative
    factors that go into this as well. This is not a math equation.
    And in their benefit analysis, they will perform that as well.
        Mr. Moolenaar. And that is very helpful, just to hear those
    weighted factors. I was assuming there were some, but I did not
    know if that was public information or how widely understood
    that was. But that is very helpful for people, to know that.
        And so for next steps, you mentioned going from 136 down to
    67, and you said there will be a shorter list coming up in the
    coming days. And let's say you have a group of 20, or I do not
    know what that shorter list looks like. Would that group then
    be asked to submit a proposal? Or is it simply that that is the
    group that there will be a site evaluation and go through these
    criteria? Or what are some of the next steps in the process?
        Ms. Boswell. As I said, we have not seen--I personally have
    not seen--the expressions of interest. But from my
    understanding, they vary greatly. Some expressions of interest
    have one site; some have 20. Actually, the 136 expressions of
    interest totaled 308 potential sites.
        And so Ernst & Young has had their hands full. But there
    will absolutely be further discussions, negotiations, site
    visits, and again, looking at that qualitative analysis. The
    example that Ernst & Young has used that really resonates with
    me is, you can find a building anywhere. We need to make sure
    that the community works for our employees and the mission
    overall.
        And so they are doing that process. Once they get to this
    shorter list--and again, in the coming days and weeks I will
    caveat that a little bit--and then doing that qualitative
    analysis and site visits and negotiations, which inevitably, I
    think, will require additional information from those who
    submitted.
        Mr. Moolenaar. Thank you very much. And thank you, Mr.
    Chairman. I yield back.

                           CURRENT USABLE FACILITIES

        Mr. Bishop. Ms. Boswell, let me ask you, you mentioned the
    need for the move, it was spawned by the expiration of leases.
    But we have not seen any data to support that need. You cite
    the recruitment and retention, with attrition, but we do not
    have any statistics on that.
        We do know that there was a hiring freeze recently. We know
    that you are concerned about the cost of the rental space. But
    we also have information that the department had planned for
    the expiration of those leases some time ago, and in fact, that
    there is a plan at USDA to renovate the South Building and the
    Carver Center, which are USDA-owned facilities.
        Would not those facilities, once renovated, provide
    sufficient space for all of the ERS and the NIFA employees in
    the Capital Region at an optimal cost? Since you already own
    it, you would not have to pay rent.
        Ms. Boswell. Thank you for the question. I am not--as I was
    not in the previous administration, I am not sure what other
    considerations were made at that point. But I can speak to
    that. Secretary----
        Mr. Bishop. The department does not maintain records from
    previous administrations?
        Ms. Boswell. I was not personally involved in----
        Mr. Bishop. I am sorry?
        Ms. Boswell. I was not personally involved in those
    discussions or what those proposals were. I can talk to----
        Mr. Bishop. But you have been involved in trying to
    relocate. Would you not look at previous research that was done
    and plans that were already developed to accommodate the
    expiration of the leases, which you give as the basis for the
    move?
        Ms. Boswell. Absolutely, Mr. Chairman. And in fact, we did,
    and there was an analysis done for NIFA because their lease was
    expired, and looking at the cost associated with relocating in
    the DC area. And Secretary Perdue and USDA currently are
    reevaluating our space utilization, and that was independent of
    the decision to relocate ERS and NIFA.
        Mr. Bishop. Would it not be appropriate to do that in the
    context of property that you already own, that is USDA-owned,
    and you would not have to rent other space nor pay the expenses
    of moving?
        Ms. Boswell. That certainly is going to be a consideration
    in the Ernst & Young analysis. However, that was only--the cost
    was one of the factors that the Secretary put forward as
    furthering our mission. That does not help our employees in
    their cost of living or quality of life.
        Mr. Bishop. Let me ask you, that was not what I understood
    the Ernst & Young mission to be. My understanding was it was to
    take proposals outside the capital area, and the properties I
    mentioned are right here almost on Capitol Hill.
        Ms. Boswell. Well, Mr. Chairman, in any cost-benefit
    analysis there has to be a baseline. And that baseline is going
    to look at the status quo and other available opportunities
    within USDA and present a full, robust analysis for the
    Secretary to consider.
        Mr. Bishop. It seems like you are sort of turning your head
    or refusing to look at existing plans that anticipated the
    expiration of leases that you mentioned.
        Let me ask you, in terms of the stakeholders, are not the
    primary stakeholders for ERS and NIFA really the people who
    have to do that research, and the direct stakeholders are those
    of us who have to take the data that is produced to make policy
    decisions? And are not most of those agencies based right here?
    And would not that facilitate collaboration? And is that not
    consistent with the national science principles for statistical
    agencies?
        Ms. Boswell. There is no one-size-fits-all stakeholder for
    these agencies. We have the customers, the farmers, that are
    using this data, and the market analysis and the forecasting
    they are doing to make their business decisions. There are the
    nutritionists that are using the research in school meal
    planning and other food safety or food program developments.
        There are also, as you mentioned, our academic colleagues
    that work as partners with us in delivering and investing in
    research. There are also policy-makers, and we believe that we
    should be informing policy from ground level rather than only
    reacting to policy and different legislative proposals that
    occur here in DC.
        And the ultimate stakeholder as well is the American
    taxpayer. And we need to make sure that we are efficient with
    our dollars to make sure that we are carrying out our mission
    the most effectively.
        Mr. Bishop. I could not agree with that more. Thank you.
        Mr. Fortenberry.
        Mr. Fortenberry. Just briefly. One question. Mr. Chairman,
    thank you.
        We have talked about the initial request for consideration
    or request for interest that generated 136 responses at
    locations across the country. That is abstract. Can you give a
    better feel for the intensity of interest around the country by
    various locations?

                                GAUGING INTEREST

        Ms. Boswell. Thank you for the question, Ranking Member. We
    have received stacks and stacks and stacks of support letters
    from Senators, Members of Congress, governors, community
    leaders, business leaders, associations, and local communities
    that are advocating not only for their particular site but the
    fact that science can be objective and trusted and done very
    well outside of the National Capital Region. And there is a lot
    of talent, untapped talent, that we could reach into that, just
    again, cannot afford or do not want to live in Washington, DC.
        Mr. Fortenberry. Thank you. I yield back.
        Mr. Bishop. Ms. Pingree.
        Ms. Pingree. Thank you. And thank you again for your
    answers to the questions. And I do not disagree with the basic
    premise that there are great people doing science in other
    places. We have incredible research universities. We have other
    institutions and labs around the country. All those things are
    true. I am from Maine. I think we do incredible work there. I
    do not think everything has to be in DC, and I do not think
    most of us are DC-centric.
        But the question about all this is the role of Congress in
    this oversight committee and other oversight committees, in
    being engaged in this conversation and understanding why these
    decisions were made. And yes, it is cheaper to live somewhere
    else. But there are also reasons why it is easier to
    collaborate and do some work here in DC. So there are pluses
    and minuses about this.
        And so I think our general argument is more about being
    engaged in the process, being part of the conversation, and so
    far disagreeing that this is a good move. We have been talking
    a lot, and you have mentioned multiple times about Ernst &
    Young and their role here. But I think we have very little
    understanding on this committee about the role of Ernst &
    Young.
        When were they first contracted? When was this contract
    first signed with them? What is in the original contract? What
    are the scenarios in the cost-benefit analysis that they are or
    have been conducting? What are we paying them? How much have
    you already paid? What is the--do you have answers to those
    questions?

                           THE ROLE OF ERNST & YOUNG

        Ms. Boswell. Thank you for the question. And again, I
    really want to apologize if there is a feeling that we have not
    been transparent. We are striving to be. We take the report
    language very seriously. The Secretary and the Deputy have both
    had personal conversations with members of this committee.
        We have engaged with staff consistently, answering their
    questions, have provided the opportunity to visit with Ernst &
    Young with your staff, and more opportunities like that are
    always available. And we are eager to answer any more
    questions.
        Specific to the Ernst & Young contract, we retained Ernst &
    Young following the solicitation and competitive bidding
    process. I would have to look at the specific day of when it
    was signed, but I believe it was around October following the
    extension of the expression of interest period, which I believe
    ended October 15th.
        We recognize that there is obviously a small cost, a cost
    in retaining that. But we felt that the objectivity and the
    expertise that they brought to the table would value and bring
    value to the process rather than having any appearance of
    political influence in this or lack of expertise in the area.
    We knew we needed to bring in that expert help.
        The two agencies split the cost of that, and that total
    cost, I can tell you right now, is approximately $340,000.
        Ms. Pingree. And what is the scope of the contract?
        Ms. Boswell. To ensure I stay in my lane, I am happy to
    provide that information back to you. We have----
        Ms. Pingree. You can give me that in writing.
        Ms. Boswell. Perfect.
        Ms. Pingree. And I would also be interested to know what
    are the scenarios in this cost-benefit analysis? If we could
    see the contract, that would be great. If we could know more of
    the detail of what they are being asked to do.
        Ms. Boswell. Absolutely. We can provide that. And also I
    would like to take this moment to mention that that cost-
    benefit analysis will be made available to you all when it is
    complete and conducted with a site recommendation.
        Ms. Pingree. Great. Thank you, Mr. Chairman.
        Mr. Bishop. Dr. Harris.
        Dr. Harris. Thank you. Just very briefly, my understanding
    is that there actually--in the last Congress there were a bill
    or bills that actually would not only--would attempt to block
    the Secretary's reorganization. I take it this is part of the
    Secretary's reorganization. But it actually might have the
    effect of actually requiring some of the agency employees that
    actually are around the country to actually move back to
    Washington and things.
        So I would take it that the Secretary does not agree with
    that kind of philosophy, I take it, in terms of the centripetal
    idea, that everything has to come inside the Beltway in order
    for it to function well?
        Ms. Boswell. Thank you for the question. Yes. That proposed
    legislation, we provide technical assistance on. And it would
    in fact require thousands of employees to move to Washington,
    DC, and it would close many ARS labs and NASS regional offices
    as a result of that legislation. It is definitely over-broad.
        If the intent was to--you get to the matter at hand, it
    would have dramatic impact on our scientific agencies across
    the country.
        Dr. Harris. And I take it not only would it have a dramatic
    impact on them, but I guess it would increase the costs, if you
    are taking people from around the country and moving them into
    a high-cost area?
        Ms. Boswell. I would expect that it would.

                                 SITE PROXIMITY

        Dr. Harris. Now, when you gave the proposals to Ernst &
    Young--and because when you were going through some of those
    criteria, some of those criteria are addressable by advances in
    technology that are not here yet. So for instance, there are
    communities where a year ago there was not broadband, there was
    not any, but there is going to be.
        One cannot conceive where, within the four years it would
    take to move an agency or build a building where it is not
    going to be there. So was that taken into consideration or was
    Ernst & Young asked to take that into consideration?
        It is not only the present capability, but it is the
    reasonably projected future capability of an area.
        Ms. Boswell. Thank you.
        That is the perfect example of the qualitative analysis
    that they are doing. Not everything can be put into a model and
    modeled out.
        As you are aware USDA is taking broad initiatives on
    broadband and working to expand broadband access throughout the
    country, and so that infrastructure is absolutely not only for
    now, but we need to make sure that this is laying the
    foundation for long-term success to deliver our mission and
    provide more diverse and more effective research in the long
    run.
        Dr. Harris. And which Ernst & Young office is doing this?
        Ms. Boswell. We actually have a team that is based here in
    DC and in New York. The analysis part of this is led by their
    construction team that is in New York that does this for
    private and public entities and has vast experience.
        Dr. Harris. And when you say New York, do you mean New York
    City?
        Ms. Boswell. It is New York City.
        Dr. Harris. And just out of curiosity, I mean, you are
    asking people from Washington and New York to judge the ability
    to move something to a rural area. Are you really confident
    that the people on the team actually understand how competent a
    rural area is to handle this job?
        Again, I understand the biases, and they are present, and
    anybody who pretends they are not present, leave the Beltway
    for a while.
        Are you confident that a team based in New York and
    Washington is going to make an adequate judgment about the
    ability to move something to an area that is not New York or
    Washington, that does not look like New York or Washington? Let
    me put it that way.
        Ms. Boswell. My role in this is to be the extension of the
    Secretary and to make sure that his intent is carried out with
    the guidance of our agency teams through the, again, employee
    committee processes to the Administrator and Director of NIFA,
    Acting Administrator and Director of NIFA, through the mission
    area and making sure that this is an Ernst & Young analysis.
        They are only providing the analysis of the information
    that we are giving them, and that is agency-driven, mission-
    focused information.
        Dr. Harris. OK. Thank you very much.
        I yield back.
        Mr. Bishop. Ms. Lee.
        Ms. Lee. Thank you very much. Thank you, Mr. Chairman.
        Good morning.

                            ERS/NIFA SENIOR STAFFING

        Let me ask you a couple of questions with regard to the
    Acting ERS Administrator, who I understand is not an economist.
    You have had an Acting Administrator since August.
        And it is my understanding you have had trouble finding a
    permanent person, and my understanding is that the job position
    for the ERS Administrator, there is no requirement to submit a
    description of how the applicant's experience and skills
    reflect Federal executive leadership qualities.
        So this is not part of the application process or a
    limiting factor for selection in the position, and I want to
    make sure that is correct. And if so, why did that occur?
        Why did you do that actually?
        And what does this mean for the type of individuals that
    you are willing to accept as an ERS Administrator?
        And then also, in terms of just the budget request, you
    would only retain, it is my understanding, 160 professional
    employees at the agency of about 350 employees that ERS had in
    September of 2017. This seems to be fairly inconsistent with
    the messaging that has been provided to the staff, nor to the
    public, by the Office of Secretary at USDA.
        So it seems like this request really does gut ERS, and if
    it does not, how are you going to handle it?
        Ms. Boswell. Thank you for the question.
        First in regard to the posting for the Administrator
    position, we cannot discuss specific personnel issues. However,
    we have posted, as you are aware, through the USA Jobs process.
    That is an ongoing process to make sure that we get the best
    individual for the job.
        That is being carried out through our Mission Area
    leadership to conduct that analysis, just as----
        Ms. Lee. Yes, but Federal executive leadership requirements
    or qualities, that is not a personnel issue, is it? That you
    can talk about just in terms of the criteria.
        Ms. Boswell. The posting that was, again, gone through or
    has went through the USA Jobs and is now being reissued, I can
    share that information with you.
        Again, that is being led at our Mission Area level as all
    hiring decisions of the like would be, but I am happy to get
    you more information about it.
        To your second question, the Secretary will be here to
    discuss the President's budget in detail in the coming weeks,
    and so I will kind of yield to specific budgetary questions to
    him.
        But I will say that our intention, and we have stood true
    to this and plan to going forward, this is not a reduction in
    force. And, in fact, the Secretary has authorized the hiring of
    60 positions at ERS, which is the highest single approved
    hiring plan since it was centralized in DC.
        For NIFA, we have approved 75 positions of hiring. So we
    are making sure that we are hiring to appropriated levels, and
    we are being strategic in creating redundancy and filling
    critical positions to make sure we carry out our mission
    effectively during this transition period.
        Ms. Lee. Well, let me go back to the question I asked about
    the Federal executive leadership experience. I appreciate your
    getting us a copy of the job description, but could you just
    answer whether or not that is listed in the job description?
        Because I would think you would know and you could tell us
    whether that is or is not a qualifying requirement for this
    position.
        Ms. Boswell. Thank you.
        Again, because, again, this is done and operated at our
    Mission Area level, that is not something as a senior advisor
    to the Secretary I am directly involved with, but I am happy to
    get you more information about that and answer those questions.
        Ms. Lee. So you just do not know.
        Ms. Boswell. Correct, and I do not want to speak
    inaccurately.
        Ms. Lee. OK. Thank you very much.
        Thank you, Mr. Chairman.
        Mr. Bishop. Thank you.
        I notice that the President's proposed budget for ERS would
    cut total funding from $86.8 million to $50.5 million. Fifty,
    point, five million of that is dedicated to the relocation.
        ERS staff-years would be cut from 330 to 160, 76 of which
    would be located in USD Headquarters.
        It seems to me that ERS is not being given the resources or
    not having the resources requested by the administration to
    maintain the high quality of research that we have enjoyed in
    the past with that dramatic cut.

                               ADDITIONAL REASONS

        Now, let me ask you. You point out that many USD agencies
    are located outside of Washington, DC, and you use that
    partially as a rationale for relocating ERS and NIFA. And that
    is true, to a certain extent.
        But you take USD agencies like NRCS, Risk Management
    Agency, and FSA. They actually run programs that assist farmers
    and ranchers directly, and of course, regulatory agencies like
    GIPSA and Food Safety Inspection Service need to be able to
    work in the field, and very large agencies like ARS are able to
    tailor their programs to distinct regional needs, and they
    obviously need to be distributed across various regions of the
    country.
        But can you tell me some compelling reason for a national
    level program for policy evaluation to be located outside of
    Washington, DC, when the major stakeholders, the vast majority
    of the beneficiaries of ERS research and statistical
    collections are the Administrators of the USDA programs, the
    food and agriculture policy decision makers, the members of
    Congress, and the other Federal agencies that depend upon the
    research that is done by ERS and NIFA or that is funded by NIFA
    in any event?
        Can you tell me why there is a compelling reason to move
    it?
        We do not have any data that says that you are losing
    employees because of the cost of living. You did not supply us
    with that data, and apparently you had resources that you
    intend to hire additional employees.
        You did not look at the cost of renovating the South and
    the Carver Buildings, which would obviously not require you to
    pay rent.
        Can you tell me what the compelling reason is to move it?
        It seems like where I come from they say, ``If it ain't
    broke, don't fix it.''
        Ms. Boswell. Thank you for the question, Mr. Chairman, and
    the opportunity to even further explain the Secretary's goals
    here.
        First of all, we can always be better, and we can always be
    more responsive, and again, the teams at ERS and NIFA do great
    work. But we believe that we can be better and should be
    better.
        The mission of these agencies is agriculture and food
    research. The primary customers and really facilitators of this
    research are the agriculture sector and food sectors. This is
    farmers; this is rural America. These are food companies. It is
    food and agriculture production.
        And while you are absolutely correct that policy makers at
    the Federal level and other departments utilizing that
    research, especially specific to ERS, just as your constituents
    bring policy matters to you, we believe we can bring ground
    level policy issues to DC and inform that policy in a proactive
    way rather than being only reactive.
        Mr. Bishop. We have a worldwide interest here, and our
    producers in America that export worldwide need to have the
    information, and it is not just localized in our various
    communities. We have producers all over the country. We have
    manufacturers and exporters of food all over the country.
        Ms. Boswell. You are absolutely right, Mr. Chairman, and
    frankly, we do not see a compelling argument that that research
    at a global level cannot be done outside of DC.
        Mr. Bishop. Thank you very much.
        Dr. Harris.
        Dr. Harris. Thank you.

                                RURAL PROSPERITY

        Just very briefly, you know, I am reading the strategic
    goals of the USDA, and goal number four is a very important
    goal. It is: facilitate rural prosperity and economic
    development.
        I would hope that that actually, again, in this age of
    technology where you really can site a lot of things in a lot
    of places, that that would be of a very high priority as you
    look to relocate these agencies that are paid for by the U.S.
    taxpayer, but are really for the farmers and for the rural
    communities.
        That is all I would suggest. It is one of the strategic
    goals. You probably do not need to look any further.
        Thank you, Mr. Chairman.
        Ms. Boswell. Thank you.
        Mr. Bishop. Well, let me thank you very much, Ms. Boswell,
    for your engagement and your participation, and we appreciate
    very much your comments in behalf of the department.
        And at this time we will take a brief recess so that we can
    have our second panel.
        Ms. Boswell. Thank you for the opportunity.
        [Recess.]
        Mr. Bishop. The committee will reconvene.
        I now would like to introduce our second panel.
        Dr. Buchanan and Dr. Woteki are former Under Secretaries
    for Research, Education, and Economics, who served under
    President Bush and President Obama, respectively, for 10 years.
        Dr. Lee and Dr. Evans served as Administrators of the
    Economic Research Service for a total of 60 years under
    Presidents Reagan, George H.W. Bush, George W. Bush, and Obama.
        This is a very impressive group with intimate knowledge of
    USDA leadership, organization, and management. We welcome your
    insight, and we are very pleased to have you appear before our
    committee today.
        And let me ask Dr. Harris for Mr. Fortenberry if he has any
    remarks before hearing from our panel.
        Dr. Harris. No, I do not, but thank you for asking.
        Mr. Bishop. Well, thank you.
        And let me recognize our distinguished guests for brief
    oral statements, and then we will proceed with questions.
        I note that each of your entire written statements will be
    included in the record.
        Dr. Buchanan.

                           Testimony by Dr. Buchanan

        Dr. Buchanan. Well, thank you, Mr. Chairman and members of
    the subcommittee for giving us the opportunity to share some of
    our thoughts on the proposals to relocate NIFA and ERS out of
    the Nation's capital region and to realign the Office of
    Economic Research Service.
        While this might appear to be a simple administrative
    change, in my opinion, it is a major fundamental change that
    will have far-reaching implications for our research programs
    in the future.
        Mr. Bishop. Would you pull your microphone towards you?
        Thank you.
        Dr. Buchanan. Can you hear me better now, Mr. Chairman?
        Thank you.
        As soon as I heard this back early last fall, I immediately
    called some of my former colleagues, administrative heads of
    agriculture, and told them what it was that I had heard and had
    they heard it, and I got a unanimous concern from all of the
    people that I called about it.
        And so several of us put together a letter outlining our
    concern, and I have learned that has now been signed by well
    over 75 agricultural leaders in the Land Grant Universities and
    some of the support people.
        And as of this date I have not gotten a single and I am not
    aware of any support coming from any individual for the
    proposal that is not from a group, institutional organization,
    that is looking to host NIFA and ERA.
        And for the past half century, many agricultural research
    leaders, such as myself and the folks here at this table, have
    worked hard to try to more fully integrate agricultural science
    into the greater scientific community in Washington, and I
    think we made a lot of progress over the years, but we still
    have a long way to go.
        I think that we have got to build and continue to build and
    strengthen our relationship with all of the agencies involved
    in research in Washington, and that includes NIH, NSF, EPA,
    NIST, NASA, DOE, the various National Academies, and other
    groups that have an interest in research because we want to be
    a part of the greater research community.
        And agricultural research benefits greatly from funds
    contributed by other departments and agencies in Washington.
    Funds for co-funded projects reached almost $2.5 billion above
    that provided by NIFA for agricultural research.
        Research policy is pretty much made in Washington, and we
    need to be where the action is, and I think that is important.
        We clearly see that both State and Federal sides are true
    partners in agricultural research and education programs. In
    fact, during the celebration of the 150-year celebration of the
    land grant legislation that created our Land Grant
    Universities, USDA and the Land Grant Universities issued a
    statement about principles of partnership for the future
    strength of the system and the true beneficiary of this effort
    is the American people.
        The research component for agriculture was ushered in with
    the Hatch Act by this body of 1887. The Smith-Lever brought in
    an extension in 1914, but there has been many, many, many major
    changes and reorganizations of our system since then, starting
    with the Adams Act of 1906, the Purnell Act of 1925, the
    Bankhead-Jones Act of 1935, and several others.
        Congress recognized a lot of problems along the way, too.
    For example, the 1890 legislation provided for a land grant
    status for African Americans. The 1994 legislation provided for
    a land grant status for Native Americans, and it was not until
    the 1977 farm bill that the Congress recognized the need for a
    mission for the 1890s for research.
        So this body has been actively involved in so many changes
    over the years in our agricultural research and education
    system.
        And finally, the 2008 farm bill had a lot of major changes.
    I know some of you remember those. I was very much involved in
    that since I was Under Secretary during that time, but in the
    2008 farm bill, the Cooperative States Research, Education and
    Extension Service was reorganized and renamed. That is when we
    got the NIFA name in the 2008 farm bill.

                          AN EMPHASIS ON DUE DILIGENCE

        But also the bill provided for a Chief Scientist for USDA,
    which is something that I think is very appropriate that came
    out of this body after a lot of deliberations, and I know some
    of you remember.
        We had meetings on top of meetings with everybody, and we
    had private groups that had interest. We had APLU, and of
    course, the department had interest. So it was a long process.
        I share this background for one particular reason, to
    illustrate the many changes that have been made in our system
    over the years. But I want to emphasize something that always
    these changes were made with a lot of discussion and a lot of
    debate and a lot of input from just about everybody that wanted
    to have input, never by spur of the moment, unilateral
    decisions.
        Changes are usually based on two criteria: to fix a problem
    or to make something better. The department has proposed some
    items to be fixed, such as the high cost of rent, recruitment
    and retention of staff, working conditions for personnel, and
    being closer to farmers.
        One could question the validity of each of these problems
    or so-called problems. For example, the idea of being closer to
    farmers makes absolutely no sense to me. NIFA's primary
    clientele are not farmers. NIFA's primary clientele are the
    scientists, administrators, and national agricultural research,
    and the greater scientific community. That is their primary
    clientele. They work primarily with other scientists and with
    the administrators, not directly with farmers.
        The department does not offer any rationale at least so far
    that I have seen for making our research system better. I
    suspect this is because I really do not see a way that it is
    going to make our research system any better by relocating
    somewhere outside of the Nation's capital region.
        In view of this, I cannot see why or any value in expending
    any research resources for this until such time as Congress
    receives, reviews, and approves a real honest cost-benefit
    analysis.
        I truly hope the Secretary will reconsider this proposal
    and keep NIFA and ERS in the area where I think they can do a
    better job of the things that they are supposed to do. They go
    back all the way back to the first Office of Experiment
    Stations in 1889, which was set up to coordinate and to try to
    bring some type of cohesion to the whole system that is spread
    all across this great country.
        In my opinion, our agricultural research system is far too
    important to be fundamentally changed without careful study and
    thoroughly investigating all of the options available. Such
    changes should clearly fix an identifiable problem or to make
    our system better.
        Thank you very much for your attention.
        [The information follows:]

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        Mr. Bishop. Thank you, Dr. Buchanan.
        Dr. Woteki.

                            Testimony by Dr. Woteki

        Dr. Woteki. Good morning, Chairman Bishop, Dr. Harris, Ms.
    Pingree. Thank you for this opportunity to testify today.
        I am opposed to the Secretary's proposal and believe that
    it will significantly weaken the scientific enterprise that is
    so critical to Americans' food, economic, and national
    security.
        There are four main reasons that I oppose the proposal, and
    I explain those reasons in more detail in my written testimony,
    which I have submitted for the record.
        I also believe that the proposal that is the topic of
    today's hearing should be considered together with the
    President's budget request for fiscal year 2020, which was
    recently made public. Taken together, they undermine America's
    ability to address looming threats to our food security and
    national well-being.
        Briefly, my four reasons for opposing this proposal are:
        One, the organizational structure and location of these
    agencies are not the problem. The major problem facing
    agricultural research is the disinvestment in public funding
    that has occurred over the last 30 years and that imperils our
    future agricultural productivity and poses threats to our
    economic competitiveness and national security.
        Two, throughout this process justification, consultation,
    and due process have been lacking. The Secretary's plan did not
    have appropriate review and consultation prior to sending out
    the request for expressions of interest from States, and the
    reasons provided for moving the agencies, quite frankly, do not
    hold water.
        Neither NIFA nor ERS experienced any extraordinary issues
    with recruitment and retention, does not put them closer to
    stakeholders, and no analysis of costs and benefits has been
    provided.
        Studies by the Office of Personnel Management, the National
    Academy of Sciences, and the Office of Science and Technology
    Policy have shown that low pay is the biggest problem for
    recruitment and retention of scientists and economists. This
    proposal will actually lower pay and make it more difficult to
    recruit a talented workforce.
        My reason number three is that realigning ERS to report to
    the Chief Economist is really a fundamental misreading of roles
    and responsibilities. ERS is a research and statistical agency
    and appropriately belongs in the research, education, and
    economics mission area.
        Lastly, the functional capacities of ERS and NIFA are being
    damaged, and since the Secretary's announcement both agencies
    have lost experienced, well trained staff, and the President's
    budget, as you pointed out, Mr. Bishop, proposes cutting 170
    staff-years from ERS.
        In conclusion, I want to thank the members of this
    committee for holding this oversight hearing and providing the
    opportunity for me to share my views on what I consider to be a
    proposal that is ill-considered and terribly damaging to our
    long-term future.
        I urge you to include language in the fiscal year 2020's
    appropriation spending bill that will provide no funding to
    relocate ERS and NIFA outside the National Capital Region,
    prevents the realignment of ERS or NIFA outside of USDA's
    research, education, and economics mission area, and that
    includes a general provision prohibiting any other funds from
    being used for the realignment or relocation of either ERS or
    NIFA.
        I look forward to your questions.
        [The information follows:]

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        Mr. Bishop. Thank you very much.
        Dr. Lee.

                              Testimony by Dr. Lee

        Dr. Lee. Thank you, Mr. Chairman and committee members.
        I appreciate the opportunity to make a statement.
        My name is John Lee. I had a 32-year career with USDA's
    Economic Research Service, the last 12 years as Administrator,
    and my remarks today are focused on ERS, but I would be happy
    to speak to the importance of NIFA, which I think is a
    tremendously important agency.
        Now, regarding ERS, I would like to make just three points
    and the fleshing out of these points is in my submitted
    testimony.
        The work of ERS is very important. Much of what Americans
    know about U.S. agriculture and the food industry comes from
    ERS. For decades ERS has monitored changes in the structure and
    organization of the agriculture and food industry. It has
    explained the economic and technological forces driving these
    changes. It has analyzed the consequences and implications of
    these changes and evaluated the effectiveness of alternative
    policies in dealing with those changes.
        ERS is not a policy organization. It is a non-political
    research organization whose work is available to all who make
    decisions about agriculture and food and natural resources in
    the interest of evidence-based or informed decision making.
        And most people do not see ERS on the stuff they pick up
    and read in the papers or read in farm magazines or read in the
    commodity magazines, but most of the stuff there has ERS
    product as a basis for what is in there.
        Second, the reasons given by the USDA administration for
    relocating ERS out of the Washington area and reassigning ERS
    to the Office of the Secretary, I believe, could easily be
    challenged, and I do that in my larger testimony.
        And, third, I think the very existence of ERS could be
    under threat. ERS staff continues to do the best they can with
    the resources they have. They turn out excellent work, but talk
    of politization of the agency and uncertainty about location
    weighs heavily on morale.
        Top researchers are being hired away, and proposals by the
    department for further draconian cuts of ERS staff and budget
    could be the beginning of the agency's demise.
        Mr. Chairman, I will be happy to speak further to any of
    these points and to others. I deeply appreciate your interest
    and that of the committee members in protecting the access of
    American agriculture to honest information and analyses.
        I urge the Congress to see that ERS stays intact, stays in
    Washington, and stays non-political and adequately funded.
        Thank you, Mr. Chairman and members of the committee.
        [The information follows:]

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        Mr. Bishop. Thank you, Dr. Lee.
        Dr. Smith Evans.

                          Testimony by Dr. Smith Evans

        Dr. Smith Evans. Thank you.
        I get to do clean-up. So many good points have been made.
        Thank you, Chairman and members of the subcommittee, for
    this opportunity.
        John has me beat, but I was with ERS for 29 years, 10 of
    which was associate or acting or actual Administrator.
        ERS has worked since 1961, collecting critical data and
    doing research that serves the public good, and the agency
    focuses on national issues, not local; U.S. global food
    security, which are elements of national security; the
    efficient and effective design and management of food and
    agricultural programs; and the collection, compilation, and
    interpretation of statistics that describe national phenomena.
        I want to give a couple highlights from my testimony on
    realignment and also rebut some of the USDA's rationale for
    relocation.
        So OMB's statistical Directive Number 1, which currently is
    being codified under the foundations for Evidence-based Policy
    Making Act, identifies the independence of Federal statistical
    agencies from political bodies as a necessary principle, going
    so far as to say that even the perception that its data
    collection, research, or dissemination of its findings might be
    manipulated for political or partisan reasons is unacceptable.
        The REE Under Secretary's Office is the buffer, has always
    been the buffer that protects that from happening.
        It has been said, you know, the Under Secretary is a
    political appointee, and the Chief Economist is a civil
    servant, but that is totally beside the point. As was already
    pointed out, the Under Secretary in the Code of Federal
    Regulations is given responsibility for scientific integrity.
        And I have seen that responsibility exercised expertly and
    routinely by these two and other REE Under Secretaries. It is
    not easy to talk back to the Secretary and say, ``That is
    science. We are not going to delay the publication of that
    report,'' and they have done it.
        And the Chief Economist has no responsibility for research,
    much less scientific integrity.
        Now, turning to USDA's rationale for relocation, I agree.
    Somebody else said it does not hold water. It surely does not.
    While farmers and ranchers are informed by ERS work, they are
    not direct recipients or users of most ERS products.
        ERS is not a regulatory or farm program agency that must
    work directly with agriculture producers. It is not a large
    research agency like USDA that has a regional component. So the
    comparison of ERS with agencies located primarily outside of
    Washington, DC is meaningless, I think.
        Finally, I am not sure that the Secretary's Office has
    visited a Land Grant College Department of Agricultural
    Economics lately. I value them. I have many, many colleagues
    there, but few students anymore are the sons and daughters of
    farmers and ranchers. They used to be. They are not, and there
    are not enough of them to populate the Land Grants.
        Many are city folk, and according to information from the
    National Science Foundation, increasing numbers of Ph.D.
    recipients are not American citizens, which means they cannot
    be hired by ERS.
        So I do not see how the relocation in any way helps use,
    recruit or retain people by virtue of our proximity to Land
    Grants.
        I look forward to your questions. Thank you very much.
        [The information follows:]

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        Mr. Bishop. Thank you very much, Dr. Evans.
        On the issue of realignment in your testimony you mention
    the scientific integrity as set forth in the Code of Federal
    Regulations, and you also mention the National Academy of
    Sciences' authoritative principles and practices of a Federal
    statistical agency.

                          EXPLAINING THE MOVE FURTHER

        Would you, and each of you if you care to, comment on how
    this move would violate those principles and violate that
    responsibility, as well as, again, elucidate or elaborate on
    the Chief Economist as opposed to the scientists, the
    researchers, and the roles within the department with regard to
    the Secretary and policy versus data and research?
        Dr. Smith Evans. The Chief Economist has responsibilities
    for coordinating across many agencies in the department, the
    production of situation and outlook, commodity situation and
    outlook and trade statistics.
        It is an amalgamation of information that is qualitative
    and quantitative; that is opinion based; and some of the
    agencies sometimes do insert some political opinion--opinion;
    let's just say ``opinion''--and it is the Chief Economist's
    responsibility to take all of that and come out with a
    projection or a baseline that is used as a baseline for
    evaluating USDA policies.
        But it is not research. You are not testing any hypotheses.
        Mr. Bishop. On the other hand, the----
        Dr. Smith Evans. And the Under Secretary does have. I said
    and elaborated in my testimony that that function is for
    research and science. Yes, responsible for scientific integrity
    across the department, but focusing on the science agencies.
        Mr. Bishop. Anyone else?
        Dr. Woteki. Well, I might further expand on that since that
    scientific integrity policy was developed during my watch to
    actually respond to what had been abuses of science during the
    previous administration or I should say perceived abuses.
        The scientific integrity policy, as Dr. Smith Evans said,
    resides for its overall enforcement with the Chief Scientist,
    who is also the Under Secretary for REE, and it is a
    department-wide purview.
        The other key role of the Under Secretary for REE is
    setting the broad priorities for the research programs under
    the purview of the REE mission area, and those were laid out in
    the road map for science that was required in the 2008 farm
    bill and subsequently elaborated further in the Agricultural
    Research and Action Plan.
        The work that the Economic Research Service does is
    integral towards achieving those research objectives, and ERS
    research, along with its role as a statistical agency, I
    believe are more secure, will be better protected if the agency
    remains within the REE mission area.
        Mr. Bishop. Thank you.
        What are the reasons that as a national function ERS and
    NIFA should be in the capital area as opposed to in a regional
    location?
        And my time is almost up.
        Dr. Smith Evans. Very quickly, we worked--``we,'' I still
    say ``we.'' I have been done for 8 years.
        ERS works closely with other people in different
    statistical agencies. It meets monthly with all of the
    statistical agency heads. I do not think you can do that by
    Skype.
        A lot of it is informal. You are talking on the side, and
    you know, as proceedings are going along, and we would miss out
    on that.
        Dr. Buchanan. I would like to comment.
        I think the single most important thing is the opportunity
    to visit with all of these other agencies. We have so many
    collaborative relationships. A lot of you do not realize.
        EPA, for example, we have many, many cooperative
    relationships between NIFA and EPA, the educational component,
    but all kinds of activities. And it is not done just at the
    leader level. It is done at the worker bee level.
        So if you move, if you divide your troops, it leaves so
    many people here, NPLs, for example. Certainly they will be one
    way to coordinate, but that is not where all of the
    coordination is done. The coordination is done very often at
    the lower level of echelon of personnel, at the scientist
    level.

                            REASONS TO HALT THE MOVE

        Mr. Bishop. My time is up, but, Dr. Woteki, you wanted to
    respond to that?
        Dr. Woteki. Yes, just one further brief point. These are
    national programs, as Dr. Smith Evans pointed out. In the 90
    percent figure that Ms. Boswell provided of USDA personnel
    being located around the country, those are service delivery
    functions, the inspectors for the Food Safety and Inspection
    Service, the people who are working in the national forests,
    the people who are working in the county offices for NRCS and
    the Farm Services Agencies.
        So they are quite distinct and different roles.
        Mr. Bishop. Thank you.
        Dr. Harris.
        Dr. Harris. Thank you very much.
        And thank you all for your service to the agriculture
    community.
        Now, I assume all of you are aware that the USDA has stated
    that a core group of staff will remain in DC from these
    agencies. So they are not moving everything out of DC.
        So, Colonel Buchanan, because I like that title best for
    you, I was a commander in the Navy. I like the Colonel title.
        In your testimony you say the idea of being closer to
    farmers makes absolutely no sense, but I am going to ask you,
    and I do not know if you were in the room when I asked the last
    panelist. You know, I brought up the strategic goal of the
    Department of Agriculture. One of them is to facilitate rural
    prosperity and economic development.
        Now, I assume all four of you are going to agree that is a
    reasonable goal, and I assume all four of you understand how
    farming communities work. They work in a cycle. You get a bunch
    of bad weather. You are in a bad cycle.
        One thing that can save that community is having something
    in their economy that actually has no cyclicity, and ladies and
    gentlemen, the Federal Government has no cyclicity. OK? I know
    we have shutdown, but everybody gets paid. Those paychecks come
    in. There is no cyclicity.
        And representing the rural community is of critical
    importance, that we have economic development in those
    communities of something that offsets the cycles of
    agriculture.
        So, Colonel Buchanan, would you not say that if you could
    put this agency one hour and 15 minutes away where you open the
    windows and you see corn fields all around you, but you could
    drive into Washington for that monthly meeting maybe or you are
    close to the capital area, that might fulfill the requirement?
        Dr. Buchanan. Being located in the National Capital
    Region----

                            THE VIRTUES OF PROXIMITY

        Dr. Harris. OK. Let me back up just a little bit. National
    Capital Region is an artificial designation. If you look at the
    map, it includes the entire Loudoun County, but it only
    includes half of Anne Arundel County in Maryland. It includes
    none of my district right across the Bay Bridge, which is
    within one hour and 15 minutes' drive to NIH, to the USDA
    headquarters.
        So when you say you cannot move it outside the capital, do
    you really mean that or do you really mean you should be within
    reasonable driving distance for an occasional meeting that has
    to take place downtown, but where the cost of living is one-
    half of what it is in Washington, where bringing those Federal
    dollars could be very important?
        Would you agree with me that that might be reasonable?
        Dr. Buchanan. Of course, and this is where a real honest to
    goodness debate would have been helpful.
        Dr. Harris. I could not agree with you more. Let me keep on
    going because we have got votes in a few minutes.
        Dr. Woteki, you say this has to be taken in context with
    the President's budget request, but you have been around
    Washington long enough to know that the President's budget is
    dead on arrival in Congress, and that the President's budget
    had to be low because Congress has not set new budget caps that
    are above even the budget cap deals from 2 years ago, right?
        So the President merely followed the statute. I mean, did
    you want him to create a budget that did not follow statute?
        I mean just basically because two of you brought up the
    issue of the President's budget and ERS decrease in funding
    positions that we know are never going to occur. Is that not a
    straw man?
        Dr. Woteki. No.
        Dr. Harris. Well, I am going to disagree with you on that.
        Dr. Woteki. No, sir.
        Dr. Harris. I think it is a tremendous straw man, and my
    prediction, Doctor, is that next year we will have the same
    number or more of ERS positions, and our agriculture funding
    will be level.
        So I think it is a straw man, and I will be proven out.
        Dr. Lee.
        Dr. Woteki. The President's budget is an expression of
    policy.
        Dr. Harris. Ma'am, ma'am, it is not. It is expression of
    the failure of Congress, and that is a shame because you could
    have made the argument, and I respect you making the other
    arguments you made, but as soon as you brought up the
    President's budget in the context of the failure of Congress to
    pass budget caps, it became a partisan argument.
        Agriculture should never be partisan. It should be about a
    very important economy in our country to that.
        And I will tell you again, and, Dr. Lee, I was just going
    to say, again, you know, putting it within reach of a
    reasonable drive of Washington seems like that is kind of win-
    win.
        Because agriculture communities, and I just want to
    reinforce this, and I think everybody up here kind of
    represents agricultural communities in their districts. They
    need that constancy of some of the economics. So whenever we
    can, we should think of creative ways to move these, move some
    of the economic development that a Federal agency can bring to
    a region to one of those regions.
        And I would urge that we think outside the box on this, and
    if we need to move it outside what is technically the National
    Capital Region but into an area that does have the economic
    swings of an agriculture community, we ought to do it.
        And with that, I yield back, Mr. Chairman.
        Mr. Bishop. Ms. Woteki, I think Dr. Harris cut you off. You
    were trying to elaborate on the relevance of the budget to the
    scientific research.

                       SCIENCE AND THE PRESIDENT'S BUDGET

        Is there some relationship between the standards set by the
    principles that you referred to in your testimony?
        Dr. Woteki. Well, sir, in my response, what I was trying to
    say was at least during my tenure, 6 years that I was Under
    Secretary and Chief Scientist at USDA, we did our best to put
    together a budget that reflected what our priorities and
    principles were for research.
        And so my dismay at seeing the President's budget and the
    implications for the Economic Research Service, the budget is
    at direct odds with the stated testimony of Ms. Boswell, who
    just preceded us, of the intent to invest in these agencies and
    particularly ERS.
        Mr. Bishop. Just before I yield to Ms. Pingree, the
    principles and practices for Federal statistical agency, which
    OMB has designated ERS as one, include an active research
    program, which means that it has to be adequately funded; is
    that not correct?
        Dr. Woteki. This is correct, sir.
        Mr. Bishop. So this would not be consistent with the
    National Academy of Sciences' standards.
        Dr. Woteki. Correct, sir.
        Mr. Bishop. Thank you.
        Ms. Pingree.
        Ms. Pingree. Thank you, Mr. Chair.
        And I would just say that, Dr. Harris, that Mr. Fortenberry
    should have never left the room because he had the chance to
    make the case for Nebraska, and you have been making the case
    for Maryland. [Laughter.]
        He is kind of losing out with your argument there.
        But that said, I still oppose the move out of Washington,
    no matter what, even if it is nearby. I do not think that
    works.
        But first, I want to thank you all for your service, for
    the hard work that you have done over the years for the USDA
    and for the American people and for keeping scientific
    integrity in this agency, which is critically important, and
    you have all made really wonderful cases for why this move
    should not happen.
        And I appreciate your taking the time today to come and do
    that, and come back to help us better understand why that is
    challenging.
        And in many ways, I do not have any other questions for
    you. I think you have done such a good job articulating it. I
    could ask you some more questions to restate what you have
    already said, but I am not sure I need to.
        One thing that did occur to me in listening to you talk,
    you brought up some other interesting information that I would
    just like to hear a little bit more.

                        PUTTING AN EMPHASIS ON RESEARCH

        At different points in your testimony, and anyone can feel
    free to elaborate on this, you mentioned that one of the real
    problems is just our overall disinvestment in public research,
    which I think is true in many ways, and that is also reflected
    here.
        And one of the reasons that it may be difficult at times to
    find the people to do the jobs is low pay, not that we need to
    move them to some other part of the country to find a pool of
    people to do those jobs, especially when you are talking about
    people with the skills and experience we are looking for.
        And then just any underlying concerns that you have that
    this move is related to a general undermining of scientific
    integrity or just valuing science. It may not be just to skew
    the science, but are we increasingly putting less and less
    value on investing our Federal dollars in science to have the
    information that people need, especially as decisions get more
    difficult going into the future?
        So I am sorry. That was a long explanation, but you have
    all said a little bit about this, and anyone who wants to
    elaborate on any of those things, I would just like to learn
    more.
        Dr. Buchanan. Well, I would like to say that I think the
    perception that I have is there is a failure to really
    understand the real role of NIFA in our system, and that causes
    decisions to be made that I think are counterproductive.
        I go back to what I mentioned earlier about the Office of
    Experimentation. You know, with the passage of the Hatch Act in
    1887 by William Henry Hatch, he was chair of the Agriculture
    Committee at that time, and he is the one that took the lead
    after the guy from Iowa and the guy from Illinois lost the
    election.
        So he picked up the mantle and drafted the legislation that
    created the Hatch Act, but there had already been about 14
    States that had started some type of experiment station, mostly
    on a shoestring, but that was the impetus to get it started.
        But it only took a year before they realized that they had
    created this system of State experiment stations that were
    quite independent. The way the experiment station was
    structured was very, very unique, and the money was allocated
    to the State, and then the State determined what research would
    be done.
        But they needed some way of coordinating the effort of all
    of these independent State experiment stations, and that is
    when the Office of Experiment Stations was created, and in one
    sense that is, I guess, the forerunner.
        Going back to then, there have been Lord knows how many
    changes over the years to get to NIFA. Of course, I lived
    through CSRS, and then CSRES, and now NIFA, and what comes next
    I do not know, but there has been many, many changes, but
    always looking to how we could make the system work better.
        And so I guess that would be my response to your question.
        Ms. Pingree. Thank you. That is very helpful. Thank you.
        Dr. Woteki. I have included a couple of graphs with my
    testimony.
        Ms. Pingree. Oh, great.
        Dr. Woteki. They are actually based on ERS research and
    make some of these points that you just asked some questions
    about.
        And I know that the Appropriations Committees have had a
    tough time over the last several decades in finding funds to
    continue the public investment in agricultural research, but
    the situation we are in now is that the current level of public
    investment in agricultural science in constant dollars is less
    than what it was in the 1980s, and that at least for the short
    term, it does not look like we will be seeing that changed or
    any decline in agricultural productivity.
        But the future trends in agricultural productivity because
    that is so tightly tied to the public investment in
    agricultural research are at risk. And this is based on
    research that ERS has done, the kind of research that I think
    is in danger with the budget proposal and with this relocation
    and realignment proposal that is on the table.
        So there is more in the written testimony if you would like
    to take a look at that.
        Ms. Pingree. I will go through that. Thank you.
        Dr. Smith Evans. Thank you.
        I would like to point out something we have not talked
    about, and that is that the research and the commodity outlook
    and projections were highly complementary, highly complementary
    of each other; that the outlook projections benefit from the
    research that is done on basic principles of commodity markets
    and so forth, and the research benefits from the deep knowledge
    of commodities by the commodity analysts.
        To separate them reduces the effectiveness of both, and
    according to the stay list that the USDA released, it is the IT
    people and the commodity experts that would stay in DC, and
    everybody else, which I guess is the research staff of 84,
    would be outside there.
        And I think that the coordination and collaboration between
    the two would be damaged.
        Ms. Pingree. Thank you. That is helpful.
        Dr. Lee. Monday night I had a call out of the blue from the
    president of the University of Nevada at Reno. I was surprised
    to get the call. I met this man years ago, but he had seen I
    was coming here.
        And he said, ``I just want to impress upon you the critical
    importance of keeping ERS in Washington and keeping it
    objective, keeping it in a situation that it provides sort of
    the intellectual center, if you will, of what we are doing out
    in the States and the universities. It is so important to us,
    and we could not function if there were any perception of loss
    of integrity or objectivity.''
        And the same Monday afternoon, I got an email from a
    department head in a southern State who said, ``I just want to
    let you know that it does not have to be any loss of integrity
    if there is just the perception of loss of integrity, we will
    not be doing business with you because we cannot afford to be
    affiliated with an agency now that has a loss of integrity.''
        I think those two points are very important.
        Ms. Pingree. Yes. No, that speaks to a lot.
        And I thank the chair for indulging me on the extra time,
    and I thank you all for your answers.
        I just will add one quick thing. While I completely
    understand why every State that has capacity would want this to
    move to their State and it would be a benefit for a rural area,
    I was at UC, Davis a couple of months ago for a conference
    related to food waste, but I was talking to a lot of the people
    in the department and I was struck by the fact that they said
    across the board to me, ``Even though we would really like this
    to move here, of course, we think this is a very bad idea and
    it should not move.''
        So I think there is something to be said for exactly what
    you said.
        So, again, thank you for all of your time and your
    testimony today.
        Mr. Bishop. Mr. Fortenberry.

                                ONE LAST EFFORT

        Mr. Fortenberry. Yes, just briefly for everyone on the
    panel, and I am sorry if the question sounds redundant, but if
    you could in one sentence, and we will just go through
    everyone, tell me why this will not work.
        Dr. Lee. Anything can be made to work, but what is missing,
    I think, is overwhelming evidence that it would work better
    than it works now, and I think that is where I stand on it.
        Mr. Fortenberry. Thank you.
        Dr. Smith Evans. It will not work because you will not be
    able to recruit the best and the brightest, even in the nicest
    rural area that you can find. Many ERS staff come from
    economics departments. They are married to people who have jobs
    here or want to have jobs here.
        This is where the market is for economic analysts, and it
    will not work if you are located elsewhere.
        Mr. Fortenberry. Thank you.
        Dr. Woteki. I cannot improve on Kitty's statement. I agree
    completely.
        Mr. Fortenberry. OK.
        Dr. Buchanan. Well, I agree with what Kitty said, but I
    think the biggest problem is the question that it would work
    better in other ways. It certainly will not be as effective as
    having the opportunity to have our research agency located with
    other research agencies.
        If you move all of the others, if you move NSF and NIH and
    all the other research agencies out to where we are going to
    move it to, then maybe it might work, but that is not possible.
        So it just is a matter of degree of working. We have to
    make it work if it is done. We have no choice but to make it
    work, but it just will not work as well.
        Mr. Fortenberry. Thank you, Mr. Chairman. I yield back.
        Mr. Bishop. Thank you very much, Mr. Fortenberry.
        And let me thank all of the witnesses for your willingness
    to engage and to give us advice and counsel on this very, very
    monumental change.
        Dr. Buchanan, Dr. Woteki, Dr. Lee, Dr. Evans, thank you all
    for being here today, and we very much appreciate your taking
    your time out to share with us your knowledge and your wisdom.
        I hope the irony of making decisions about data-driven
    agencies without data is not lost on anyone, but again, thank
    you all for your testimony.
        And with that, this hearing is adjourned.
        [The testimony of Sonny Ramaswamy follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                                                Tuesday, April 2, 2019.

                     OVERSIGHT HEARING ON THE RURAL ECONOMY

                                   WITNESSES

    DALLAS P. TONSAGER, BOARD CHAIRMAN AND CEO, FARM CREDIT ADMINISTRATION
    JEFFERY S. HALL, BOARD CHAIRMAN, FARM CREDIT SYSTEM INSURANCE
        CORPORATION
    PAXTON POINTEVINT, PRESIDENT AND CEO, SOUTHWEST GEORGIA FARM CREDIT,
        BAINBRIDGE, GA
    MARK JENSEN, PRESIDENT AND CEO, FCS OF AMERICA/FRONTIER FARM CREDIT,
        OMAHA, NE
    ROD HEBRINK, PRESIDENT AND CEO, COMPEER FARM CREDIT, SUN PRAIRIE, WI

                        Opening Statement by Mr. Bishop

        Mr. Bishop. The subcommittee will come to order. Before we
    begin, I want to raise a small piece of old business.
        During the Members Day hearing last week, we committed to
    include Representative Posey's testimony in the record because
    he was unable to attend. Because of the press of time and
    votes, we did not ask unanimous consent to do that during the
    hearing.
        Similarly, it had been our intention to ask unanimous
    consent to include the written testimony of former NIFA
    administrator Dr. Sonny Ramaswamy in the hearing last week on
    relocation. We also failed to do that.
        I would like to accommodate both of these with a unanimous
    consent request. This has been cleared with the minority staff.
    And I ask unanimous consent to include both traumas in their
    respective hearing transcripts.
        Without objection, so ordered.
        Good morning, and let me welcome all of you to today's
    hearing. This morning we are examining the state of the rural
    and farm economies through the lens of farm credit. We have two
    panels to help us understand the challenges and opportunities
    our farmers, ranchers, producers and rural communities are
    facing.
        The first panel consists of two members of the Farm Credit
    Administration board, Dallas Tonsager, who is the chairman and
    CEO of the Farm Credit Administration, and Jeffery Hall, who is
    an board member and chairman of the Farm Credit System
    Insurance Corporation.
        While few people outside of the agriculture world may know
    about this small, independent agency that is tucked inside the
    executive branch, it has an important regulatory role in
    overseeing the banks and associations within the Farm Credit
    System.
        The second panel consists of three CEOs of regional
    Agricultural Credit Associations within the Farm Credit System.
    Created by Congress more than 100 years ago, the Farm Credit
    System, which is the largest agricultural lender, provides
    safe, sound, and reliable source of credit and related services
    to farmers and rural communities.
        The members on this panel represent large portions of the
    country, from the Southeast to the Midwest, and will give us a
    sense of what is happening on the ground and lend a voice to
    our farmers. I thank everyone for being here today, especially
    those who had to travel a great distance to get here.
        This discussion comes at a critical time for our farmers,
    our ranchers, our producers, and for our rural communities.
    Recent natural disasters across the country--including
    hurricanes and tornados in my home State of Georgia and
    unprecedented flooding in Nebraska, the home State of our
    distinguished Ranking Member Mr. Fortenberry, and other
    disasters across the country and in the territories--have
    created stress and uncertainty, on top of the impacts from the
    ongoing tariff situation.
        And that is not to mention the fact that farmers have faced
    years of declining commodity prices. I have heard from my
    constituents, as I am sure my colleagues have, too, and there
    is a lot of anxiety. Farmers and ranchers are resilient by
    nature, but for many the future holds a lot of unknowns.
        To be honest, I did not think we would still be sitting
    here in April without a disaster aid package that had been
    signed into law. I am hopeful it will happen soon, but I am
    extremely frustrated and am eager to hear from our witnesses on
    the second panel who are having to deal with the aftermath of
    disasters firsthand.
        Even with all that uncertainty, there are reasons to be
    optimistic. As if 2017, the Farm Credit System made more than
    $9 million in outstanding loans for young farmers and more than
    $12 million in beginning farmers investing in the future of
    agriculture, whether it be research of people. It is a priority
    of this committee, and I am looking forward to hearing more
    about Farm Credit Administrations and the Farm Credit System's
    outreach to these farmers.
        In addition to making loans, farm credit banks and
    associations serve as a trusted resource of information for
    people in agriculture in rural America. They build
    relationships, offer trainings, support trade associations, and
    donate time and resources after natural disasters have
    occurred.
        Finally, as the chairman of this subcommittee and as a
    member from a rural district in southwest Georgia, rural
    development is one of my top priorities. I have a real passion
    for trying to utilize this opportunity to see that rural
    America is able to prosper. It should not matter what zip code
    a youngster is born into or in which his or her family lives.
    That should have no impact on their capacity or their ability
    to realize their full potential. I was glad to see all our
    witnesses took time to address the issues of rural America in
    your written testimony, and we will explore this topic further.
        I want to thank all of our witnesses for being with us
    today, and I look forward to today's discussion.
        I would like to ask my distinguished ranking member and my
    friend, Mr. Fortenberry, if he would like to have some opening
    remarks.

                      Opening Statement by Mr. Fortenberry

        Mr. Fortenberry. Yes, I would. Thank you, Mr. Chairman, and
    thank you for convening this important hearing. Good morning,
    gentlemen, and welcome to the subcommittee. We look forward to
    your testimony.
        I am eager to get an update on the Farm Credit System and
    how it continues to play a critical role in providing stable
    and dependable sources of financial credit for, as the chairman
    mentioned, the hard-working men and women of rural America.
        I am pleased to see that our chairman, Chairman Bishop, has
    called the Farm Credit back to testify here. Only the second
    time, as I understand it, before the subcommittee in the last
    21 years. So welcome home, and again, thank you, Mr. Chairman,
    for your initiative.
        Your appearance before us is timely, as our farmers,
    ranchers, and producers face a number of threats to their
    livelihoods, from low commodity prices and tight margins to the
    externalities born of hard but necessary trade negotiations as
    well as the problem of natural disasters, and something very
    often overlooked that is that is really impacting rural
    America, the high cost of healthcare.
        Most prominent in my mind is the historic levels of damage
    caused by the Platte and Elkhorn and Missouri Rivers to farming
    and rural communities in my district, as well as certain urban
    communities, but also, the many neighboring districts in the
    Midwest. And thank you, Mr. Chairman, for recognizing that in
    your opening statement.
        To see the power and devastation of this once-in-every-500-
    year series of events bomb cyclone, as it has been called, it
    leaves an indelible mark on you, especially when there is
    uncertainty about what both private and public resources will
    be available to support these communities as they recover. So
    on a related note, I do want to thank the Farm Credit
    Administration for the public statement that you offered,
    encouraging credit institutions to use flexibility following
    the disasters so it can help borrowers get back on their feet.
        Chairman Bishop, as he mentioned, has also seen this type
    of disaster in Georgia after the hurricane last fall and
    hurricanes from previous years. So we are hopeful that Congress
    can move quickly to pass a disaster supplemental for all of the
    2018 and 2019 disasters in order to reassure lenders that the
    Federal Government is there to lend a helping hand.
        Today we will discuss the function of the Farm Credit
    Administration within the context of the Farm Credit System.
    And you all will touch upon the operations of the budget of the
    administration, its policies and regulation, and something that
    I think we need to spend a little time on, the worsening
    financial situation in today's farm economy.
        Many outside the agricultural community have little
    familiarity with what you all do and how it plays a critical
    role in ensuring that America has among the lowest per capita
    grocery prices in the world. We overlook this. We are among the
    lowest in terms of food cost in the world. But this also
    depends upon certain preconditions. Without farmers' and
    ranchers' access to affordable credit, the less access we
    potentially have to abundant and good-quality, affordable food.
        So as your testimony points out, the Farm Credit System
    remains healthy despite some challenges, including a decrease
    in net farm income, and uncertainty of revenues tied to
    exports, and the impact of these natural disasters. You also
    point out that the system is well-capitalized and the portfolio
    credit risk remains manageable. I think this is the key
    component of this hearing that we need to unpack.
        Agricultural financing is a unique and challenging sector
    of our economy, with certain unpredictable swings in commodity
    prices as well as land values. So if risk to the system
    continues to rise, the Federal Government and the Farm Credit
    System must be ready to respond.
        So Chairman Tonsager, thank you very much, Chairman Hall,
    for appearing before us today, and we look forward to your
    testimony. I yield back, Mr. Chairman.
        Mr. Bishop. Thank you, Mr. Fortenberry.
        Mr. Tonsager, without objection, your entire written
    testimony will be included in the record. And I would like to
    recognize you now for a brief opening statement, and then we
    will proceed with questions.

                       Opening Statement by Mr. Tonsager

        Mr. Tonsager. Thank you, Chairman Bishop. Thank you,
    Ranking Member Fortenberry. My name is Dallas Tonsager, board
    chairman and CEO of the Farm Credit Administration. On behalf
    of my colleagues on the board, Jeffery Hall of Kentucky, and
    Glenn Smith of Iowa, and all the dedicated men and women of the
    agency, I am pleased to provide this testimony.
        I would like to thank the subcommittee members and their
    staffs for their assistance during the most recent budget
    process. The resources provided will be critical for recruiting
    and training highly qualified staff to maintain the safety and
    soundness of the Farm Credit System (System or FCS) and the
    Federal Agricultural Mortgage Corporation (Farmer Mac).
        FCA is an independent Federal agency that regulates and
    examines the banks, associations, and related entities of the
    FCS and Farmer Mac. Our responsibility is to ensure that the
    System and Farmer Mac meet their congressional missions--for
    the System to provide a dependable source of competitive credit
    for agriculture and rural America, and for Farmer Mac to
    provide a secondary market for agricultural real estate loans,
    rural housing loans, and rural cooperative credit.
        For more than 100 years, the System has helped our Nation's
    agricultural producers provide the most abundant, affordable,
    and safest food supply in the world. The System includes four
    banks and 69 associations. The banks provide loan funds to the
    associations, which in turn lend to farmers and ranchers, farm-
    related businesses, and other eligible borrowers.
        Of the four banks, only CoBank has retail lending authority
    with express authority to lend to agricultural cooperatives and
    to support rural infrastructure like water, power, and
    communications. The System obtains loan funds by selling
    securities on the national and international money markets.
    These securities are not guaranteed by the Federal Government.
    Investor demand for all System debt remains positive, allowing
    the System to continue to issue debt on a wide maturity
    spectrum at competitive rates.
        U.S. farmers are facing challenging economic conditions.
    After several years of robust times, many farmers and ranchers
    are facing declining financial conditions amid large commodity
    supplies and weak prices for crops and livestock products.
    Higher operating costs for labor, farm inputs, and other
    expenses are putting stress on farm cash flows and liquidity
    levels.
        At current price levels, many farmers will be under
    financial stress in 2019 despite the USDA's projected increase
    in U.S. net farm income. For example, profitability of corn and
    soybean enterprises remains well below levels reported earlier
    in the decade.
        Adjusting production costs to meet expected commodity
    prices will challenge many producers. Despite these headwinds
    in the overall farm economy, I am pleased to report that the
    System's banks and associations, as well as Farmer Mac, are
    fundamentally safe and sound, and they maintain a strong
    position to carry out their mission.
        While overall portfolio credit quality has declined
    compared to a year ago, credit quality in the System's loan
    portfolio remains strong. Non-performing assets totaled $2.3
    billion at the end of 2018. While elevated from $2 billion at
    the end of 2017, the System's loan portfolio continues to
    perform well.
        Other factors supporting the overall strength of the System
    are stable earnings, a strong capital base, and reliable access
    to debt markets. For calendar year 2018, the system reported
    $5.3 billion in combined net income, and the System's total
    capital equaled $58.4 billion, up from $55.4 billion a year
    ago.
        Finally, the System's loan portfolio continued to grow in
    2018. The System currently supplies around 41 percent of our
    Nation's farm credit. At year-end 2018, gross loans totaled
    $271.9 billion, up 5.1 percent from 2017. I would also note
    that Farmer Mac's business volume grew by $717 million to $19.7
    billion during 2018, and overall credit quality remained
    stable, with substandard assets and 90-day delinquencies
    remaining well below historic averages.
        I appreciate that you have included my written statement
    for the Record. Thank you, sir.
        [The information follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Bishop. Thank you, Mr. Tonsager. Your excellent and
    frank testimony seems to raise at least a flashing yellow light
    with respect to our rural economy, which is the subject of our
    hearing today.

                                FARM BANKRUPTCY

        You cite a 9 percent decline in U.S. agriculture exports in
    the fourth quarter of 2018, labor availability concerns, net
    cash farm income that is well below the level achieved 5 years
    ago, somewhat lower cropland prices for the rest of 2019, a 4
    percent increase in total farm debt, and a rise in farm
    bankruptcy rates. And I thank you for noting the serious impact
    that extreme weather events have had on farmers in many parts
    of the country. Taken together, all of this is very, very
    concerning.
        Would you say that we are at a tipping point in 2019? And
    what would you say are the major warnings signs that we should
    be paying attention to as we go forward, preparing for 2020?
        Mr. Tonsager. Yes. I think there is great concern,
    especially related to net farm cash income. That number alone
    should cause all of us engaged in helping agriculture concern.
    I do believe that the Farm Credit System is in the strongest
    possible position in my memory to help deal with the challenges
    associated with that.
        That all being said, there is nothing more difficult than
    being someone in bankruptcy and having to deal with the issues
    associated with that. I think that farmers grew a general
    strong balance sheet some 5 years ago or so when things were
    quite good. But there is an erosion of that that is occurring.
        And I think that the early participation of Farm Credit
    System loan personnel with producers to help them deal with--
    whether it be the difficulties of the farm economy, the
    physical difficulties of the storms that we have had--I think
    is absolutely crucial. And I think that the System is prepared
    to engage with producers that way, and is engaging with them.
        Mr. Bishop. You mentioned USDA's projection of net cash
    farm income in your testimony. For my colleagues, I want to
    point out that it is the Economic Research Service that does
    this estimate. My staff checked the Farm Credit Administration
    website and found that there are many, many citations to ERS
    studies in your reports and publications.
        Does the Farm Credit Administration value the independence
    and the work of the Economic Research Service?
        Mr. Tonsager. Yes, we do. We have a small economic staff
    but a very good one, five, six people that are directly engaged
    in the economic issues. They rely heavily on the ERS's work as
    a check on our own work, as well as an early warning system, if
    you will, that points to trends that may be occurring. So yes,
    we rely on them significantly.
        Mr. Bishop. I understand that the Farm Credit Act and the
    Farm Credit Administration regulations require credit programs
    and annual reporting on young, beginning, and small farmers.
    Can you discuss these credit programs?
        And in today's market, with the challenges that you have
    discussed, are young people deciding not to go into farming and
    to pursue something else, given the tremendous challenges that
    we are now facing?

                              NEW FARMER PROGRAMS

        Mr. Tonsager. I think that the Farm Credit System program
    for young, beginning, and small farmers is probably the best in
    the country. It was initiated on a rulemaking in 2000, so it is
    about 19 years since that rulemaking occurred. The rule
    requires that each institution of the Farm Credit System
    establish a program to work with their producers, so it is
    identified to their particular regional needs.
        And so it might be reduction in interest costs. It might be
    reduced collateral requirements. But each of them
    enthusiastically embraced this effort to make sure it works. So
    they report to us. We examine them to make sure that they are
    following the program they have established.
        But you may be aware that we have recently put out an
    advance notice of proposed rulemaking on the 2000 provisions
    because we think after 19 years, it makes sense to reexamine
    what the System is doing in that area, especially the reporting
    information that we get, and hope to improve it.
        Mr. Bishop. Thank you, Mr. Tonsager. My time has expired,
    and I would like to yield to Mr. Fortenberry.
        Mr. Fortenberry. Thank you, Mr. Chairman.
        Mr. Tonsager, I have your name written out phonetically in
    my opening notes, but we are going to get to the bottom of this
    once and for all. [Laughter.]
        Did I say it wrong the first time and right the second
    time?
        Mr. Tonsager. Well, yes, you just did now. Thank you very
    much. I have encountered that issue a number of times over the
    years. [Laughter.]
        Mr. Fortenberry. OK. Thank you. But you will answer to
    either in case I do that again?
        Mr. Tonsager. Most people just go with Dallas.
        Mr. Fortenberry. Mr. Chairman, would that be all right?
    [Laughter.]
        Let's try to reconcile a few things here that are being
    talked about. And frankly, I think I heard the answer embedded
    in your testimony.
        Investor demand for your securities are positive?
        Mr. Tonsager. Yes.
        Mr. Fortenberry. Cash flow, farm cash income, is down?
        Mr. Tonsager. Yes.
        Mr. Fortenberry. USDA predicts a little rosier scenario. Do
    you or not? That is one question. So I think the question
    becomes, farmer debt levels, have they significantly decreased?
    You referenced strong balance sheets having been built 5 years
    ago.
        So are we living now off the seed corn, if you will, of a
    stronger balance sheet, which gives us a better position to
    weather the net income loss at this time, which then
    contributes to, again, investor confidence in your securities.
    Is this a correct analysis?
        Mr. Tonsager. Yes. I think that we would agree with USDA's
    analysis of the income. We do not attempt to recalculate that
    ourselves. We rely on their calculations when we talk about it.

                                  BOND MARKETS

        I think that the Farm Credit System has done an excellent
    job of building confidence in the marketplace in the bonds
    issued. So for generations, there has been very little
    disruption on the part of the System relative to the bond
    markets.
        The bonds have always been paid, and the bond markets give
    them one of the highest ratings in the world for the quality of
    the bond issuances that the System does, which is an enormous
    benefit to all of the 500,000 stockholders that are
    participants in that. So it is a huge advantage.
        And the very strong capital position helps the System, I
    think, address some of the issues that are involved with credit
    and to be able to be assured the System we can continue to pay
    those bondholders back, or they can pay the bondholders back on
    those securities.
        Mr. Fortenberry. Well, there has to be another dynamic here
    as well, another variable. I would assume that, again, the
    adjustments of the farm bill, the authorized programs that
    provide more robust risk mitigation, create the scenario in
    which, again, with the ups and downs of incomes, it does not as
    significantly impact credit risk as it used to.
        Is that a fair statement?
        Mr. Tonsager. Absolutely. I think the crop insurance
    program and the other risk mitigating factors you described
    certainly are key to all lenders--not just the Farm Credit
    System, but others. Without that basis, we would be much
    farther behind in our ability to help producers get credit.

                         FARM CREDIT DISASTER RESPONSE

        Mr. Fortenberry. I may bring this up with the next panel,
    but you are intimately familiar with what has happened to us
    back home in the Midwest. So how is the Farm Credit System
    responding?
        Mr. Tonsager. Well, I think the strategy that the Farm
    Credit System pursues, and we press them, is to seek the best
    possible outcome for all producers. I think, in looking at a
    disaster situation or the general erosion of farm income and
    assets, asset preservation needs to be part of that dialogue
    with producers.
        In the 1980s, and I was a dairy farmer in the 1980s in
    South Dakota, people went a long ways in borrowing money. So
    they wanted to stay on the farm. It was absolutely critical to
    them. We ended up with a real crisis that resulted in a
    tremendous amount of bankruptcies and other factors.
        So the term that we have pressed the System with and they
    talk about themselves is trying to seek the best possible
    outcome for every producer.
        Mr. Fortenberry. Let me go back to an earlier question
    before my time expires, regarding debt levels that farmers are
    carrying, because I do not think I got an answer from you in
    that regard.
        Mr. Tonsager. There has been an increase in debt level.
    Generally it is a restructuring process, where longer-term debt
    is taken out and replaced with shorter-term debt. And so while
    the farmers' position still looks good, they have lost some
    ground in their available short-term----
        Mr. Fortenberry. Maybe, as you proceed in your testimony,
    you can unpack as compared to when. I would like to know the
    historical comparison. I am out of time, but maybe we can come
    back to that.
        Mr. Tonsager. Sure.
        Mr. Fortenberry. Thank you, Mr. Chairman.
        Mr. Bishop. Mr. Cuellar.
        Mr. Cuellar. Mr. Chairman, thank you, And to the ranking
    member also.

                               TARIFF MITIGATION

        Mr. Tonsager, let me ask you, in your written testimony you
    mentioned the tariffs that the administration has imposed on
    China and other countries. And as you know, they have resulted
    in retaliatory tariffs on many of the American agricultural
    products. In fact, I was just communicating with some of them
    right now.
        Mr. Tonsager. Sure.
        Mr. Cuellar. This has increased price risk for our
    agriculture and key commodities that many farmers grow in my
    district and across the Nation. Can you talk a little bit more
    about what the Farm Credit Administration has done to marketing
    the negative effects that these tariffs have had on farmers.
        And my personal opinion on this--I do not want to see
    subsidies or bailouts for farmers. We went through that in
    2009, and some of those folks that were complaining are now
    getting what they complained about some years ago. So I do not
    want to see bailouts for them.
        I think the most important thing is to get markets because
    you understand the way this works--if they lose a contract to
    somebody else, they just cannot turn on that contract right
    away. I mean, once they lose that, it might be gone for a
    while. So I would rather give them markets instead of subsidies
    or bailouts.
        Tell me what you all are doing on that aspect.
        Mr. Tonsager. Well, I think we are being very much aware,
    and we are anxious to--we are anxious to be prepared for the
    issues associated with that. The Farm Credit System is a credit
    provider. And the need for producers is if there are short-term
    issues, and hopefully prices are short-term issues, that the
    System is in a position to help producers get through that
    difficult time.
        So we are following it closely. The System is following it
    closely. We are trying to help, or the System is attempting to
    help, producers get through that difficult period while paying
    attention to their situation over time. So we know that there
    are issues that hopefully will be resolved regarding trade, and
    that will help producers move forward.
        Mr. Cuellar. We have even talked about the President trying
    to shut down the border. I mean, if you want to talk about
    economic impact to our agriculture folks, that would have an
    extremely negative impact. Every day there is more than 1.6-,
    $1.7 billion of trade between the U.S. and Mexico. That is over
    a million dollars a minute on it. So that is another issue
    because Mexico is a huge partner to the agriculture industry.
        Let me ask you about 2017. Hurricane Harvey, as you know,
    hit Southern Texas. And you know the numbers, and the
    agricultural losses topped more than $200 million. I really
    appreciate the good work that you all have done to support
    recovery efforts. And if you can just tell me, update me on
    your efforts. And I have heard a lot of good, thanks to what
    you all are doing. But if you can just tell us where we are
    right now.
        Mr. Tonsager. Well, I think we examined it and discussed
    this yesterday. The Farm Credit System, I think, when you look
    at the disaster, of course, you get into all the issues
    associated with what disaster assistance there was, and crop
    insurance, and regular insurance.
        But it appears that that whole region that was subject to
    that has been recovering nicely, that the credit issues have
    not been extreme. They have not put the association in any kind
    of jeopardy in that area. And so of course there are risks. I
    am sure there were cases where producers lost their farms or
    otherwise.
        But by and large, it has recovered nicely. Delinquency
    rates have not gone up dramatically. So people have done their
    jobs and done their work, and I think it has been very
    beneficial.
        Mr. Cuellar. Thank you. I appreciate the good work you have
    done on that. I have a defense appropriations; as you know,
    they are all at the same time. So again, with your respect, I
    will be stepping out.
        Thank you, Mr. Chairman and Ranking Member.
        Mr. Bishop. Thank you, Mr. Cuellar.
        Mr. Moolenaar.
        Mr. Moolenaar. Thank you, Mr. Chairman, and thank you for
    being here today.

                             HEMP GROWER FINANCING

        One of the areas in the farm bill of 2018 classified hemp
    as a commodity, and in turn, it makes it eligible for crop
    insurance. And some farmers in my district have expressed an
    interest in growing it as part of their rotation.
        Could you explain what the next steps would be for farmers
    that are interested in growing hemp in terms of financing?
        Mr. Tonsager. I would like to offer some thoughts. In
    addition, we are prepared to provide some guidance to the Farm
    Credit System on exactly that subject. And so it is clear that
    the hemp that is low-THC levels, under 3/10ths percent, is now
    legal to be produced. The 2018 farm bill also established a
    program to be operated by the Secretary and the States to help
    the growth of the hemp program. But they do not believe that it
    is going to be available until 2020, is my understanding.
        The Secretary has recommended that people operate under the
    authority of the 2014 farm bill that is granted and been out
    there and available to people to use on a pilot basis. We have
    identified a list of criteria that we are going to be giving to
    the Farm Credit System, under which they could potentially
    finance it.
        I would like to offer to my colleague here; I know he has
    great interest in the hemp issue as well.
        Mr. Hall. While there is a lot of clarity, there is a lot
    of uncertainty, too. It is not USDA but the Food and Drug
    Administration who is going to have to make some decisions on
    hemp products.
        We really see there are three different categories we find
    States in right now. Some States do not even have State
    authority to produce hemp, sell hemp, market hemp. States like
    Kentucky and several others--I think maybe 20, 25 others--have
    a pilot project that has been in operation since 2014 once it
    was a pilot project in that farm bill. Those States are moving
    forward.
        And then there is a middle ground, where States do not have
    a pilot project. They are working to try to develop one. And so
    we are trying to put out guidance to address all three of those
    situations. But it is clear, as the chairman stated. It is
    legal now, and we are trying to make sure that we get the
    proper guidance out to System institutions so they can provide
    credit to borrowers.
        Mr. Moolenaar. And you said to rely on--it will not be
    available until 2010?
        Go ahead.
        Mr. Hall. I think that 2020 is when we anticipate USDA
    putting out their regulations. I know they are in the process;
    in fact, I am attending a field hearing next week with AMS to
    get some more information on that. But just given the growing
    season, something is going to have to come up pretty soon, and
    I just do not see anything, probably, this growing season. It
    is going to be those States that have some pilot project
    already in place who will be able to produce.
        Mr. Tonsager. But I am saying that we are ready to provide
    guidance now to the Farm Credit System regarding financing.

                                  TRADE ISSUES

        Mr. Moolenaar. OK. Thank you. Also, to follow up on the
    discussion on some of the trade issues, you mentioned in your
    projections corn and soybeans. You felt that that was going to
    be down right now.
        How do you account for things? I know China has said they
    will take more of our soybeans. I do not know where that stands
    today. But how do you factor in those kinds of considerations,
    and are you doing that?
        Mr. Tonsager. Well, we rely generally on ERS's projections
    for those. We study closely. We talk to the System
    institutions. They have policy established for financing. And
    so each institution would establish what they think the right
    number is for the value of the crop in their region in
    calculations of how they would support producers, along with,
    of course, as we talked about earlier, crop insurance and the
    other risk mitigating tools that are available.
        Mr. Moolenaar. And then when it comes to the USMCA, my
    understanding is that will help open some dairy markets in
    Canada. Overall, does that affect any of your projections? And
    are you urging passage of that? Would that be a benefit for the
    farm economy?
        Mr. Tonsager. We have provided guidance to the Farm Credit
    System regarding what was in the farm bill approach for
    improvement, and asked them to look at that closely. I am not
    as familiar with the USMCA.
        Mr. Moolenaar. Is that something that you would typically
    weigh in on? Is that something that----
        Mr. Tonsager. Yes. Well, we certainly--it has been pointed
    out to us by several parties that there is help coming for
    dairy producers, and that the System should allow for that help
    to be made available, and that they should account for that in
    their lending practices.
        Mr. Moolenaar. OK. Thank you. Thank you, Mr. Chairman.
        Mr. Bishop. Mr. Aderholt.

                               RURAL DEVELOPMENT

        Mr. Aderholt. Thank you, Mr. Chairman. Thanks. Good to be
    here today. Sorry I am a little late; we have had a full
    morning. But I think most everybody that is on this committee,
    whether you experience it firsthand or whether you just know
    about it from your colleagues, know that rural America is
    different from urban America. And it is no surprise that rural
    lending needs, particularly to farmers and ranchers, are also
    unique.
        I am comforted knowing that there are entities like Farm
    Credit who understand the needs of rural America. And I
    appreciate all the work you do for producers and for the
    districts like that I am proud to represent in North Alabama.
        Financing needs of farmers in rural communities are more
    than any one type of lender can handle alone, in my opinion.
    Could you talk about your instrument, how it works
    cooperatively with community banks and others in the area to
    meet the needs of the overall communities and agriculture?
        Mr. Tonsager. Yes. There, I think, one of the unknown
    things is there are thousands of transactions occurring all the
    time between the Farm Credit System and community banks in
    serving agricultural producers. Sometimes there are arguments
    over the institutions.
        But they, in the field, do a significant amount of risk-
    sharing on farmer projects particularly, but also on rural
    projects. There are quite often community facility kinds of
    loans made where the System attempts to be helpful for a
    community facility and bank. We require that they seek the
    participation of the bankers with them in developing these
    kinds of projects.
        And of course the System engages in water or sewer system,
    broadband communications, and it tries to participate broadly
    with other lenders in those areas. So I think in general, there
    are good working relationships that occur between community
    banks and the Farm Credit System.
        Mr. Aderholt. Are there ways to encourage more cooperation
    that would help meet rural financing needs that you could think
    of?
        Mr. Tonsager. Yes, I believe so. I think we currently
    provide individual--the board approves individual projects
    under the Farm Credit Act in community facilities in rural
    America. And I think more of that could be done. I think they
    are treated as third party investments. So if a project is
    coming to finance in rural America, a package is put together
    that the Farm Credit System, bankers and others, can
    participate together in.
        And as a former undersecretary of rural development, to be
    successful, I think, in development in rural America, it is
    about spreading risk, putting together deals where multiple
    parties take a piece of the risk. And so it is not too much for
    any one institution to take.
        And I think the more that can be done in creating these
    kinds of participatory arrangements, the better off rural
    America is going to be. We need everybody in rural America
    participating together and sharing risks together to make sure
    that there is success because nobody can take the whole risk.
        USDA is a great example. It participates with its community
    facility programs with private partnerships and helping put
    deals together.

                                LOSS MITIGATION

        Mr. Aderholt. Let me switch topics just a bit. Alabama
    ranks third in broiler production, right behind the chairman's
    home State of Georgia, and then of course Arkansas. And my
    district in Alabama is the most broilers produced in the state.
        Of course, avian influenza has had a terrible impact on the
    poultry growers in Alabama, and Alabama Farm Credit went out of
    its way to work with products that were impacted by the last
    outbreak that occurred in our State. Did your associations have
    a similar problem? And how did you work with producers who
    experienced losses like those that are in Alabama?
        Mr. Tonsager. Again, the information that I receive is
    there is significant effort by the System to work with any
    party in these kinds of difficulties. And I think the many
    years of experience. Avian influenza is not new. It has been
    around a while. It has come and gone.
        And I think that that experience helps the loan
    underwriting within the System and making sure that when they
    look at these cases, they know that there is a coming out, that
    you get over it, you get on, and you can go on to the next
    thing.
        So that experience, I think, has given them a confidence in
    being able to work with producers to help make sure we can keep
    moving forward and keep financing them and help them make some
    money, hopefully, along the way.
        Mr. Aderholt. Thank you. I yield back.
        Mr. Bishop. Thank you. Let me just follow up on the rural
    development discussion that we had a little earlier. As I had
    indicated, one of my priorities is investing in and giving
    renewed focus to rural development; and for rural America to
    thrive, we have to close the digital divide between urban
    America and rural America.
        We have got to invest in critical infrastructure, which
    includes roads, bridges, water, wastewater, and we have got to
    improve rural health and rural education. And much of that
    focus, of course, is within the jurisdiction of USDA. But the
    Farm Credit System has to play an integral part there.
        In addition to providing credit to agriculture producers,
    the system also makes loans for rural housing and for rural
    utilities. You had mentioned it is to ensure a safe, sound, and
    dependable source of credit and related services for all
    creditworthy and eligible persons in agriculture and rural
    America.

                         PILOT PROGRAM--LESSONS LEARNED

        It is my understanding that in 2014, the Farm Credit
    Administration ended the pilot programs associated with
    investments in the rural America. What lessons did FCA learn
    from these pilot programs? And are there any plans for
    establishing similar projects in the future?
        Mr. Tonsager. Yes. The pilot program went on for several
    years, and we did learn some issues, and we--of course, during
    that time, there was strong debate among many about their
    participation. I think that we chose to take a route that we
    felt very secure about going forward.
        And we feel very confident that there is the ability for
    the System to participate in these kinds of investments. At
    this point, we have chosen to do it through individual
    approvals by the board and these institutions. So they
    continue.
        We have developed a much more efficient process for
    improvements at the agency on these approvals, and generally we
    strive for trying to do them in two weeks. Sometimes it goes a
    bit longer. We are continuing to look at processes that might
    allow us to accelerate those investments. But we have come to
    no conclusions on what might be the process for that.
        As I mentioned earlier, I believe that it is critical, in
    providing credit to institutions in rural America, that as many
    partnerships can be made as possible; many institutions in the
    System like to be engaged in those partnerships. So I
    appreciate your interest in that, and we are diligently looking
    for ways to continue to grow that.
        I would like to add also that Congress authorized the Farm
    Credit System to invest in what are called Rural Business
    Investment Corporations. And many institutions have taken
    advantage of that. There has been, I think, six or seven new
    investment companies created, and the Farm Credit System has
    invested significantly in those. And it is out there involved
    in investments this way as well.
        Mr. Bishop. The key to it is a real robust investment in
    broadband and the internet because connectivity is going to
    mean everything for quality of life in rural communities.

                              DISASTER ASSISTANCE

        Let me switch gears for a moment and go back to the impact
    of the lack of passage of the Disaster Bill, which has been
    pending now in the Senate since January 16. We had volcanoes
    and the damage done in Hawaii, the cyclones in the Mariana
    Islands, wildfires and mudslides in California, hurricanes and
    tornadoes in the Southeast, the Gulf Coast, the Eastern
    Seaboard, the floods in Nebraska and the Midwest.
        What is the impact of the slowness, the inability allow
    assistance for farmers and rural communities from the lack of
    passage of this? How is that impacting the Farm Credit System,
    and what are the prospects that will come out of that?
        Mr. Tonsager. Well, any assistance that can be provided by
    the Federal Government or other parties to these people that
    are affected by this is helpful. And it is not only helpful in
    the giving of a grant. It also gives lenders comfort in seeing
    that help occur. So I think any time the resources of the
    Government are provided or other parties, it has a positive
    effect.
        And I cannot measure the effect of the lack of approval of
    a statute.
        Mr. Bishop. My time is expired. Mr. Fortenberry.

                         FARM CREDIT SYSTEM ADVANTAGES

        Mr. Fortenberry. Thank you, Mr. Chairman.
        I want to go back to a question that Congressman Aderholt
    hinted at. Many of us receive complaints from the commercial
    banking sector that the Farm Credit System has an unfair
    advantage. Just a rough calculation: You have had about a 20
    percent increase in assets over the last 5 years. Are they
    correct in saying that the Farm Credit System has an unfair
    advantage?
        Mr. Tonsager. I understand the arguments that occur. But I
    would mention a few things.
        The Farm Credit System has roughly 40 percent of the
    agricultural credit. The banking industry has roughly 40
    percent of the agricultural credit; the Farm Credit System----
        Mr. Fortenberry. Is that a recent statistic, or that has
    remained the standard article?
        Mr. Tonsager. It has been pretty close. It has varied a few
    percentage points over time. The System was established 100
    years ago as a cooperative System, so there are 500,000 farmer
    owners of the System that are the beneficiaries of the Farm
    Credit System.
        The cooperative structure generally allows for the profit
    of the System to be given to the producers, who in turn pay the
    tax on it. Many of the banking industry participate in a
    subchapter S structure that also allows the profits to pass
    through to them.
        The profits of the long-term credit lending for
    particularly real estate are not taxed. The banking industry
    has access to the Federal Home Loan banking system as well, and
    gets some advantages that way.
        So I would argue yes, there are debates that occur. But by
    and large, this is a 100-year-old institution that benefits
    producers, and there are offsetting issues in some cases. And I
    am not aware of any analysis that has been done in recent times
    that would compare the two.
        Mr. Fortenberry. Thank you. Regarding beginning farmers and
    ranchers as well as small farmers, you have credit available as
    part of your portfolio to persons in this category. Would you
    unpack some specifics?
        One of the things that I am hinting at here--I will just
    tell you the pretext here--we have something exciting going on,
    actually, in the agricultural family. Now, while we only have a
    certain amount of land, and the barriers to entry for someone
    entering without connection to perhaps a family or some other
    institution to obtain a larger-scale production agriculture
    farm with all of its land requirements, while its capital
    requirements are diminishing. That is reality.
        But the interest in agriculture, particularly among young
    people, is growing, particularly as there is a convergence of
    different fields of science, whether that be environmental
    quality, conservation, international development, are all
    components of providing the necessary means toward food
    security and environmental security.
        What is happening is niche markets are developing, small
    farms that maybe direct market to consumers, reconnecting the
    rural to the urban and the farmer to the family, as well as all
    types of value-added opportunities, even increasing significant
    revenue on traditional production agriculture farms.
        So one of the entryways into the agriculture family again
    is through some of these value-added opportunities or unique
    niches. Is farm credit involved in that type of issuance of
    credit for those types of entities?
        Mr. Tonsager. Yes. There is a strong recognition of that,
    the growth of that. The Farm Credit System does provide
    assistance in some cases to help getting farmers markets going.
    We are all examining closely the LAMP program that was recently
    provided for in the farm bill, and see some opportunity there.
        Mr. Fortenberry. Well, yes. I am glad you raised that
    because I think you are not in front of this dynamic yet, that
    might be an important on-ramp to leveraging the Farm Credit
    System to again participate in what is already organically
    happening, and expansion of the agriculture family creating
    exciting new opportunities.
        Mr. Tonsager. Yes. I have always been a strong believer in
    the value-added producer grant program. I think that has been a
    great tool. And I have seen projects where the institutions
    have been involved heavily in it. I think they make
    contributions, and you can speak to them in the next panel, of
    course, about efforts they have seen in their own areas about
    the evolution of that. And I think it is exciting as well.
        Mr. Fortenberry. Yes. So that was half a question and half
    a speech. I think you understood the intention of my speech.
        Mr. Tonsager. Yes. Sure.
        Mr. Fortenberry. Thank you.
        Mr. Bishop. Dr. Harris.

                           NAVIGATING CBD REGULATION

        Dr. Harris. Thank you very much, Mr. Chairman. And I
    apologize, but we have concurrent hearings. And one of the
    topics I am going to ask about, actually, is--we just discussed
    at the hearing with the NIH, and it is the CBD issue.
        I understand that my colleague has brought it up already.
    But I need to dissect this a little further because we just had
    the head of the National Institute of Drug Abuse testify three
    doors down that we do not know what CBD does on developing
    brains right now. A 10-year-old can go in and buy CBD items at
    a store.
        And it is a little disconcerting to understand that now we
    may be loaning money to farmers who might find out six months
    from now, when the FDA regulates it, that there is--the vast
    marketplace goes away. Because the amount of CBD raised or
    grown for the licensed drug is minuscule compared to this huge,
    overwhelming market that could come under tight regulation.
        So you have got to walk me through this. Why, when this is
    completely up in the air--I mean, the FDA--I spoke to the
    Commissioner about this. They are very close to regulating this
    industry. If they regulate it, it can fall under the
    scheduling, the DEA scheduling, and could eliminate the market,
    not for all hemp--obviously, you still have the fiber product--
    but the CBD market.
        So how are you going to factor that in when you make this
    loan? Because that crop, I have got to tell you, if you are
    raising it just for the rope, for the fiber, it is probably not
    a profitable crop for a lot of farmers. And yet the credit
    association is going to be advancing or suggesting that credit
    be advanced for it.
        Mr. Tonsager. Of course, it is a combination of issues that
    we are struggling with. And that is, this is now a legally
    available product, crop, to be produced.
        Dr. Harris. OK. That, of course--and I am going to
    interrupt you right there because you know, of course, that is
    questionable because the raising of that crop for other than
    use to make the FDA-licensed drug is actually of questionable
    legality.
        I understand there is an issue of disagreement on this. But
    in that setting--and let me take it back one step. There are
    other places a farmer can get a loan to grow hemp. Is that
    right? They do not have to do it through the Farm Credit
    Administration. Right?
        Mr. Tonsager. Of course. Yes.
        Dr. Harris. So why would the Farm Credit Administration
    wade into that in a period of regulatory uncertainty? Because,
    you see, the trouble is that my farmers who do not grow it now
    are subject to risk because we have the coop system and all
    now. They are subject to risk because of a decision made in
    Washington that farm credit ought to be advanced to a product
    that is of questionable legality.
        Mr. Tonsager. My understanding is the statute provides for
    any hemp that is to be grown of TH3, of--excuse me--.3 THC or
    less, which is obviously a very low level involved with it.
        Dr. Harris. I fully understand that. That is only the
    definition of hemp. That is a botanical definition that
    separates it from other cannabis products. It does not say that
    you can sell the CBD legally. That is not a corollary of that.
        So again, my question is: Why would FCA wade into this area
    of uncertainty? I do not get it. There are other ways--these
    farmers want to get loans; there are other ways to get it. I
    know there are because the marijuana growers in my State
    certainly do not get farm credit advanced to them. Is that
    right?
        Mr. Tonsager. That is correct.
        Dr. Harris. Because of the questionable legality. Right?
    Because in Maryland, it is legal to grow the drug in Maryland.
    It is just not legal to grow it in the United States. Right?
        Mr. Tonsager. We are--well, we are----
        Dr. Harris. How is this not analogous? Is the next thing
    that someone in your shop is going to say, ``You know what?
    Some States approve it. It is a profitable product. Let's go
    ahead and lend money for marijuana growth.''
        Mr. Tonsager. Well, certainly with marijuana we are a
    Federal agency and we comply completely with--marijuana is
    still on the contra substance list and we are not touching it.
        Dr. Harris. I am going to interrupt you once again.
    Cannabis is still on the list, on DEA Schedule 1. Read what it
    says. Read what it says. Cannabis is on the list. Hemp is a
    cannabis plant. So again, I am going to say--and again, so I
    just want to--you and I understand that there is a
    disagreement, and there is question about this going forward.
        Why would a banking institution--which is what the FCA is,
    for all intents and purposes--take a risk on this, on this
    remaining legal?
        Mr. Tonsager. The guidance we provide will allow the
    institutions to set their portfolio standards. So they will
    evaluate the risk for themselves, for their institution, and
    for the people that might be financing it. So they are going to
    look at the market, which may become overwhelmed with hemp
    availability, and they will have to assess that risk. They will
    look at the marketplace to see if there is a market for it. And
    they will look at the overall issue that occurs regarding the
    hemp.
        I was unaware of this particular argument. It is new to me.
    It is part of the struggle. And it is probably why USDA is
    moving slower. They are talking about implementation of the
    program in 2020. So I suspect there are real considerations
    going on of that all as well.
        I would also like to allow my colleague to comment, if he
    would like to.
        Dr. Harris. My time is up.
        Mr. Tonsager. I am sorry.
        Dr. Harris. Thank you.
        Mr. Bishop. Thank you, Mr. Tonsager and Mr. Hall. Thank you
    all for being here today. I appreciate your honesty and your
    genuine assessment of our rural agricultural economies. And I
    want to thank you for your testimony. We look forward to
    working with you to meet the challenges that we have discussed
    today. They are significant, to be sure, but we remain hopeful.
        With that, we will take a brief recess to set up for our
    next panel, which I hope we can do quickly. Thank you. We will
    stand in recess for 3 minutes.
        [Recess.]
        Mr. Bishop. All right. The hearing will now come to order.
    And I would like to now introduce our second panel.
        Mr. Hebrink is the president and CEO of Compeer Financial
    in Sun Prairie, Wisconsin. Mr. Jensen is the president and CEO
    of Farm Credit Services of America in Omaha, Nebraska. And Mr.
    Pointevint is president and CEO of Southwest Georgia Farm
    Credit in Bainbridge, Georgia.
        As you can tell, the panel represents a diverse geographic
    area. We welcome your insight, and we are pleased to have you
    appear before the committee today and to give us a sense of
    what you are seeing back home.
        Let me ask Mr. Fortenberry if he has any remarks before
    hearing from the panel. Mr. Fortenberry.
        Mr. Fortenberry. Thank you, Mr. Chairman, again for calling
    this important hearing. I would rather proceed right to the
    witnesses. Thank you very much.
        Mr. Bishop. Thank you. Let me now recognize our guests for
    brief oral statements, and then we will proceed with questions.
    Note that each of your entire written traumas will be included
    in the record.
        Mr. Hebrink, please proceed.

                            Testimony by Mr. Hebrink

        Mr. Hebrink. Chairman Bishop and members of the committee,
    thank you for the opportunity to testify. My name is Rod
    Hebrink, and I am the president and CEO of Compeer Financial.
    We provide financing, risk management, and financial services
    to farmers and rural communities in Illinois, Minnesota, and
    Wisconsin.
        You are well aware of the economic challenges facing
    farmers. The crop and livestock sectors we serve are best
    described as struggling, impacting farmers of all ages,
    experience levels, and sizes. In our region, dairy is the most
    significantly affected, with hundreds of dairy farmers exiting
    business this past year.
        While commodity prices have always been cyclical, the
    current downturn has been prolonged. We work with producers
    through all economic cycles. Our team is actively meeting one-
    on-one with farmers to review their financial information, to
    help them better understand their cost of production and ways
    they can improve their operation. We strive to assist farmers
    in managing through the downturn, to position them to succeed
    when the agriculture economy improves.
        Each of us have farmers who have been impacted by recent
    weather-related disasters. Heavy snowfalls this winter resulted
    in structural damage to farm buildings. We have responded
    quickly, providing 140 farm families immediate grants through
    the Compeer Fund for Rural America. We want them to know we
    have their backs as they begin the process of recovery.
        Compeer supports the next generation of farmers through our
    young, beginning, and small farmer programs. We are proud with
    farmers such as Emily, a young organic dairy farmer in Illinois
    who I described in my written testimony. Compeer has a strong
    commitment to minority farmers. We have created effective
    partnerships with community and immigrant organizations who
    recruit farmers and provide training while we focus on lending
    and technical assistance.
        We are proud of our successful work with the Hmong American
    Farmers Association that has resulted in more than 20 new
    families growing and selling food to area restaurants and
    farmers markets. Many of these Hmong families live in
    Congresswoman McCollum's district.
        Our focus in championing the hopes and dreams of rural
    America goes beyond our farmer customers. We are concerned
    about the continued decline in the health of rural communities.
    Strong rural communities help agriculture thrive. Fresh
    thinking is needed to sustain these rural communities and
    agriculture.
        Fulfilling our public mission includes enhancing the
    vitality of rural communities. Compeer has taken a proactive
    approach through partnerships with the USDA Community
    Facilities Program and Rural Business Investment Companies.
        Among the rural areas we have helped is Renville County,
    Minnesota, which has a very personal connection. Compeer
    partnered with local banks, AgCountry Farm Credit, and CoBank
    to rebuild the outdated hospital where I was born, and provide
    rural families a $24 million state-of-the-art facility.
        Residents now have access to the quality of care previously
    available only at great distances. But we did not stop there.
    Farm credit grants purchased telemedicine equipment, allowing
    cardiologists in Minneapolis to diagnose life-threatening heart
    conditions real-time. This investment will save lives.
        Compeer is one of USDA's key community facility partners,
    with $760 million of projects across 17 States. We thank the
    committee for your past support of USDA's programs, and request
    your continued support in this year's budget.
        Finally, a significant challenge to the future prosperity
    of rural communities is the lack of equity capital. Developing
    new approaches to attracting investments into rural communities
    is essential to creating opportunities for agriculture.
        Compeer began partnering on RBICs to address the shortage
    of equity capital for rural America. Nearly 1500 potential
    investments have been identified, representing $7.2 billion in
    opportunities.
        On behalf of Compeer Financial and, more importantly, on
    behalf of the farmers and communities we serve, thank you for
    your time today. As a partner in their success, it is a
    pleasure to share their stories and the impact they are making
    each and every day.
        We are honored to partner with them to champion the hopes
    and dreams of rural America.
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        Mr. Bishop. Thank you.
        Mr. Jensen.

                            Testimony by Mr. Jensen

        Mr. Jensen. Mr. Chairman, Ranking Member Fortenberry, and
    members of the committee, thank you for the opportunity to
    testify today. My name is Mark Jensen, and I am the president
    and CEO of Farm Credit Services of America and Frontier Farm
    Credit, with our service territory covering Nebraska, Iowa,
    South Dakota, Wyoming, and the eastern third of Kansas.
        I will refer you to my written testimony, and I am happy to
    add a few opening remarks to give you more insight into the
    challenging economic environment the farmers and ranchers in
    our territory are working through.
        Located in the middle of the country, our portfolio is
    reflective of Midwestern agriculture. Half our lending is
    committed to producers concentrated on grain production, and
    another 25 percent on the protein industries, primarily beef
    feed lots, swine, poultry, dairy, and cow-calf production. I
    will focus my comments on the grain sector.
        Make no mistake--grain producers in the U.S. are world-
    class when it comes to raising a crop. Above-average yields
    have helped some producers, but increased volatility in
    commodity markets has given them a very narrow window for
    marketing grain at or above the break-even levels. Barring
    unforeseen events, there are no signs indicating a significant
    change to projected profitability levels.
        Grain producers with higher debt levels and/or those having
    higher costs to raise their crops have generally experienced
    losses over the last 4 or 5 years. For many producers, these
    losses have more than offset profits they may have experienced
    from 2010 to 2013, during a time of higher gross prices.
        Some producers are running out of options to make
    adjustments to their operations and are at risk of continued
    price and weather volatility. The financial outlook for 2019
    does not look favorable for crop prices relative to the cost to
    produce these crops, and we anticipate an additional number of
    producers experiencing credit challenges.
        This is the time of year that we work with farmers to
    establish their credit needs for the upcoming growing season,
    and this is what we know: Profit margins for producers continue
    to be tight. We also know the projected crop prices for 2019
    are at or below break-even level for many producers.
        What we do not know is when trade agreements may be
    completed which would bring needed stability to grain price
    levels. Of course, we also do not know the weather. And
    speaking of the weather, across much of the Midwest major
    weather events over the last two weeks have taken lives, ruined
    machinery and equipment, caused substantial livestock deaths,
    destroyed critical infrastructure, and damaged homes and
    livelihoods. It will likely take months to fully assess the
    damage, but the need for assistance is immediate.
        We are mobilizing staff and resources to help farmers and
    ranchers and the rural communities in which they live. We have
    a standard disaster assistance program that is tailor-made to
    work at times like these. Producers impacted by the floods and
    winter storms will qualify for this program. The program
    includes more lenient credit standards, deferment of payments,
    reamortization of loans, and interest rate relief.
        Our staff is and will be spending a significant amount of
    time helping individual producers think through their options.
    We are grateful for the committee's support of the pending
    Disaster Bill, and urge you to include assistance for Midwest
    producers devastated by these storms, and pass the bill
    immediately. With spring planting season just ahead of us, the
    timing of disaster assistance is critical. We urge fast action.
        Let me close by saying the agriculture industry is very
    dynamic and has always adjusted. There remains confidence in
    the future of agriculture and that market volatility will
    improve. In this environment, agriculture needs Congress's
    continued support for the farm bill, the ethanol industry, and
    the Federal crop insurance program. Providing access to the
    world markets through strong trade agreements is also critical
    to the viability of U.S. producers.
        The U.S. agriculture industry is positioned better than
    anyone to feed the world for decades to come, and we are
    excited to be a part of that future. Thank you, and I look
    forward to addressing your questions.
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        Mr. Bishop. Mr. Pointevint.

                          Testimony by Mr. Pointevint

        Mr. Pointevint. Mr. Chairman, thank you very much for what
    you do for Southwest Georgia, especially as it relates to
    agriculture and rural America. Ranking Member Fortenberry, my
    thoughts and prayers are with you and your constituents back
    home during this time.
        Members of the subcommittee, I am Paxton Pointevint, CEO of
    Southwest Georgia Farm Credit, which is headquartered in rural
    Bainbridge, Georgia. On behalf of the association's boards of
    directors, my colleagues, and especially the resilient farmers
    and rural communities of Southwest Georgia. I would like to
    thank you for allowing me to be here today.
        I would also like to thank each of you for the countless
    hours you have spent on the disaster assistance package for the
    farmers and communities that are suffering from recent storms
    and wildfires.
        In my home State of Georgia, agriculture contributes more
    $72 billion each year to the State's economy. One in seven
    Georgians work in agriculture, forestry, or a related field.
    Agriculture is the lifeblood of our local economies. Our
    farmers create jobs that support local business and industry.
        They buy food in their local grocery stores. They purchase
    tires from the family-owned tire stores. They seek and receive
    care at our small hospitals. They send their kids to local
    schools, and the list goes on. It is safe to assume that when
    our farmers struggle, our rural communities struggle.
        Southwest Georgia farmers are fortunate to grow a diverse
    mix of row crops, including cotton, corn, peanuts, soybeans,
    and a variety of vegetables. This is primarily due to soil
    types, climate, and a consistent supply of well water for
    irrigation. Such diversification and access to water has
    historically provided risk mitigation for both farmers and
    creditors.
        However, after several years of suppressed farm income,
    rising input costs, volatile trade conditions, and catastrophic
    weather events, many of the customers are now suffering. The
    benefits of irrigation, excellent soil types, and mild climate
    cannot overcome these other factors.
        Since Hurricane Michael, approximately 10 percent of our
    loan portfolio's credit quality has deteriorated due to
    financial-related stress on our borrowers. We expect to see
    more of this deterioration as we continue to work through the
    annual operating loan renewal cycle.
        On the morning of October 11, 2018 our crops were at their
    most vulnerable state for wind damage. Cotton plants were full
    of fiber, and pecan trees were loaded to the hilt with quality
    nuts and foliage. Much of the peanut crop had been harvested,
    so most of the farmers had turned their attention to the
    harvest of what appeared to be a very strong cotton crop, one
    that would allow farmers to take advantage of an uptick in
    cotton prices while improving their production history for crop
    insurance purposes.
        Unfortunately, we were quickly reminded Mother Nature has
    the ultimate say in a crop's fate. By nightfall, Hurricane
    Michael had swept through our area and decimated most of the
    cotton and pecan crops. The storm also damaged agriculture-
    related infrastructure and equipment like poultry houses, grain
    elevators, and center-pivot irrigation systems.
        Not only had Hurricane Michael created tremendous adversity
    for the current production cycle, for some farmers the struggle
    will continue for many years to come. Hurricane Michael's
    devastating impact on cotton and pecan farmers was felt
    immediately. Unable to harvest their crops in many cases, some
    farmers did not make enough money to pay creditors or make
    necessary repairs to equipment and infrastructure.
        Fortunately, crop insurance and farm support programs have
    provided many of the legal farmers with the ability to repay
    some of their annual input costs. At the end of the day,
    however, some farmers are still faced with significant cash
    shortages, meaning there simply is not enough earnings from
    their operations to repay all their obligations.
        Regardless of the situation facing our farmers and rural
    communities, Southwest Georgia Farm Credit remains committed to
    fulfilling our mandated mission. We are currently working with
    our borrowers to finance their operating losses when justified,
    provide funds to repair equipment and infrastructure, and renew
    operating lines for the 2019 production cycle.
        As you can imagine, many of the farming families in our
    area have depleted their equity and liquidity as they have
    tried to salvage their operations. Given lower projected
    commodity prices, lower projected farm income, and volatile
    trade markets, farmers in rural communities will continue to
    struggle.
        Therefore, strong crop insurance programs, farm support
    programs, and trade agreements remain critically important. But
    more importantly, it is time to help our farmers. The time for
    Federal disaster assistance is now.
        Thank you very much for the opportunity to testify, and I
    will be happy to answer any questions from the committee.
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        Mr. Bishop. Thank you very much, Mr. Pointevint, Mr.
    Hebrink, Mr. Jensen. Thank you again for being here. As I said,
    the written and oral testimony is heartfelt, is compelling, and
    is honest.
        Can each of you just take a moment to respond to,
    reiterate, or emphasize any of the testimony that you heard
    from our first panel? Are there any stories or anecdotes that
    you can share that will help the subcommittee get a sense of
    the mood of farmers from your respective regions? And I think
    we just got a taste of that from Mr. Fortenberry.

          FARM DISASTER AID FROM THE PERSPECTIVE OF THE PRIVATE SECTOR

        Mr. Pointevint. Mr. Chairman, I think I would add that the
    best way I know to describe it is there is very little room for
    error in our area, Southwest Georgia. Given the history, the
    recent history, I would say the 5-year history of suppressed
    commodity prices on top of the storm, it is a very critical
    situation at this time in our territory.
        So I think it is important for lenders like Farm Credit to
    be there for their customers to try and work through these
    times, and we are committed to doing so. We are looking at loan
    restructures, providing additional working capital loans,
    financing irrigation repairs and infrastructure repairs and
    things like that, to get ready for the 2019 production cycle.
        Mr. Bishop. Mr. Jensen. Mr. Hebrink.
        Mr. Jensen. Mr. Chairman, I would just make a comment. As
    we have dealt with both a decline in income, net farm income
    across the Midwest, particularly in grain production, as well
    as dealt with a disaster or two over the last few years, I
    think I would call out the consistency in philosophy between
    FCA, Mr. Tonsager and his testimony, and what we execute on
    every day in working with our customers.
        In terms of--they have been encouraged to work with
    customers, or the agency has been encouraging to work with
    customers through these challenging times, both in terms of the
    disaster and what we have seen of the grain industry. So I
    would call that out. It is important, as we work with customers
    every day, which is our focus.
        Mr. Bishop. Mr. Hebrink.
        Mr. Hebrink. Mr. Chairman, both Chairman Tonsager's
    testimony and some of the follow-up questions he had referenced
    broad statistics from USDA and overall farm income. And while
    accurate and indicative of the challenges and the stress within
    the financial sector, it is important for us to keep in mind
    that on individual producers, the impact can be very, very
    different.
        And for those individual producers who are exiting the
    business and as I referenced, our why statement, our position
    statement, that we exist to champion the hopes and dreams of
    agriculture in rural America, we understand that when
    individual farm families suffer, that is a suffering and a
    death of one of those hopes and dreams of individual families.
    And that is what we are there and who we are there to serve on
    an ongoing basis, to help them through those challenges and
    hopefully see the uptick in the agricultural economy.

                             SOUTHERN STORM DAMAGE

        Mr. Bishop. Mr. Pointevint, as you know and as most people
    probably know, Georgia is famous for peaches, peanuts, pecans,
    and cotton. But a lesser-known fact is that Georgia is
    consistently ranked at the top of the forestry industry in
    terms of privately owned forestry.
        In 2017, the forestry industry contributed $18.7 billion to
    the Georgia economy and supported 82,800 jobs. And the
    University of Georgia has estimated that Hurricane Michael
    resulted in nearly $800 million in direct losses to the Georgia
    timber industry.
        Can you give the subcommittee a sense of the damage to the
    Georgia forestry industry? And can you tell us from your
    perspective how three consecutive years of hurricanes have
    impacted our Georgia farmers, and to reiterate the impact of
    not having passed the Disaster Bill?
        Mr. Pointevint. Mr. Chairman, you are exactly right. The
    timber industry is extremely important to the State of Georgia.
    And I can tell you, if you took a trek across our territory on
    October 10 and took that same trek, about a 40-mile stretch
    across our area, you would see the landscape looks totally
    different. And that is due to the significant timber damage in
    our area.
        Much of the timber, unfortunately, at this time is done by
    private individuals. And a lot of our farmers have diversified
    their operations through their timber operations. So much of
    that timber was put in place as an investment for retirement
    purposes, or to pass along to future generations.
        One description I like for timber and pecans is the fact
    that we consider it to be a generational crop, meaning it takes
    many years to grow. It is typically 10 to 12 years before you
    can generate any material income from a pecan tree, and it is
    10, 12, or 15 years before you can generate any type of income
    from a timber operation. So it has had a significant impact on
    our area.
        As for the three hurricanes, you are exactly right, Mr.
    Chairman. 2016, Hurricane Matthew came across the southeastern
    part of Georgia, and really at a bad time, just like Hurricane
    Michael, really damaged the cotton and pecan crop in that area.
    2017 we had Hurricane Irma that came through southwest Georgia,
    not quite as severe winds but did significant damage to the
    cotton crop; again, it was at a very bad time.
        And then obviously in 2018 with Hurricane Michael and the
    significant damage that it did on our cotton and pecans in
    October.
        Mr. Bishop. My time is expired.
        Mr. Fortenberry.

                               NEBRASKA FLOODING

        Mr. Fortenberry. Thank you, Mr. Chairman. Thank you for
    your questions and your vivid description. Sometimes when we
    are talking balance sheets and debt ratios and deferred
    interest and loan consolidations, we are in the realm of the
    abstract. So stories that point to the significance of the
    problem out there are always very helpful. Let me give you an
    idea of what happened in the area which I represent.
        So we had three 500-year events along three rivers where
    they basically converged: the Platte, which runs from west to
    east, flowing into the Missouri; the Elkhorn, from the north
    down to the south end of the Platte near the convergence of the
    Platte and the Missouri.
        So you have rain on top of frozen ground on top of snow,
    with rising temperatures, causing a slurry of soil and ice that
    is not absorbed into the ground smashing against flood control
    barriers, levees and other designed systems to protect our
    communities.
        So when it hit the Missouri, this wave, this tsunami of
    sorts, couldn't not go anywhere except backwards, upriver,
    which then came over the top of the levee system designed to
    protect Offutt Air Force Base, which is a significant part of
    our Nation's military infrastructure, which houses, by the way,
    Strategic Command, which is the most--the place of the most
    powerful command of weaponry in the world. Going back upriver,
    all along the Platte as well as the Elkhorn where you had levee
    systems failing, it looks like Swiss cheese, according to the
    Corps of Engineers.
        The town of Fremont was largely spared except in the
    southern portion of it, when the Platte River decided to take a
    new course, going back to the 1940s route that it once had,
    blowing out 400 yards of levee that I saw. The little town of
    North Bend had water just coming like fingers straight through
    the streets.
        And then going further west, south of the town of Columbus,
    which is 25,000 people, there is a little truck stop called T-
    Bone Cafe. Well, I saw the initial pictures of T-Bones, which
    had water and mud four feet high. By the time I got there, a
    lot of that mud was out, and I looked at the manager, Fred, and
    he said, ``We don't mess around. We're Nebraskans. We get it
    done.''
        The point of all this is, there is a real cooperative
    spirit where I live. And in America in general, the disasters
    tend to bring about the best of us. Neighbor helps neighbor.
    Local governments have done an extraordinary job of responding.
    Our role here is to provide the backup mechanisms, which when
    local responses are overwhelmed, we are here to help.
        So can you speak to any specifics in regards to some things
    that you have done? You talked about the grain sector, but the
    livestock sector is also significantly impacted.
        Back to T-Bones. They have two boots, large six-foot or so
    cowboy boots that greet you on the outside. One was found about
    300 yards away in Mitulka's Garage, and the other one about
    half a mile away on Highway 81. These are big, concrete boots,
    big boots sunk in concrete that were just tossed about like
    toys.
        So that's kind of amusing. But at the same time, when you
    see a bloated cow right next to that area on the side of the
    road, who knows where it comes from? It points to the issue
    that the agricultural losses are going to mount. It is almost
    easier, in a way, to identify the losses in the urban
    communities because they are dense and the resource mechanisms
    are right there to begin to count. It is a little bit harder in
    the agricultural community.

                     HANDLING LOSS AND PREDICTING CASUALTY

        So two questions, Mr. Jensen. What specific examples of
    what you have already done with persons who are benefitting
    from your credit portfolio? And second, how intense do you see
    the agricultural losses rising, or how intense will the rise
    be?
        Mr. Jensen. Congressman, thank you for the question. And it
    has been an interesting week or two, has it not? It is a
    disaster that I do not think any of us were ready for or
    anticipated.
        I am going to start off my response to your question with a
    letter I received, actually, from one of our customers. And
    this is the letter that was received on March 25, so within
    days after this occurred. And it was after one of our loan
    officers had already been out to meet with the customer and
    look at some of the extent of the damage they have seen and
    start talking about, ``What about next steps?''
        And this is how we kicked off--this customer happens to be
    from the Columbus area, which you just mentioned. ``I am one of
    the victims of the terrible flooding across the State of
    Nebraska. It is going to be a long road to recovery.'' So that
    is how he kicked it off.
        So we are in the process right now of meeting with many of
    these customers in these affected areas. We know that there
    will be many that would be impacted. We also had many employees
    impacted. I think we identified 11 employees that had
    significant damage to their homes; four of them may lose their
    homes. So we are dealing with it both in terms of customers and
    employees.
        There were a couple of unique aspects to what happened
    there, and you mentioned many of them and how all those things
    converged at one time. The extent of this flooding is probably
    something we had not seen; this flooded outside of what would
    typically be some of your river typical flooding areas if you
    were to get some mild flooding.
        And then how quickly it happened--it converged all within a
    day or two. A lot of our customers did not have time to get out
    there and remove grain from bins, remove livestock from those
    areas, move machinery and equipment out. The impact is
    significant, and there are all kinds of estimates, and I know
    you have seen them, too, how broad this could be. Clearly it is
    in the hundreds of millions of dollars, if not billions.
        What we are doing immediately is, when an event like this
    occurs, what we find is the customers need some time just to
    get their arms around what has happened and deal with what is
    ahead of them. And then one of the first conversation was to
    start to work with their loan officer, their banker, to start
    talking about what options they have.
        So the things that we have done so far is this is not only,
    as you mentioned, impacted a lot of farm producers. But their
    communities to some degree have been devastated. So the
    Nebraska Farm Bureau immediately set up a relief fund. You have
    got to give them a lot of credit for how quickly they responded
    to that.
        So we have made a significant financial obligation to them,
    to the Nebraska Cattlemen's, to the Red Cross, and then also
    the Farm Credit system has an employee relief fund that we have
    donated a significant amount of dollars to. Add that up, we
    have donated about just under $200,000.
        In addition to that, as I mentioned, we are starting to
    have conversations with our customers. And we have what is
    called a disaster assistance program that is built for these
    types of situations that--unfortunately, we see them from time
    to time, and we pull that off the shelf, which starts to lay
    out options for customers to look at--a lot of the cases, they
    need to buy a little time. There might be payments coming due
    here in February--excuse me, in April or May.
        So there are ways that we, under that program, defer
    payments, reamortize some loans, advance some additional
    dollars under a low-interest loan program to help them. So
    those are some of the things that we are doing immediately and
    some of the things we have done for the community. And I
    realize I am running out of time, too.

                 RURAL DEVELOPMENT INTERACTIONS AND EXPERIENCES

        Mr. Bishop. Thank you. I am interested in learning a little
    bit more about your rural development activities. Rural
    communities and agricultural are interdependent, and the Farm
    Credit Association has played an important role in financing
    and supporting rural hospitals, housing, and infrastructure. As
    you know, our committee oversees rural development at USDA.
        From what you see on a day-to-day basis, what are the
    greatest needs that you see in rural America? Do any of you
    have experience working with the Rural Development Agency,
    USDA? And have those interactions been positive? Because what
    you have to do is, whether it is housing, whether it is
    infrastructure, whether it is education or healthcare, you have
    got to help make it affordable and accessible in order for the
    quality of life in those rural communities to be improved.
        Can you comment on that? Each of you?
        Mr. Hebrink. Yes. Thank you, Mr. Chairman. Your
    observations and insights are correct. In order to retain
    population in rural areas, we need many of these amenities,
    whether it is access to healthcare, jobs, education, and other
    infrastructure, such as broadband in rural communities, to be
    able to retain the rural population that exists in the young
    families, your younger generation.
        Compeer has been one of the most active Farm Credit
    Associations within rural development. We have participated
    very actively with the USDA in those rural development
    programs, particularly the community facility programs. We have
    been involved in the development of 40 projects over the
    Midwestern part of the United States across 17 States, largely
    rural, critical access care facilities, senior living
    facilities, and other community living facilities.
        We have had a strong partnership with the USDA. Those
    programs have been essential to put into place the financial
    structure that allows those communities to move forward and
    finance those projects. It has been a public-private
    partnership between Farm Credit, community banks, and the USDA
    programs. And we look forward to continuing to work on those
    USDA programs on future projects.
        Mr. Bishop. Mr. Jensen.
        Mr. Jensen. In addition to those type of programs, at more
    of a local level we are involved in promoting various different
    agricultural programs, include 4-H programs, the county 4-H
    level. We have a Hands On Learning agriculture initiative that
    we participate in. We provide scholarships for 32 individuals
    for $2500 each scholarships last year, and also local farmers
    markets, like the Fallbrook Farmers Market in Lincoln,
    Nebraska.
        So those are various different types of opportunities we
    take advantage of to help rural America.
        Mr. Bishop. Mr. Pointevint.
        Mr. Pointevint. Mr. Chairman, I would echo the comments.
    But I would say that job creation is an absolute must in the
    rural areas, especially in southwest Georgia. And the only way
    to create jobs and lure those industries to our area is to
    ensure we have access to quality healthcare, access to quality
    education, and obviously, as you mentioned earlier, the
    infrastructure, including broadband, to create the connectivity
    we need to thrive.
        But that is definitely the biggest challenge for our rural
    area in Southwest Georgia.
        Mr. Bishop. Well, thank you. I want to thank all of you,
    all of our witnesses, Mr. Hebrink, Mr. Jensen, and Mr.
    Pointevint. And on behalf of the committee, we truly appreciate
    your willingness to come to Washington today to discuss a rural
    economy and to provide personal, on-the-ground insight of what
    is going on and what is needed from Congress.
        The work that you do is extremely important, and I am glad
    that we were able to have you to assist us and discuss this
    important topic today.
        Again, I want to thank you all for your testimony. And with
    that, the subcommittee is adjourned.

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                                              Wednesday, April 3, 2019.

                          FOOD AND DRUG ADMINISTRATION

                                    WITNESS

    SCOTT GOTTLIEB, M.D., COMMISSIONER, FOOD AND DRUG ADMINISTRATION

                             Introdution of Witness

        Mr. Bishop. The subcommittee will come to order.
        Good morning. I want to welcome all of you to today's
    hearing. Our primary objective this morning is to examine the
    Food and Drug Administration's fiscal year 2020 budget request.
    Our witness is the Commissioner of the Food and Drug
    Administration, Dr. Scott Gottlieb.
        Commissioner, welcome back.
        Dr. Gottlieb. Thank you.
        Mr. Bishop. I remember well your first appearance before
    the subcommittee. I think you had only been in office a few
    weeks then. And now you appear to be--you are, unfortunately,
    appearing before us, which will probably be your last time and
    with just a few days left in your service at FDA.
        I think I can speak for many people when I say that you
    have been a fierce advocate for public health, tackling
    critical issues such as reducing youth tobacco use, addressing
    the opioid epidemic, reducing drug prices, and approving
    generic drugs. You have taken on these issues during a time of
    sharp partisan divides on many issues, and yet you have earned
    broad bipartisan support. I congratulate you on that.
        It has always been a pleasure to have you here, and I wish
    you the best in your future endeavors. I hope you enjoy
    spending time with your family back in Connecticut. But your
    efforts and leadership as Commissioner are greatly appreciated.
        Dr. Gottlieb. Thank you.

                         Opening Statement--Mr. Bishop

        Mr. Bishop. Prior to your departure, we are going to take
    one last opportunity to discuss the impacts of your agency's
    fiscal year 2020 budget request.
        As in past years, the FDA's request is in stark contrast to
    much of the Federal Government. Many administration officials
    have appeared in the recent weeks defending steep cuts to their
    budgets. That is not the case here. Your request totaled $6.1
    billion, an increase of 7 percent from fiscal 2019. The
    increases include nearly $176 million in budget authority and
    $241 million in user fees. These additional resources are on
    top of a significant increase for fiscal year 2019.
        On the medical product safety side of the agency, you
    requested $254 million more than last year's enacted level, an
    increase of over 7 percent. For the food side of the agency,
    the FDA is requesting almost $56 million more than fiscal year
    2019, which is an increase of 4 percent. I should also note
    that you are requesting authority to increase tobacco user fees
    by $100 million from the e-cigarette industry.
        Again, I want to thank you for being with us today, and I
    look forward to today's discussion.
        My ranking member, Mr. Fortenberry, has been delayed, but I
    will yield to Mr. Aderholt, the former chairman of the
    committee, for any comments that he might wish to make.

                        Opening Statement--Mr. Aderholt

        Mr. Aderholt. Thank you, Mr. Chairman. It is good to be
    here. It is good to be the ranking member for a few minutes
    here while we are waiting on the real ranking member to get
    here.
        As you know, I had the privilege to chair this committee
    for 6 years. And after 6 years, I am now over at the Commerce,
    Justice, Science Subcommittee. But I am glad I am able to
    maintain a seat on this subcommittee and to work with everyone
    that is on this subcommittee, including the chairman and his
    great work.
        But, Commissioner, welcome. It is good to have you here. I
    would like to take a moment to congratulate you on your
    tremendous productive tenure at the Food and Drug
    Administration. I have enjoyed working with you to address a
    number of issues that we have worked with on this subcommittee.
    And, quite honestly, it is really rare in a town that someone
    is able to accomplish quite as much as you have over the last 2
    years. And I believe I speak for many as we appreciate your
    service to the country and the fact that you are leaving FDA in
    a strong shape speaks well of you as your successor takes over.
    I applaud the work of the agency that it has done over the last
    few years to bring increased competition to the market in order
    to lower the drug prices and expand access. I know that this
    has been a priority for you and the administration, and I look
    forward to working with your successor in that regard.
        I also appreciate your leadership to curb the tide of the
    opioid epidemic, between enforcement measures against companies
    that are violating the law to helping speed alternative
    nonopioid-based pain medication to the approval process to your
    efforts to reduce misuse and abuse of opioid drugs, the FDA,
    under your leadership, has been a leading partner in fighting
    the scourge on many of our communities across the Nation, and
    particularly in my part of the country where the Appalachian
    region has been hit hard. And, of course, I say the commission
    because I just, the last couple weeks had the co-chair of the
    Appalachian Regional Commission down to my district. And we
    were able to discuss some ways that we can try to fight and
    help this scourge that has been on a lot of the States and
    particularly the Appalachian region.
        And, finally, I am encouraged by your work to curb the
    epidemic of youth e-cigarettes by addressing youth access and
    youth appeal to these type of products. And so, again, we are
    sorry to see you go, but we look forward to seeing you in your
    next chapter of your life, and I know you will have great
    success. So, again, thank you for being here, and I look
    forward to following up with you in the future.
        And thank you, Mr. Chairman, for having this hearing today
    and having the Commissioner here in his last week in office.
    Thank you.
        Mr. Bishop. Thank you, Mr. Aderholt.
        Mr. Gottlieb, without objection, your entire written
    testimony will be included in the record. I will now recognize
    you for your statement, and then we will proceed with questions
    from the subcommittee.

                        Opening Statement--Dr. Gottlieb

        Dr. Gottlieb. Well, thank you, Mr. Chairman, for your kind
    comments at the outset. They mean a lot to me and to my
    colleagues at FDA.
        And I want to thank you as well, Congressman Aderholt, for
    the work that we have done together over the last 2 years.
        And I want to thank all the Members of the Subcommittee and
    the chance to appear before you today.
        As was mentioned, this is the last time I will appear
    before the Subcommittee as the 23d Commissioner, and I am
    grateful for the opportunity to have worked with you. I am
    proud of what we accomplished together on behalf of the FDA's
    public health mission. We are especially thankful for the
    funding increases the Subcommittee provided to FDA in 2019.
    That new funding comes at a critical time. It is going to help
    FDA modernize our approach to medical product manufacturing and
    make product review more efficient and safer and help us
    protect our food supply. The funding request in the President's
    2020 Budget will allow FDA to advance our work to ensure the
    safety of food and medical products that we regulate.
        Today I want to focus on one of my priorities, and one of
    my biggest priorities and my biggest concerns right now is the
    youth vaping epidemic. This is one of the most significant
    public health crises facing FDA and also facing our Nation. And
    it is one of the most significant problems that we are trying
    to address.
        To help address that concern, the President's 2020 budget
    requested $100 million in new tobacco user fees. These new user
    fees are critical to ensuring that the FDA can continue to
    fight the youth epidemic and, at the same time, create a modern
    regulatory framework for the appropriate oversight of e-
    cigarettes. It is key that we have the resources to continue
    standing up a framework to put e-cigarettes through an
    appropriate series of regulatory gates and that we aggressively
    confront kids' use of these products to make sure children
    don't become addicted to nicotine.
        Last month, FDA proposed to end our current compliance
    policy as it relates to flavored electronic nicotine delivery
    system products other than menthol-flavored e-cigs. We put all
    manufacturers and retailers on notice that we expect to see
    heightened age verification requirements in place for these
    flavored products sold online and at retail. And if rates of
    use among kids don't come down, we will need to take additional
    steps.
        Our concern about kids' use of these products isn't just
    based on the potential for kids to become addicted to nicotine
    from the e-cigs and then transition to combustible tobacco
    products. It is also based on the direct risks posed by the e-
    cigs. While e-cigs could be less harmful than combustible
    tobacco for currently addicted adult smokers who can fully
    transition off of cigarettes, they are not safe. For one thing,
    nicotine is especially problematic because of the impact it can
    have on a still-developing adolescent brain. But there are
    other risks as well.
        And while we are still learning about the long-term
    potential benefits and health risks of e-cigs, existing
    scientific research offers some clear evidence that several of
    the dangerous chemicals in tobacco smoke are also present in
    aerosol of some of these products. And we know that this
    exposure is a major health concern due to the ability of e-cig
    particles penetrating deep into the respiratory system. Some of
    the toxic chemicals and other substances contained in e-cigs
    can go deep into lungs and may pose the risk for disease not
    usually seen in smokers.
        This isn't idle speculation. And studies have shown that e-
    cig vapor contains chemicals that can damage cells and cause
    illness and aging. Research we have reviewed shows substances
    found in e-cig vapors can pose a risk for decreased lung
    development, breathing difficulties, lower defense against
    bacterial and viral pathogens, and vaping-induced inflammatory
    reactions. We are especially concerned about evidence from
    animal studies that vapor and e-cigs can cause changes to
    tissue in the airways that could induce cancer or be a
    precursor to cancer.
        Today, I am announcing that the FDA has initiated a
    comprehensive research plan to fully evaluate these risks, and
    we will report our results publicly. The FDA Center for Tobacco
    Products and the Center for Drug Evaluation Research are
    already leading these research efforts. Four distinct types of
    Electronic Nicotine Delivery Systems products are being tested,
    each with three different flavors. We need to fully evaluate
    the potential risks that we have identified to inform the
    public as well as our own regulatory decisionmaking.
        We also have other safety concerns about e-cigs. Today, FDA
    is notifying the public of a potential emerging safety issue.
    We have reports indicating that some people who use e-cigs,
    especially youth and young adults, are experiencing seizures
    following their use of e-cigarettes. While seizures or
    convulsions are a known potential side effect of nicotine
    poisoning, they are more commonly encountered with intentional
    or accidental swallowing of nicotine-containing e-liquids. But
    our review of voluntary adverse event reports for these
    products submitted to the FDA and to poison control centers has
    identified 35 reported cases of seizures following use of e-
    cigs between 2010 and early 2019. We believe this signal
    warrants full investigation.
        We want to be clear that we don't know yet if there is a
    direct relationship between the use of the e-cigs and a risk of
    seizure. We are sharing this early signal information just as
    we would share similar information with other products we
    regulate. We have identified it as a goal to communicate early
    about potential safety concerns and to share when a safety
    signal is under active investigation by the Agency.
        As we work to evaluate these potential risks, we will
    remain especially committed to preventing kids from using any
    tobacco products. Any policy steps to advance innovations that
    could be alternatives to smoking can't and won't come at the
    expense of addicting a generation of kids to nicotine through
    these same products and exposing kids to all these potential
    risks.
        I look forward to answering your questions today, and I am
    grateful for the opportunity to be here. Thanks a lot.
        [The information follows:]

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        Mr. Bishop. Thank you very much, Dr. Gottlieb.
        Let me start the questioning.

              APPLICATION DEADLINES FOR E-CIGARETTE MANUFACTURERS

        At our February hearing, you and I discussed the issue of
    small e-cigarette manufacturers' ability to afford to submit
    product applications to FDA. In response to my question, you
    said, quote: Our desire to extend the application deadlines on
    these products and give them until 2022 is to give us the time
    to put in place the implementing regulations and guidance that
    would not only provide the rules of the road for how to
    effectively traverse the application process but also take into
    consideration the kinds of challenges that you bring up about
    how we can build into our regulation and guidance
    accommodations for small manufacturers.
        In light of this response, I have to say that I was a bit
    surprised that you recently decided to shorten the deadline to
    2021. I will tell you that your response was somewhat vague. I
    think that we need to have a robust market for adult e-
    cigarette consumers with competition and wide product choice
    instead of a smaller market controlled by the big companies
    with fewer choices for adult smokers, higher prices, and
    probably less innovation.
        If adult smokers who wish to use e-cigarettes to reduce or
    to end their use of combustibles cannot find products that they
    like, they may not make the change, and public health will
    suffer.
        And compounding, FDA has requested funds to help small
    compounders become outsourcing compounders. While this isn't
    exactly analogous, do you feel like the FDA should request
    funds specifically to help small manufacturers navigate the FDA
    regulatory process regarding e-cigarettes?
        Dr. Gottlieb. Thank you for the question, Mr. Chairman.
        We would certainly use the resources from the user fees
    that we requested towards that purpose. And, you know, part of
    the hope by trying to request funding to create a regulatory
    paradigm for these e-cigarette products and for all the newly
    deemed ENDS products is that we create a proper regulatory
    framework that can apply, you know, the right regulatory touch,
    including making accommodations for small manufacturers.
        I would just point out, we shortened the application
    deadlines for the flavored e-cigarette products as an attempt
    to reduce the access and appeal of those products to kids, to
    make sure that we have a proper Premarket Tobacco Product
    Application (PMTA) process to adequately evaluate the risks of
    those products, recognizing they are being more widely used by
    children. It wasn't all of the e-cigarette products that we
    addressed.
        But, you know, make no mistake, we still have to put in
    place all the foundational rules. We issued the substantial
    equivalence (SE) rule last week, we should be releasing the
    PMTA ENDS guidance within a couple of weeks. I was hoping to
    get that out before I left, but it will be coming out. And we
    will have the PMTA rule and the Modified Risk Tobacco Products
    (MRTP) rule, two other important foundational rules, out before
    the end of year.
        So, you know, we are putting in place the elements of the
    modern regulatory process for these products and, in the
    context of doing that policymaking, trying to take into
    consideration exactly what you are bringing to light here. We
    do not want a process that is only accessible to three large
    companies.

                        OLIVE OIL STANDARDS OF IDENTITY

        Mr. Bishop. Thank you, Dr. Gottlieb.
        And I want to applaud and let me you know that I think we
    all support your efforts to keep e-cigarettes and all tobacco
    products out of the hands of youth.
        Let me turn to a more parochial level for the remaining
    time I have regarding olive oil standards.
        Georgia is home to several small olive farms that produce
    some small batches of extra virgin olive oil. And,
    unfortunately, there is no single standard of identity in the
    U.S. for extra virgin olive oil. In the fiscal year 2019
    appropriations bill, the committee directed the FDA to
    establish a separate U.S. standard of identity for different
    grades of olive oil, including extra virgin olive oil.
        What progress has FDA made in the development of these
    separate standards of identity for different grades of olive
    oil? Studies show that the extra virgin olive oil provides
    certain health benefits that no other grades of olive oil
    provide.
        Do you believe that the U.S. should have one single
    standard of identity for extra virgin olive oil to ensure that
    American consumers know exactly what they are paying for when
    they go to the grocery store?
        Dr. Gottlieb. Well, unfortunately, Mr. Chairman, with
    apologies, I am not going to be able to answer the question
    directly. But I will certainly get an answer back to you.
        We have over 300 standards of identity, and we have been
    fortunate to receive some funding from this Committee to
    undertake a broad process to modernize those standards,
    including more than 100 that relate to dairy products.
        And so, I will get back to you on this specific question
    around this specific standard of identity. It is not one that
    has come across my desk yet, but I will make sure it does
    before I leave the Agency in 3 days.
        Mr. Bishop. Thank you very much.
        Mr. Aderholt.

                            YOUTH NICOTINE ADDICTION

        Mr. Aderholt. Thank you, Chairman.
        And, Dr. Gottlieb, let me just start in and follow up on
    the first question that the chairman asked about the e-
    cigarettes.
        I am encouraged by your agency's work to curb the epidemic
    of these e-cigarettes that are used by the youth. And I will be
    introducing a bill this week that would, number one, raise the
    minimum age for tobacco products to 21. Number two, it will
    require online sellers of vapor products to obtain the name,
    the birth date, the address of customers, and verify the
    customer's identity through a third-party database, and it
    would require an adult to sign for the product on delivery.
        My question will be to you is, do you think a bill like
    this is needed to help address the youth nicotine addiction
    epidemic that we are seeing?
        Dr. Gottlieb. Well, I appreciate the question, Congressman.
    I will just say at the outset, you know, while we take
    aggressive steps to try to address the youth use of these
    products, we still believe that these products could offer a
    viable alternative for currently addicted adult smokers to
    fully transition off of combustible tobacco on to something
    that is less harmful, notwithstanding our concerns around the
    risks associated with these products. And we do believe they
    have risks. These are not safe products.
        We also believe they are less harmful than smoking
    combustible tobacco. That obviously needs to be demonstrated
    through a proper regulatory process. We plan to put these
    products through that process. But we still believe in some
    public health promise of these products for currently addicted
    adult smokers, which is why we are trying to strike this
    balance, even while we vigorously address the youth use.
        We do believe that raising--and I believe personally that
    raising the age to 21 for tobacco products can help address
    this crisis. A lot of the sales of e-cigarettes that we see to
    youth are secondary sales of enterprising 18-year-olds going in
    the store and buying a lot of product and reselling it in a
    high school.
        And as far as online sales of these products, one of the
    things we plan to address with the guidance that we are
    promulgating is trying to put in place height and age
    verification requirements for these products being purchased
    online. We have seen other products being sold online where
    there is good age verification. Not 100 percent foolproof but
    certainly better than what we have today. You look at things
    like alcohol sales online, wine sales online, we have adult
    signature on delivery and other kinds of age verification. And
    they are more foolproof than what historically has been in
    place with the e-cigarette products. Some companies have
    voluntarily taken those steps now. But we think a more uniform
    standard could be helpful in trying to address the youth access
    issue when it comes to these products.
        Mr. Aderholt. Well, I know, when you were asked just what
    you said just now, you have said in the past that you want to
    preserve access to noncombustible for adult smokers. And a lot
    of the youth access isn't just 14- and 15-year-olds buying
    illegally. It is these enterprising 18-year-olds that are
    selling to minors. And increasing the age to 21 will make it
    harder for this type of activity.
        As I understand, approximately 80 percent of high school
    seniors will turn 18 by the time they graduate. FDA's past data
    indicates amongst 15- to 17-year-olds, 74 percent of access to
    vapor products come from social sources; 57 percent asked for
    or someone offered a vapor product; and 17 percent gave someone
    money to buy for them.
        If this bill that I plan to introduce, a bipartisan bill,
    when it is introduced, how quickly do you think we could
    reverse these current trends that we are seeing?
        Dr. Gottlieb. You know, I hope quickly. I think that the
    challenge here is going to be that once you have sort of an
    epidemic like this under way, we are going to continue to see
    some increases before we start to see decreases. I am not
    optimistic that, when you have the data for the National Youth
    Tobacco survey in 2019, it is going to go down. I think it is
    going to go up. If it goes up, you know, 30, 40, 50 percent, we
    are going to need to be stepping into the market with
    additional regulation.
        So my short answer to the question is I don't know. We need
    to be vigorous here. And if we continue to see these kinds of
    increases year over year for an additional year, we are going
    to have to be very direct.
        And the next place we would look is at the pod-based e-
    cigarettes as a class, because these are the ones that are
    being abused by kids. And, you know, at some point, there is
    going to be so much use of these products that we are going to
    have to conclude that there is not enough redeeming public
    health value in having these products available for currently
    addicted adult smokers to offset all that youth initiation.

                            HANDMADE PREMIUM CIGARS

        Mr. Aderholt. OK. Let me see if I can sneak one more
    question in.
        FDA last week released nearly 200 pages of proposed
    framework for the substantial equivalent process. The documents
    seek input on how process may apply to handmade premium cigars.
    As you may know, as with all handmade products, no two are
    actually the same.
        Given that FDA remains in the early stages of addressing
    this process, would it not be appropriate to delay the
    implementation of the regulations relative to the narrow
    premium cigar category until FDA has clear guidance for these
    small manufacturers on how to keep their products on the
    market.
        Dr. Gottlieb. Well, as you know, Congressman, we pushed off
    the application deadlines for the cigars as a category while we
    issued an advanced notice of proposed rulemaking to collect
    questions looking at questions specifically related to the
    premium cigars and whether or not there were different patterns
    of use associated with those cigars that might inform the
    Agency about how we might regulate these differently.
        We haven't formed any conclusions. We are still going
    through comments on that Advanced Notice of Proposed Rulemaking
    (ANPRM). This is a question that is actively before the Agency
    right now. I would just make note that we did get out the SE
    rule, which does provide a pathway for these products to come
    to the market using a predicate. And we have also grandfathered
    a large number of cigars, more than a thousand. And that
    pathway is also available to the premium cigars.
        And just in conclusion, I will mention that we provided
    Technical Assistance (TA) back to your office on the
    legislation that you talked about at the outset and look
    forward to working with you on that.
        Mr. Aderholt. Thank you.
        Thank you, Mr. Chairman.
        Mr. Bishop. Thank you.
        Ms. Pingree.
        Ms. Pingree. Thank you very much.
        And thank you to Chairman Bishop and the ranking member for
    holding this hearing. It is bittersweet to have our last
    hearing with Commissioner Gottlieb.
        Mr. Chair, I do want to just, as an aside, I had no idea
    that olive oil was produced in Georgia. And I don't want to rat
    anyone out, but there was some grumbling next to me about
    Italian olive oil.
        And I really think the only solution here is an olive oil
    tasting because I feel convinced that domestic olive oil and
    buying American must be a good thing to do. So I would be
    interested to learn more about that.
        Sorry. I am just sorry.
        But there is actually--you know, olive oil is one of the
    products with the highest rate of fraud and mislabeling. And so
    it is an interesting topic in and of itself.
        But we are here to speak to you, Commissioner Gottlieb. And
    I just thank you so much for your service and dedication. The
    chair said it very well, but you have really worked on a broad
    range of issues under the FDA's jurisdiction. And I know all of
    us have enjoyed working with you. And I have in particular. You
    have been so responsive, so knowledgeable about so many topics
    and been willing to tackle many of the tough issues that come
    before us just in a straightforward way. And we are going to
    miss you. We are grateful that you get some time with your
    family and look forward to staying in contact. But thank you so
    much, really, for all you have done.
        And, in particular, I want to thank you for a few
    announcements that FDA made yesterday. First, FDA is working
    with USDA and EPA on elevating our country's food waste
    reduction problem during the month of April. Most people don't
    know that this is Food Waste Month, but we appreciate that you
    are helping us to do that. The challenges of food waste is
    something I am focused on quite a bit, and so I appreciate the
    joint effort.
        Second, you announced some updates on finding legal
    pathways for CBD products including forming a high level
    working group and setting the public meeting for May 31. So,
    again, thank you for prioritizing this issue, which is causing
    substantial disruption in the hemp market in Maine and in
    States across the country. And it would be good to have some of
    these things resolved.
        But since I have you here, I am going to start with a
    couple of questions.

                      CHEMICALS IN FOOD CONTACT MATERIALS

        One I wanted to ask you about I don't think I have
    discussed with you before, but that is chemicals that are in
    food contact materials. Public concern about food safety due to
    chemical substances in our food supply continues to grow, and
    we are currently dealing with PFAS contamination crisis, and
    phthalates are also widely used in U.S. food contact materials,
    like packaging and processing equipment.
        Does the FDA consider new scientific information once an
    indirect food additive has been approved? There is some concern
    that some of these substances in food contact materials were
    approved years ago and may need to be reassessed. And
    additionally, does FDA currently coordinate with other Federal
    agencies, such as the EPA and the U.S. Consumer Product Safety
    Commission, on chemicals that are used both as food contact
    substances and/or for other purposes subject to the
    jurisdiction of these agencies?
        Dr. Gottlieb. Thank you for the question.
        We would evaluate the food contact materials in the same
    way we would evaluate other food additives. We do a scientific
    safety assessment of them. If there are historical compounds
    still in use that your specific question is about, I would be
    happy to take that back and take a look at what the process was
    that they went through and whether or not there was updated
    scientific information that we have taken into consideration.
        On the food waste issue, which you and I have talked about
    a number of times, I will just mention that, and we have
    discussed this, we are going to be sending out letters to the
    industry to encourage adoption of best-if-used-by nomenclature
    on the labels. So, as long as the dating is for quality reasons
    and not for safety reasons, we find that is the best language
    to be using to try to discourage food waste.
        Ms. Pingree. That is great. And my understanding, after
    researching that quite a bit, is that changing that in a way
    that would bring some sensibility to what a label means, which
    are, as you know, arbitrary on most things, would be the
    greatest return on our investment in reducing food waste that,
    frankly, people just pick it up, and if a label tells them to
    throw it away, they throw it away, even if it may be just a
    little bit old.
        Dr. Gottlieb. Not in my house, but----
        Ms. Pingree. There you go. See.
        In most houses, there is an argument, so you clearly have a
    harmonic household.

                        PRODUCE SAFETY RULE INSPECTIONS

        Let me slip in one other quick question. The FDA's fiscal
    year 2020 budget request includes an increase of $16 million
    above the fiscal year 2019 level for FSMA implementation to
    provide inspections through the State cooperative agreement
    programs. It is my understanding that, through cooperative
    agreements, FDA and most State departments of agriculture will
    soon begin produce safety rule inspections. FDA has indicated
    that they will visit farms that are qualified exempt under the
    produce safety rule, but it is understanding that States will
    have discretion in whether to conduct on-farm inspections of
    qualified exempt farms.
        Is the FDA planning to show up at farms that are exempt
    from most parts of the rule? Will it vary from State to State
    as to whether qualified exempt farms will receive on-farm
    inspections.
        Dr. Gottlieb. Well, in that kind of a framework, we would
    defer to the States unless we had a cause to be on the farm. I
    mean, there might be situations where we would.
        But we are trying to work in a cooperative fashion with the
    States and leverage their resources. So this is $16.5 million.
    It is $11.7 million in new money on top of 2019. We received
    some money. We were fortunate to receive money from this
    Committee about $2 million, for this effort. But this would go
    towards, as you mentioned, the State cooperative agreements
    program.
        It would also help manufacturing and processing facilities
    comply with the rule. Right now there are no resources for
    those inspections. And so these are important resources for the
    Agency to help advance the Food Safety Modernization Act
    (FSMA). We are grateful for the support that we have received.
        Ms. Pingree. Great. Well, I am out of time. But just to
    clarify, I think we do realize you have limited funds
    available. There was some concern that the FDA, not the States,
    would be making visits to qualified exempt farms, and that
    doesn't seem like the best use of resources.
        Dr. Gottlieb. We would agree with that. We are looking
    wherever we can to leverage the resources to States.
        Ms. Pingree. Great.
        Thank you very much.
        Mr. Bishop. Mr. Fortenberry.
        Mr. Fortenberry. Thank you, Mr. Chairman.
        Dr. Gottlieb, welcome back.
        You were before our committee maybe about a month ago. It
    might have been the same day that you announced that you were
    leaving government.
        Was it something that we said?
        Dr. Gottlieb. It might have been a week or two before, but
    it was not the same day. But I appreciate the----
        Mr. Fortenberry. Well, thank you for your service. And you
    have navigated process and possibilities very well, and we are
    grateful and wish you all best.
        Dr. Gottlieb. Thank you.
        Mr. Fortenberry. You will be with us for another month or
    so. Is that right?
        Dr. Gottlieb. Another 3 days.
        Mr. Fortenberry. I see. Well, we better hurry and get these
    questions in.

                         GENETICALLY ENGINEERED ANIMALS

        Can you explain the state of the science regarding
    genetically engineered animals? And then I would like your
    perspective on the state of the ethic debate in that regard.
    And then explain your proposed regulatory pathway, which I
    believe you released a statement yesterday in that regard.
        Dr. Gottlieb. So I think, you know, when you and I spoke
    about this, we were speaking about gene editing in animals. We
    see a lot of promise in this technology right now. And there
    are indications in the literature. There are public disclosures
    in literature of where people try to use gene editing Cas9,
    zinc-finger nuclease. There are other forms of gene editing to
    try to edit in modifications that can be inherited to try to,
    for example, guard against certain diseases where there is no
    effective vaccines or engineer other qualities that could make
    the animals more advantageous for food production uses and more
    impervious to disease.
        And so this is a field where there is significant promise
    and ethical considerations across the board. I think where the
    ethical considerations are most acute, frankly, in my
    estimation and where I have been outspoken, is when we are
    looking at doing gene editing on germ line cells for human
    reproduction. You have seen the National Academy of Medicine
    (NAM) and other groups come out and talk about the need for
    potential moratoriums or registries. My concern is that I can't
    find a good-use case on why you would introduce gene editing in
    human reproduction. And all the ones that have been brought
    forward to me as a theoretical basis seem to be things that
    could be addressed with modalities and through methods that are
    far less high-risk and raise far fewer ethical considerations.
        And so I think, as a society, we need to consider whether
    or not we just put a moratorium in that kind of scientific
    inquiry because I think if we cross boundaries that cause deep
    concern for a large section of the population, we end up
    potentially besmirching this technology for all the potential
    beneficial uses, whether it is in animals or whether it is to
    help cure inherited disease in pediatric patients through gene
    editing.
        So that is where I think the most acute ethical
    considerations are right now, and I think this issue is very
    ripe having seen experimentation done in China that tried to--
    that did edit germ line cells, edited embryos for trying to
    introduce a hereditable trait with, really, I think, not
    significant enough medical rationale to support the risks that
    they were taking in that case, and other people proposing other
    experiments in this regard.
        The resources that we are requesting would help stand up a
    comprehensive program inside FDA to consider all these
    technologies, particularly on the animal side, where we see a
    lot of opportunity not just from biotechnology in the context
    of animals and the use of these technologies, like Cas9, but
    also continued biotechnology with respect to crops as well. And
    we think it is time that FDA should have a comprehensive
    program addressing all these possibilities. We think this could
    be a significant area of growth for the United States as a new
    scientific opportunity.
        Mr. Fortenberry. And that is a part of your proposed
    budget?
        Dr. Gottlieb. That is. There was a request, I believe, for
    $8.2 million, if I am remembering correctly, of budget
    authority and then a user fee on top of that.
        Mr. Fortenberry. Do you think that the FDA is the proper
    regulatory authority in this regard particularly in response to
    your thoughtful response regarding the ethics? Because I,
    frankly, was surprised and pleased by the outcry from the
    international scientific community about this rogue scientific
    experiment in China. And I don't know if those persons are now
    being watched or are part of a database to see what happens to
    these persons or not or whether, again, this is just some
    random thing that a scientist does because he can untethered to
    the larger consequences for all of humanity.
        But this question and issue was specifically to animals.
    But then, of course, there is ethical considerations regarding
    persons. So will you, as a part of that budgetary proposal,
    have a very considered structure around the ethical question as
    well?
        Dr. Gottlieb. Well, I think FDA is absolutely the optimal
    place to consider this technology with respect to animals, for
    a whole host of the reasons, not least of which are the ones
    you have brought up here today. I mean, we have a deep
    experience in uses, technology, across human and animal health.
    I think if we are going to watch these innovations go forward
    effectively, we have to instill confidence in them. And FDA is
    the proper authority to evaluate the safety of these products.
    And that is our first consideration.
        I think, frankly, also, the ethical questions and the other
    kinds of broader questions, the societal questions and public
    health questions that we have to consider across our portfolio,
    and FDA, looking at this technology across an entire portfolio,
    allows us to make the distinctions between doing something in
    an animal and putting a hereditable trait into an animal
    versus, why would you ever consider doing that in a human? And
    so, keeping the technology within the domain of an agency that
    can make those considerations across a portfolio makes eminent
    sense for a whole host of reasons, not least of which are the
    ones you brought up.
        Mr. Fortenberry. Thank you very much.
        Mr. Bishop. Ms. McCollum.
        Ms. McCollum. Thank you, Mr. Chair.
        Before I get into my question, I wanted to share this with
    the committee because I agree with my colleagues who are
    concerned about this. This is from Bloomberg News: China is
    selling genetically modified mice for as much as $17,000 a
    pair. Demand for animals that mimic human disease is
    skyrocketing as President Xi Jinping works to churn the country
    into a biomedical powerhouse by 2025.
        So this is something that we need not only to be addressing
    here in the United States but something that we need to be
    addressing with our colleagues and friends, you and around.

                            REGULATION OF COSMETICS

        So good morning. Thank you for being here. And I want to go
    back to one of our first conversations when I asked about
    cosmetic regulation, or should I say therefore the lack of
    regulations. And I asked you about some of the tools available
    at the FDA to ensure the safety of the millions of cosmetic
    products on the market today. And I have been learning a little
    more, and I want to thank your office and others for helping us
    with this.
        Part of the problem is Congress has granted you and the FDA
    very little authority to even regulate cosmetics. You don't
    have the ability to order mandatory recalls. You can't inspect
    facilities or records. You can do that with other food and drug
    products, but you can't do that with cosmetics. And cosmetic
    companies don't have to submit safety data before marketing
    their product. They are not required to register their
    facilities with the agency or even comply with basic good
    manufacturing practices.
        So, even if you did have mandatory recall, cosmetic
    companies are not required to even report their adverse effects
    to you. So, clearly, I think there needs to be more done.
        In a 2017 letter from the FDA to Energy and Commerce Chair
    Frank Pallone, said 2.9 million products were imported. Less
    than 1 percent were physically inspected. But of the products
    that were physically inspected, and this is 1 percent, 15
    percent had adverse findings. And additionally, where the U.S.
    has been banned or restrict 11 substances for use in cosmetics,
    the European Union has banned more than 1,300.
        And I point these numbers out because it seems like we
    might not be giving you all the tools in the toolbox you need
    to do to carry out basic functions I think the American people
    assume even in cosmetics that you are doing. One of the offices
    of congressional appropriations at the FDA in fiscal year 2019
    was $7.3 million, 27 full-time employees devoted to cosmetics.
    In 2019, a little increase to $8 million and 31 full-time
    employees or plans.
        So I am glad to see the trending is going upwards. But at
    the same time, Congress had tried to pass unsuccessfully
    legislation that would have expanded your authority over the
    industry. But short of that happening, and that is something I
    am going to be working with others on, is there anything that
    you can point to us in the 2019 budget that you are going to
    build on to help make it safer for consumers and the role that
    you are going to have with the extra employees and the extra
    dollars so that we know the direction to help, due to lack of
    regulation, to make you more effective in protecting U.S.
    consumers?
        Dr. Gottlieb. Well, I appreciate the question. And you and
    I have had the opportunity to talk about this. And I share your
    concerns that there are a lot of things that we think we would
    like to be doing as the industry gets more modern, as more
    products are on the product, more diversity of products,
    products with more active ingredients and creating more
    potential opportunities but also more risks. You know, looking
    at mandatory recall authority, Good Manufacturing Practices,
    inspection capacity, reporting of adverse events, looking at
    issues with metals in tattooings, for example. We have seen a
    sharp increase and changing patterns of how people use tattoos.
    It is another area of regulation where we have some questions
    and things that we would like to be doing.
        There is nothing specific in the Budget, to answer your
    question directly. I hope you don't take that as a reflection
    of our lack of concern and interest in doing something.
        Ms. McCollum. No.
        Dr. Gottlieb. What I would say is that if we are unable to
    try to do something within the cosmetics program itself, my
    long-term plan, we worked this up internally, would be to move
    the cosmetics program to the drug center where, you know, more
    and more of the cosmetics themselves have active ingredients in
    them where they could be able to leverage some of the resources
    that we have in our drug center.
        I don't want to do that. I would rather see it reside as it
    historically has resided within the food center. But if we
    can't get more resources into that program, one way to try to
    support it better would be to move it into our center for
    drugs.
        Ms. McCollum. Thank you. Thank you, Mr. Chair.
        I think some of the heavy metals that I am finding in some
    of the cosmetics, I think most women would be taken back,
    because it is women who are primarily using these products, but
    more men are starting to go use them too.
        Thank you.
        Dr. Gottlieb. That is right.
        Mr. Bishop. Ms. Lee.
        Ms. Lee. Thank you very much, Mr. Chairman. Thank you for
    this hearing to you and our ranking member.
        And thank you for being here, Dr. Gottlieb. I just want to
    say I wish you well and good luck in this next chapter of your
    life. It has been great getting to know you.

                                 DIABETES DRUGS

        As you know, I am going to bring up again my two favorite
    subjects: Cuba and cannabis. And, you know, when you were here
    in February, I mentioned that I care very deeply about reducing
    diabetes, especially in communities of color. Thirty million
    Americans--that is about 9.4 percent of the United States
    population--has diabetes. And for African Americans, those
    numbers are even worse. African Americans are 80 percent more
    likely to get diabetes than their white counterparts. And
    currently 13 percent of African Americans, the entire
    population, has diabetes. And, unfortunately, in many of these
    cases, amputations are prevalent.
        So it is my understanding that the FDA cannot comment on
    this possible ongoing approval of a Cuban diabetic drug called
    Heberprot-P which helps prevent and treat foot ulcers and also
    prevents amputations. I have visited, I have seen, with members
    of the American Diabetic Association, Members of Congress, it
    is used in many countries.
        So, while the drug was signed by the Cuban company, it is
    called Heber Biotec, and the U.S. company, Mercurio Biotec, we
    still don't know where the FDA is on their approval. And this
    drug has already been made available in--I believe it is over
    20 countries in the world.
        So what can you tell us about what is going on? Are you
    familiar with the companies? How do we get an update if, in
    fact, we can't just ask what the status is? And what is the
    regulatory framework for dealing with drugs from other
    countries?
        Dr. Gottlieb. I appreciate the question.
        I can't comment on a specific sponsor and whether or not
    that sponsor has filed an investigation or a new drug
    application and is, in fact, engaged in the regulatory process
    just because that would constitute commercial confidential
    information. As much as I would like to answer your question
    very directly, I would put the question back to the sponsor,
    and I would hope that they would be responsive to you.
        I would say, though, just at a broader level, a drug that
    met the profile of what you are suggesting and if it showed
    promise in an early stage clinical study that it could achieve
    the kinds of outputs, end points that you have suggested here
    today, that kind of drug would potentially qualify for
    breakthrough designation with the Agency. It would be something
    that we would be very interested in.
        But as far as this specific drug and whether or not they
    have engaged FDA, that is a question that the sponsor would
    have to answer.
        Ms. Lee. I understand they have engaged FDA somewhere in
    the process. We just don't know where it is. It has been there
    for a year, 2 years.
        Dr. Gottlieb. Right. I am not sure what they have said
    publicly, about their engagement with the FDA and whether or
    not they have an active Investigational New Drug.
        Ms. Lee. So we should go back to the sponsor.
        Dr. Gottlieb. And ask them if they have an investigational
    new drug application on file with the Agency.
        Ms. Lee. And they could tell us the status?
        Dr. Gottlieb. They should be able to give you some
    information about that. And, you know, that would give you an
    indication of where they are and what stage of development they
    are in.
        We could help guide you on the questions to ask them.
        Ms. Lee. OK. No, I would like to do that because this has
    taken much too long, and we need this.

                 LAWFUL MARKETING OF CANNABIS DERIVED PRODUCTS

        You announced steps yesterday that the FDA has advanced in
    our cannabidiol regulatory pathways for lawful marketing of
    cannabis-derived products. Since the public hearing, I guess on
    May 31, an interagency working group is going to explore
    dietary supplements and conventional foods containing CBD and
    public website updates. It is a good first step, especially
    considering we just passed into law the farm bill which has
    hemp now as a descheduled schedule I control substance.
        So I am concerned about the proper interagency
    communications with this working group. And I wanted to find
    out who do you plan to include in the public hearings? And are
    you working with an intergovernmental body to make sure that
    nothing drops through the cracks and our regulations are
    consistent and you are collaborating with Congress?
        Dr. Gottlieb. Right. I appreciate the question.
        We have engaged with DEA and USDA around some of these
    questions. I think a lot of them fall within the purview of the
    Agency.
        You know, we have heard Congress loud and clear that there
    was an intent to provide a regulatory pathway that allowed for
    the lawful marketing of products derived from hemp, including
    CBD. But that bill also preserved FDA's drug authorities. And
    so what we need to do is craft a framework that allows CBD to
    lawfully be put into food products, even though it is a drug
    product and didn't previously exist in the food supply. That is
    the conundrum here: Because it never previously existed in the
    food supply and it is subject to substantial clinical
    investigation and also approved as a drug, we would have to
    create a separate regulatory scheme in order to allow this to
    be put lawfully into the food supply. We don't have a really
    modern proxy for where this has happened. That doesn't mean we
    can't create such a framework.
        But part of what we are going to do--and this is a working
    group being chaired by Amy Abernethy, who is here with me
    today, the Principal Deputy Commissioner at the FDA and a
    physician--part of what we are going to do is also look at
    potential legislative remedies where you could potentially
    have, for example, and I don't want to speculate too much, but
    you could have situations where CBD exists in lower
    concentrations as a food additive and in a more purified high
    concentration form as an approved drug.
        I will just say, CBD is not entirely safe. We have CBD in
    the context of some of the drug applications, and there are
    side effects associated with it. And so, when you think of the
    cumulative effects of having CBD for breakfast and lunch and
    dinner in different food products, you might be getting a dose
    that could potentially cause public health concerns, safety
    concerns, including liver damage.
        Ms. Lee. Thank you very much.
        Mr. Bishop. We have been joined by the distinguished
    gentlewoman from New York, the chairwoman of the Appropriations
    Committee. And she has an extremely busy schedule, so I ask my
    colleagues to please indulge me as I recognize her out of turn
    but, of course, in turn as our distinguished chairwoman.
        The Chairwoman.
        The Chairwoman. Thank you very much, Mr. Chairman. But we
    have several hearings going on at the same time.
        I want to welcome you, and I also want to wish you well.
    And I won't say I told you so.

                                  E-CIGARETTES

        But we have had a discussion about what is going on with
    these kids and the fact that 60 percent of the kids are vaping
    today. And the now it is going down to junior highs and
    elementary school. But any event, we have had many
    conversations about this.
        Last month you described a difficult meeting with Altria
    suggesting the tobacco giant went back on its earlier promise
    to withdrawal pod-based products from the market all while
    moving forward on a $12.8 billion investment in Juul--boy, I
    saw that in the newspaper, and I was pretty upset--valued at 35
    percent stake in the e-cigarette maker. I was so alarmed by
    this sale. I am not sure that I was surprised, but I was
    alarmed.
        Do you believe that Juul and Altria are working in good
    faith to reduce youth use of e-cigarettes? By the way, you look
    at the local newspapers, huge advertise for Juul; in the
    bottom, ``This could be dangerous to kids,'' so I don't know if
    that is the exact word.
        Why would Altria publicly say it is so concerned about
    youth use of the e-cigarettes that it would offer to
    voluntarily remove flavored products from the market pending
    FDA review and then shortly thereafter make this investment in
    Juul? And what can we do about this?
        Dr. Gottlieb. Well, Mrs. Chairman, you did warn me. And,
    sadly, you were right about the epidemic that ensued with
    respect to these products and kids.
        You know, you ask about, can we rely on their good faith? I
    am not dependent upon their good faith. That is why we have a
    regulatory system in place, and that is why we have been taking
    regulatory action.
        I will take voluntary action where I can get it. And if
    these companies want to voluntarily comply with our rules and
    take other steps to try to thwart this epidemic, I welcome
    that. But we are not dependent upon that.
        Unfortunately, I can't answer your question. I invited
    Altria and Juul in to answer that specific question. And I
    can't say that I walked away from my meeting with them with
    clear insight into why they would send me a 15-page letter
    saying that they believe that the pod-based products are so
    concerning with respect to, you know, stoking this youth
    epidemic, and the flavored products in particular are so
    problematic that they are going to voluntarily withdraw their
    entire portfolio from the market pending either a successful
    PMTA application or otherwise the abatement of the youth
    addiction crisis and then, several months later, make an
    investment to extend market access to the flavored pod-based
    product that happens to be, the top selling product with
    adolescents.
        And so, those two don't seem to square with me. I thought
    maybe they would come in and tell me they thought the youth
    crisis had abated and met one of their criteria in the letter.
    But, clearly, they are not going to be able to say that. So I
    am not sure what their rationale was from a public standpoint.
        The Chairwoman. Let me just ask you, because time is
    limited. We have had many ongoing conversations, and I
    appreciate your concern, and I wish you good luck in your
    future.
        What kind of advice do you have for your successor? Do you
    have any recommendations or cautionary tales, particularly
    regarding tobacco regulation and enforcement? Are you free to
    really share with us whether you think--never mind could have--
    what can be done now to possibly prevent this spread?
        It is just widespread, as you know, everywhere.
        Dr. Gottlieb. I appreciate the question.
        I have had a lot of advice for him. I have to temper some
    of my advice for him because I want him to show up for work on
    Monday. But, I think a lot of this is going to depend on what
    we see with the 2019 National Youth Tobacco Survey, which we
    are doing in the field right now. We will have the results
    probably late July or early August given the fact that we will
    probably try to take an early look at them.
        I think the policy that we announced several weeks ago,
    that we will fully implement shortly to try to put in place
    significantly heightened age verification requirements for the
    flavored products and the pod-based products at retail
    settings, is going to impact this. But unfortunately, our
    regulatory action in the setting of any epidemic--and this is
    the lesson we learned from the opioid crisis--you are always
    sort of one step behind a burgeoning epidemic. And that is why
    we are trying to act so aggressively to get in front of this
    one.
        The Chairwoman. Thirty-three seconds. One thing that you
    would like him to do?
        Dr. Gottlieb. So, if the 2019 National Youth Tobacco Survey
    shows another substantial increase, I think we need to look at
    the potential market withdrawal of the pod-based products as a
    category because those are the products that are being abused
    by the kids and particularly the flavored products. That is
    what we are going to have to start to look at, the cartridge-
    based, pod-based products. If we see another 30, 40, 50 percent
    increase and we see youth tobacco use rates of this country hit
    40, 45 percent, which is where we will be if the increase in
    cigarettes continues to go up.
        And I will just add, we are not going to see an increase in
    e-cigarette use among kids without also starting to see a
    corresponding increase in cigarette use among kids. So all the
    dramatic gains that we have made in recent years from a public
    health standpoint, abating smoking among kids, will have been
    reversed.
        The Chairwoman. Well, thank you very much, Mr. Chairman.
    And I wish you good luck. And I just hope, as you leave, based
    upon--we all have could have, should have, would have. I do
    hope you leave a very clear directive and perhaps encourage us
    to work with the FDA in place--putting in place some really
    stringent, stringent actions.
        So thank you very much and good luck.
        And thank you, Mr. Chairman.
        Mr. Bishop. Thank you for your patience.
        Mr. Moolenaar.
        Mr. Moolenaar. Thank you, Mr. Chairman.
        And, Commissioner Gottlieb, thanks for being with us, and
    thank you for your service and all you have done at FDA and the
    work you have done to advance the mission and protect public
    health. I really have appreciated the time I have had to get to
    know you briefly and just see your passion for your work. So
    thank you for being here today.

                                    OPIOIDS

        I wanted to follow up with you on some of the testimony you
    have had about fiscal year 2020 budget request, where you have
    requested an additional $55 million to support FDA's efforts in
    addressing the ongoing opioid crisis. And I understand you are
    focusing on four priorities: decreasing exposure, preventing
    new addiction; supporting the treatment of those with opioid
    use disorder; fostering the development of novel pain-treatment
    therapies; and increasing enforcement and assessing benefit
    risk.
        I wonder if you could comment on what the FDA is doing to
    expedite the approval of nonaddictive, opioid-alternative
    treatments.
        Dr. Gottlieb. So, thank you for the question. We have
    stated that we are going to withdraw the existing guidances
    that we have in place as it relates to laying out a regulatory
    pathway for the development of drugs, particularly to treat
    chronic pain--acute and chronic pain, but particularly acute
    pain, and be replacing those with new guidances that are
    indication-specific. So, outlining a regulatory pathway for
    pain related to minor post-surgical procedures or pain related
    to dental pain or bunionectomy or other sort of common places
    where you see analgesics prescribed, trying to allow for
    sponsors to come to the market with more targeted studies
    rather than having to do, five or six studies across multiple
    indications. We think this will create a more efficient pathway
    for the development of nonopioid alternatives for the treatment
    of pain.
        So these guidances are going to start to roll out. We have
    one specifically addressing evidentiary standards for nonopioid
    alternatives. So, this is sort of a modernization of the
    overall framework as it relates to the development of these
    products, and I will just say, in closing, we have also said
    that we have been very clear that a product that could
    potentially treat pain, without all of the addictive qualities
    of opioids, would probably be a product that would qualify for
    breakthrough designation and all the benefits of all the
    expedited processes that Congress has legislated over the past
    several years.
        Mr. Moolenaar. OK. Thank you. Are there any other lesser
    known programs or initiatives within the FDA that--maybe that
    you haven't highlighted in the budget that you are believing
    that this subcommittee should further investigate, to address
    the opioid crisis?
        Dr. Gottlieb. Well, I think one of the things that is sort
    of embedded in the budget is continued efforts to try to
    rationalize the prescribing of opioids. I believe that the
    agency--and we have sort of taken on a view over the last
    couple of years, that we play a significant role in trying to
    reduce the rate of new addiction by trying to rationalize
    prescribing; making sure fewer prescriptions are written; they
    are only written for appropriate circumstances; and when they
    are written, it is for a duration of use that comports with the
    clinical reasons why the prescription was given in the first
    place.
        So a lot of the resources that we got last year are going
    towards developing evidentiary standards, evidence-based
    guidelines that can potentially be used by physicians and maybe
    even eventually be incorporated into drug labeling to try to
    better delineate what the appropriate dispensing and
    prescribing should be by indication. Because when we look at
    our data, if you look at, you know, postsurgical procedures,
    cholecystectomy, things like that, typically it is a day or two
    of prescribing of opioids, and yet you still see doctors
    prescribing 30 pills in those situations. And so we want better
    evidence-based guidelines that can be used to help guide those
    circumstances.
        We are also going to be implementing, very soon, authority
    that you gave us to acquire the immediate release formulations
    of the drugs we put in blister packs, so that more doctors will
    default maybe to a one-a-day pack of drugs, rather than, again,
    a 30-day tablet fill. So that whole area of activity, I think,
    continues to be exceedingly important in a place where FDA
    plays a unique role and perhaps a singular role in trying to
    address this crisis.

                         THERAPEUTICS FOR RARE CANCERS

        Mr. Moolenaar. Thank you. Occasionally, I will meet with
    people who, in my office, who talk about some of the rare
    cancers, and I wonder if you are--kind of what you could
    comment on the FDA doing to help develop more therapeutics for
    those rare cancers and how the FDA might be able to incentivize
    or accelerate drug development in these areas.
        Dr. Gottlieb. I think we have had tremendous success in
    recent years, trying to target rare and ultra-rare diseases and
    particularly in the oncology setting. More than 40 of the
    record 59 approvals that we had last year were in oncology, and
    some in pediatric oncology and other very, very rare tumor
    types.
        The challenge is, in many cases, recruiting enough patients
    for these trials. So that is where we look at things like
    master protocols where you can allow multiple drugs to be
    tested within the same protocol. We put out guidance to sort of
    delineate that framework for the development of oncology
    products; basket trials where you can test multiple indications
    within the context of the same trial; tissue-agnostic approvals
    where we might approve a drug that is targeting a rare mutation
    that might be seen in multiple different types of tumors, but
    rather than approving the drug in tumors in the pancreas and
    tumors in the liver, we would approve the drug on the basis of
    the marker that it is trying to address that drives multiple
    different types of cancer.
        So all of these innovations in the clinical-development
    process, I think, are having an impact to try to achieve the
    purpose that you are identifying here to make it more efficient
    and to develop products for these very rare cancers.
        Mr. Moolenaar. Thank you very much. And again, thank you
    for your service.
        Dr. Gottlieb. Thanks a lot.
        Mr. Bishop. Ms. DeLauro.
        Ms. DeLauro. Thank you very much, Mr. Chairman.
        And I just want to welcome Dr. Gottlieb. Thank you so much
    for being here today, but really thank you for your service
    over the last several years.
        You and I have not seen eye to eye on every issue, but I
    really do appreciate many of the important initiatives that you
    have spearheaded, and I hope that, moving forward, two things,
    one, FDA will continue much of the work that you have started,
    and then, for you personally and for your family, that you move
    on to another productive chapter in your life. So thank you
    very, very much, for going back and forth with us.
        I just want to mention to my colleague, Mr. Aderholt, who
    is not here, but the online sales of e-cigarettes--we
    introduced the Youth Vaping Prevention Act in January 2019, the
    first section of which deals with online sales and age
    verification. So we will communicate that to him.

                                OPIOID LABELING

        Let me just ask a question with regard to FDA's role in
    opioid labeling. Your testimony, you describe the ongoing
    crisis of addiction, one of the highest priorities. You are
    familiar with the 60 Minutes report, ``Did the FDA ignite the
    opioid epidemic?'' 60 Minutes identified a controversial
    labeling change in 2001 for Purdue Pharma's oxycontin.
        The approval of oxycontin in 1995 was based on science that
    showed oxycontin to be safe and effective, underscored, only
    for a, quote, short-term use. 2001, FDA allowed the label to be
    changed to include terms like, quote, daily, around-the-clock
    for an extended period of time, end quote.
        It later becomes--and this is still true today, as I
    understand it, that, quote, there is long-term use, which has
    broadened the drug's use to all chronic-pain patients. If this
    labeling change occurred without a clinical trial to support
    it, as has been reported, would that be a violation of the law?
    And just a yes or no answer on this one.
        Dr. Gottlieb. The labeling change itself would not. What
    was a violation of law--and we know that now--was how they
    marketed off of that label. And they have been criminally
    convicted for it.
        Ms. DeLauro. But only with a short period of time for a
    clinical trial, which I believe it was about 2 weeks in time--
        Dr. Gottlieb. It is hard for me to relitigate the labeling
    change made many years ago, but I am familiar with the history.
    But the labeling change was made with good intention. The
    language that they used tried to discourage the use of the
    long-acting formulations when immediate-release formulations
    could do. So we were seeing doctors using these long-acting
    formulations for things like postsurgical procedures, when you
    really should be prescribing Vicodin or Percocet for a few
    days. What we couldn't envision was how the company would
    inappropriately market off of that language.
        Ms. DeLauro. But with regard--my understanding is that the
    law says that a drug must have substantial evidence of
    efficacy, that the drug has the effect it purports to have in
    the label. I really would love to see, and if you can get to
    us, with getting us the substantial evidence of efficacy, for
    oxycontin's label of chronic, long-term use.
        Dr. Gottlieb. Well, I will tell you, we are doing that now.
    The changes that were made historically were with the best of
    the intentions by the FDA staff, but we are using the authority
    that Congress has given us under the SUPPORT Act to require
    long-term efficacy studies with chronic administration, and
    require that those studies will be done, that information will
    be put into the labeling, and we could take additional
    regulatory action on the basis of what we find. So we are doing
    that.
        Ms. DeLauro. OK. But because, you know, if you look at the
    label, it shows a single, 2-week efficacy study in the 20
    milligrams dose. That was it. And we are talking about a drug
    whose launch and aggressive marketing, honestly, you would
    acknowledge, I would, we all would acknowledge, is the most
    responsible for igniting the epidemic that we have today. In
    your opinion, is this 1, 2-week study legally enough to justify
    long-term, chronic-use labeling for oxycontin?
        Dr. Gottlieb. Yeah, it is hard for me to sit here and
    comment today on the historical information that they had at
    the time. I am not familiar with all of the studies that they
    were evaluating at that time and what the standard was for the
    decision. I will tell you the company was criminally convicted.
    They marketed inappropriately off of this label.
        Ms. DeLauro. Yeah, I knew that, but I think we have to look
    at what the labeling change was just as for future use. Now,
    this is Dr. Woodcock at the FDA on chronic labeling. She says
    here, in 2013, and I quote: FDA is not aware of adequate and
    well-controlled studies of opioid use longer than 12 weeks.
        Again, the FDA--how does the FDA justify the current
    labeling for chronic, long-term use? Let me just ask this
    question because my time is up.
        OK, thank you, Mr. Chairman.
        And I will get the question to you in the last 3 days of--
    --
        Dr. Gottlieb. Thank you.
        Ms. DeLauro [continuing]. Of your tenure.
        Dr. Gottlieb. Thanks a lot.
        Mr. Bishop. Dr. Harris.
        Dr. Harris. Thank you very much.

                                 CBD REGULATION

        And, Dr. Gottlieb, I think you are one of the best FDA
    Commissioners, certainly the most knowledgeable, very
    responsive. So I congratulate you on your tenure and wish you
    luck going forward. I do want to just follow up on this--the
    release--I guess, yesterday about CBD and regulation. And I
    think it takes--I think it takes a necessary first step, but I
    am not sure it goes far enough. I mean, you know, you make the
    statement that you issued multiple warning letters, and I think
    you have an example of the three companies, marketing products
    with egregious and unfounded claims that are aimed at
    vulnerable populations. What would be a founded claim for CBD,
    other than for, you know, pediatric seizures?
        Dr. Gottlieb. Well, right now, it is a good question. There
    is probably no----
        Dr. Harris. OK. There is no founded claim----
        Dr. Gottlieb. You can't make a structure or function claim
    because it is not a lawfully marketed dietary supplement, so--
        Dr. Harris. Correct. So my question--and so there are two
    issues--one is--well, three really because if you go online,
    and anybody who wants to go, go online and see, you can buy CBD
    that is supposed to be pure, that is actually at a price
    about--my calculation, about 40 percent of the list price of
    the FDA-approved drug. It is claimed to be pure. So I am not
    sure how the FDA allows an American company to sell, claiming
    they are selling pure CBD, which is exactly what Epidiolex is,
    I don't understand why that isn't being stopped, as they are
    selling a pharmaceutical. OK? Now, then, there are nutritional
    supplements and food supplements. On the food supplement side,
    I mean, I am assuming that CBD is not generally recognized as
    safe. Is that correct?
        Dr. Gottlieb. That is right.
        Dr. Harris. And we went to extraordinary levels with trans
    fat, for instance, to make sure there was zero in any food
    supplement, zero. Not like minuscule amounts, because it is
    naturally occurring, just like CBD is naturally occurring, but
    zero. Why isn't the FDA going as hard a regulatory pathway?
    Because--I walked into a store, a little country store in my
    district, and find a CBD food display in the store. Now, it
    didn't say, you know, show us proof that you are 21 or 18 or
    something, just like anybody come in, and they are buying a
    food supplement. So how is the FDA allowing a food supplement,
    which is not generally recognized as safe, to be put in food
    products and not regulated?
        And then, finally, in terms of nutrition supplement, I
    think, you know, you hit the nail on the head. The bottom line
    is that we have a regulatory scheme that basically says that,
    you know, CBD has been regulated by the FDA as a pharmaceutical
    product, and as you said, there is no grandfathering in for it
    being a nutritional supplement.
        So I think the FDA has to come down a little hard on these
    institutions, on these individuals who are making money--and
    they make a lot of money in this--selling a product that has--
    that I think we agree has no founded claim except for pediatric
    seizures, right, in the FDA's mind. Why is it taking so long
    and we are going to--you know, you are going to study it a
    little bit more? How do you need to study when CBDs is being
    sold as a food additive when it is not generally recognized as
    safe?
        Dr. Gottlieb. Well, I would just say--and Congressman, I
    appreciate the question--we are not allowing it. You know, we
    have taken enforcement action. We are taking a risk-based
    approach, where we are going after places where CBD is being
    marketed, in situations where we think the claims are either
    misleading to the point of encouraging a patient forego
    otherwise effective therapy for a medical condition, and are
    being marketed in a formulation and a dose that is, at a level
    that creates significant safety concerns.
        We expressed concern yesterday, I did, about CVS and
    Walgreen's stepping into this market. So you now see big box
    stores seeking to market CBD products for some uses where the
    claims seem to be potentially, over-the-line claims for the
    treatment of pain, for example. So we are not allowing this.
    What is happening is we see a burgeoning market, and we can't
    boil the ocean, so we are trying to take a risk-based approach
    to enforcement, like we do in all matters. And we are hoping by
    taking selective enforcement actions, you are going to see
    voluntary compliance from the legitimate manufacturers and
    retailers because they are marketing an unlawful product. Now,
    that said, I recognize Congress wants there to be a pathway
    here. So we are trying to work at the same time to
    expeditiously create a viable pathway that could differentiate
    between potentially appropriate use of the product if we can
    have scientific evidence to support its appropriate use, and
    use of the product that creates safety risks for the consumers.
        Dr. Harris. Sure. So, again, and I see, you know, your
    actions basically looked at a therapeutic claim, but as a food
    supplement, I don't see any action at all. I mean, I am going
    to walk into that store 2 weeks from now, and it is still going
    to have a food supplement, CBD food supplement--foods that have
    it as a supplement. And I wish you would take action. I don't
    think you have to take much action before everybody gets the
    message you shouldn't be doing this.

                        USE OF FETAL TISSUE IN RESEARCH

        Just one final question. I know that there was a
    controversy about the FDA using fetal tissue in research, and I
    understand the contract has been canceled. Has the research
    been stopped, or is it just--the contract just been reissued
    with another entity?
        Dr. Gottlieb. I don't believe there is any ongoing research
    right now with fetal tissue at the FDA. That is right, yeah.
        Dr. Harris. So that contract was canceled, and it just----
        Dr. Gottlieb. That contract was canceled, and there is no
    ongoing research.
        Dr. Harris. Thank you very much. I yield back.
        Mr. Bishop. Mr. Pocan.
        Mr. Pocan. Sure. Thank you, Mr. Chairman, and thank you,
    Commissioner Gottlieb. I want to associate myself with the
    first 10 seconds of my colleague's remarks on the other side. I
    don't know if you disassociate with the other 4:50, but I do
    think you have been an excellent FDA Commissioner. You have
    improved morale--I mentioned that last time--in the Department,
    one of the few where I have seen that happen with the change of
    administration. The companies that work with the FDA have--in
    my district--have had nothing but praise for working with you
    and your staff. I have always appreciated your candor when we
    agree and even when we don't; in fact, even more when we don't
    agree, because I really have learned a lot in our
    conversations.
        And what I would like to do, almost as more of the exit
    interview, because I do hate to see you leave the position.
    Independently, in your opinion alone, when you look at the
    FDA--and I also really appreciate the three generic-equivalent
    goal of the FDA, and I hope that continues under the FDA--what
    would you like to see done differently, you would hope that if
    you had that ability, that magic wand, whether it be, you need
    additional funds in some area that the White House and Congress
    never look at, you are doing something that is idiotic and you
    think is a waste of your agency's time and takes you off
    course? I have always appreciated your candor. I hope you will
    give some candor here, but what would you do--you know, as you
    are leaving, what would you say would improve the FDA based on
    your experience?
        Dr. Gottlieb. Well, I think--I appreciate the question. And
    I haven't quite left yet, so I probably have to temper it a
    little bit.
        I still have residual concerns about the have and have-nots
    in the agency, and I have always had those concerns, having
    been around the FDA now for almost 15 years. And particularly
    on the food side of our house, you know, we have struggled to
    fully fund our obligations and have adequate authorities. And
    so I would be taking a hard look at what we do with respect to
    cosmetics, dietary supplements and the resources that we have
    to carry out our food-safety mission. Those are the higher risk
    parts of the agency, the places where you can wake up one
    morning and find out that something really bad has happened and
    a lot of people have been hurt. And so I think that we need to
    be looking hard at that and how we shore up those parts of FDA.
        Mr. Pocan. And what are you doing that you wish you didn't
    have to do? You look back and you are going, I don't think it
    serves the public mission and those resources could be
    allocated towards what you just brought up?
        Dr. Gottlieb. That is a good question. In all candor, I
    would have to give that more thought, because I think, you
    know, everything that hits my desk, and everything that I have
    been involved in, I think, is really important. The agency has
    a very vital mission.
        Mr. Pocan. Ms. Pingree just said maybe congressional
    hearings, you would like to----
        Dr. Gottlieb. I have always----

                            PRESCRIPTION DRUG COSTS

        Mr. Pocan. And just to this point--and I really appreciated
    it when you said it last time--because the price of generic,
    when you have that third equivalent, really brings it down.
    What else could the FDA be doing, again, if you were just in
    charge, to help bring down the cost of prescription drugs? It
    is something we all say we want to do, but you don't see the
    activity. I think the American people aren't seeing the
    activity. I think that was a good suggestion that you had. What
    else should the FDA be doing or could it do, with or without
    additional resources, to help work towards this?
        Dr. Gottlieb. Well, there are still a lot of areas where we
    don't see all the expected product competition after
    exclusivities have elapsed on branded drugs. And the one place
    is looking at the complex formulations of complex drugs, where
    sometimes it is, from a scientific standpoint, hard to develop
    generic copies of those drugs and demonstrate that they are
    seen through a conventional regulatory process. I mean, you
    could contemplate changes to the Hatch-Waxman construct that
    allow the agency to look at small complements of clinical data
    in the context of an approval of a complex drug. You would have
    to go through the difficult job of defining what a complex drug
    is. I can define what I know it is. It is sometimes hard to
    define what you know it isn't.
        And, you know, I am growing increasingly concerned about
    the lack of second-to-market--timely second-to-market
    competition for novel drugs. And we see more and more drugs
    that are approved for these very rare disorders where, once the
    drug is approved and the population that has the disease is
    treated, the financial incentive to approve a second drug for
    the treatment of the same condition has gone down
    significantly. And the market is so small, it might not support
    second-to-market innovation. And we literally see companies
    slowing down the development of products if they think they are
    going to be second to market. That is going to be a problem
    when you get into things like gene therapy. If the market is
    only big enough to sustain one product, then you get monopoly
    pricing in perpetuity and no competition, and it forestalls
    access. And so that is a concern of mine. I think there are
    things we can do to make the development of second-to-market
    innovation more efficient. It has been a focus of mine.
        Mr. Pocan. I have 27 seconds, and we have NATO coming in.
    But I really do want to say thank you. You know, the
    companies--and I have so many that are spinoffs from our
    University of Wisconsin network--with you, have had nothing but
    praise. We appreciate that. We look forward to the Department
    continuing, and, you know, I think maybe it is bad luck when
    you are like my favorite Trump appointee. The next one may go
    down as well. But thank you for your service, I appreciate it.
        Dr. Gottlieb. Thanks a lot, Congressman. I appreciate it
    very much.
        Mr. Pocan. Thank you.
        Mr. Bishop. Mr. Cuellar.
        Mr. Cuellar. Mr. Chairman, thank you so much.
        Commissioner, I really appreciate the service that you
    provided to our country and give you God speed to your next
    endeavor. Again, thank you so much.

                                  COMPOUNDING

        I want to follow up on what we talked about last time you
    were here, and I want to talk about compounding. The center--
    you are looking at establishing--you have plans to establish a
    compounding center of excellence, to provide training on
    manufacturing practices, as well as establishing investigators
    for inspectional activities. And my two questions are: Can you
    explain how this compounding center for excellence will help
    decrease costs for those in need of compound medication? And
    number two is, how is the FDA taking small pharmacist issues
    with regulations regarding distribution and dispensing of
    medications into consideration? And I want to thank you for
    doing this. I really, really want to because I have been to
    different parts of the country, and this issue is something
    that we certainly have to look at. So I want to thank you for
    your leadership on this.
        Dr. Gottlieb. All right, thank you for the question, and
    thank you for your comments. I appreciate them very much.
        The $12 million that we received in 2019, to establish this
    compounding center for excellence, is focused exactly on some
    of the challenges that you have identified. How do we help
    small pharmacies get into a regulatory framework where they can
    engage in a wider scale of activity, particularly some
    manufacturing engaging in potentially office stock, shipping to
    hospitals? And so what we want to do is make it easier and less
    expensive for the 503A pharmacies to become 503B pharmacies,
    outsourcing facilities. And what we believe is by developing a
    center that can work more directly with pharmacies, help train
    them on how to meet GMP requirements, provide a high level of
    touch, train them on how to be inspected. We believe we can
    help actually provide sort of almost consultative-type services
    to these pharmacies to try to get them over that transition and
    also promulgate policies and guidance that adjusts the amount
    of regulation that we are going to impose based on the size of
    the pharmacy and what they are doing, so take a much more risk-
    based approach. So, if a 503A pharmacy wants to compound
    relatively lower risk products and do it on a small, local
    scale, we shouldn't be applying the same level of regulation as
    someone who is going to ship hundreds of thousands of vials of
    a sterile product nationally because that is more risk.
        And so the resources are going to allow us to develop a
    center that is going to be focused on that and help develop
    this domestic industry. I believe, and I still believe, that if
    we can get more 503A pharmacies to more less expensively
    convert to 503B pharmacies, we also offer them a tremendous
    economic opportunity to expand their businesses. Because if
    they remain a 503A pharmacy, they are always going to be capped
    in terms of what they can do. If they become a 503B pharmacy, a
    much broader range of opportunity becomes accessible. Those
    resources are different than what we requested in 2020. We were
    asking for $13.5 million. That is to help expand the 503B
    opportunity set to finalize the bulks compounding list and
    develop guidance from regulation that is going to further
    clarify how the 503B pharmacies can operate in a regulatory,
    compliant fashion.
        This is a relatively new industry, and we envision that
    this should be a robust industry, but we want to be more
    actively engaged in making that come to fruition.
        Mr. Cuellar. Thank you. I do want to say, thank you so much
    for--on this forward thinking on this. So thank you, thank you
    so much.
        Dr. Gottlieb. Thanks a lot.
        Mr. Cuellar. Thank you, Mr. Chairman.
        Mr. Bishop. OK. Thank you, Mr. Cuellar, for that last
    question. You saved me from having to explore that.

                                 FUTURE OF FDA

        Dr. Gottlieb, I want to take a moment to discuss the future
    of FDA and where you would like to see it in the next 5 years.
    As you know, too often a regulatory agency is forced to spend
    most of its time responding to various issues that arise, and
    sometimes without any warning, rather than to help build a
    foundation for the technological innovations that would drive
    the industry forward.
        Regarding the medical side of FDA, where do you see the
    industry moving forward, and what are the most important things
    that FDA is doing to help safely and effectively guide it
    there? And on the food safety mission side, tell us the same
    thing about that mission area.
        And, finally, is there an area of FDA's work that deserves
    a bigger spotlight moving forward?
        Dr. Gottlieb. I appreciate the question. I think that there
    are things in the 2020 budget--and I would come back to that--
    that I think can be sort of the foundational elements of a
    modern transformation of the agency. And I would point to what
    we are trying to do to try to develop knowledge management
    systems and more structured approaches to medical product
    review across the entire continuum to make more of the
    application review process, a structured, templated approach to
    review, where we are not receiving paper applications from
    industry anymore, but we are actually receiving information
    that is in a cloud-based environment, pulling that information
    down, and then populating templates and applications that are
    standardized from review to review to review, to help
    standardize the review, make it far more efficient, and having
    our team sort of collaborate around single applications that
    are in a virtual environment.
        What I have just described probably exists inside every
    corporation that deals with data and makes decisions based on
    information, but it is not the way FDA has traditionally done
    business because we haven't had the resources. So the money
    that we are asking for to fully develop the new data enterprise
    is focused on that. It would fundamentally transform how we go
    about our work.
        Another transformational element is the ability to use
    information from electronic health records to do post-market
    safety assessments and also look at real-world evidence derived
    from Electronic Health Records (EHRs) as a component of how we
    assess, not just safety in the postmarket, but also benefit
    pre- and postmarket. And so that is another transformational
    opportunity set for the agency, and those are embedded in that
    2020 Budget request, and we received partial funding in 2019.
        On the food side of our house, I think there is more work
    that we want to do to improve the recall process. We have a
    request in the budget for 26 Full time Employees (FTEs) in our
    Office of Regulatory Affairs (ORA), for example, to improve how
    we do on recalls and how we get timely information to
    consumers. I think we need to contain and make investments
    there, but I think one of the more transformational things we
    can do from a technology standpoint, in terms of modernizing
    the regulatory process, is putting in place modern track and
    trace. What people want to know is, are they getting an
    assurance of safety from FDA? And that is where all the tools,
    the preventative controls in FSMA come into play. They want to
    know, if something goes wrong, will they find out about it
    quickly? And that is where everything we are trying to do to
    modernize the recall process comes into play.
        But they also want to know where their food is from, and
    they want us to be able to trace it right back to the source.
    And that is where modern track and trace comes into play. And
    as we have seen, when we have recalls, if we recall romaine
    lettuce, it takes us a long time to trace it back to the
    specific farm where it might have come from. We think there is
    much more we can do with traceability in the system using
    modern technology like blockchain.
        We hired, as a Deputy Commissioner, Frank Yiannas, who is
    here today, who used to head up food safety for a very large
    retailer and has deep expertise in this. And he has many
    purposes in coming to FDA, but one of them is to try to stand
    up this modern framework. So we have requested resources for
    that as well. I think these could be transformational elements.
        The final thing I will just say--and I will put a plug in
    for one more thing that is in the budget, if I may, with just
    30 seconds--is what we want to do with the blood pathogen
    technology and basically pathogen reduction technology to
    improve the safety of our blood supply. I think this is another
    tool that could be transformative in improving the safety of
    the blood supply and lowering the costs, reducing the need to
    defer people who want to donate blood. And it is a technology
    that exists. It is a technology that we could be adopting, and
    I think it could be transformative on the blood side of our
    house.
        And if you ask me, in closing, where the biggest risks are,
    it is the places in the FDA portfolio where you have the
    potential for latent risks that become widely distributed
    before they fully manifest, before we discover them. And those
    kinds of risks only exist in a few places in our portfolio, but
    one of them is in the blood supply, if there is some undetected
    pathogen in the blood supply. And another one is on food safety
    part of our house, where you could have a food contaminent that
    gets widely distributed very quickly in today's supply chain,
    has latency associated with the pathogens. So, by the time
    people start showing signs of illness, it has been out there in
    the food supply for 5, 6 days, and you could have a lot of
    people exposed.
        Mr. Bishop. Thank you.
        I would like to recognize Mr. Fortenberry.

                                 GENERIC DRUGS

        Mr. Fortenberry. Dr. Gottlieb, I want to return to the
    issue of generic drugs that Mr. Pocan brought up. The last time
    you were here, I had asked for the broad calculation if the
    full vision that you have for generics was implemented, what
    would we say? Do you have that number yet?
        Dr. Gottlieb. I have----
        Mr. Fortenberry. It doesn't have to be absolutely precise,
    but you--let's move from the--the problem is, let's move from
    the abstract to----
        Dr. Gottlieb. Right.
        Mr. Fortenberry [continuing]. What is potentially real.
        Dr. Gottlieb. Well, I don't have the number yet, the
    aggregated number. What we do have is an updated--and we can
    make this available to you--we have an updated estimate of what
    the price reductions are as you get multiple product
    introductions in a category. And it is more substantial than
    what we have seen historically. We haven't been able to publish
    that yet, but we could certainly get that data to your office.
        Mr. Fortenberry. OK, but you are leaving in 3 days.
        Dr. Gottlieb. Well, I will get it to you before we leave.
        Mr. Fortenberry. Are you staying?
        Dr. Gottlieb. She is--yeah. We have it.
        Mr. Fortenberry. OK.
        Dr. Gottlieb. We can get it to you today.
        Mr. Fortenberry. That is all I have. Thank you, Mr.
    Chairman.
        Mr. Bishop. Thank you.
        Dr. Harris.
        Dr. Harris. Thank you very much.

                            CBD AS A FOOD SUPPLEMENT

        Let me just follow up on, again, the CBD as a food
    supplement. So what would you need in order to establish
    regulatory action or, you know, actions against these stores
    that are selling CBD as a food--put it in food? You know, I
    don't care what food they have them in. There is one that sells
    gummies, for God sake, with the stuff in it. Talk about
    marketing to children. But my understanding is the schedule V,
    right? Epidiolex is in the schedule V. Is that right?
        Dr. Gottlieb. I believe it is, yes.
        Dr. Harris. Yeah. So they obviously move from I to V, but,
    you know, codeine is in V. So I assume that if I went into that
    display in that store and it said, you know, ``Buy these
    products with codeine in it,'' and they were food products, I
    would assume that the FDA has instant regulatory authority to,
    you know, stop the sale of those. Does the FDA have authority
    to stop the sale right now of food products containing CBD?
        Dr. Gottlieb. We do. And we are taking action.
        Dr. Harris. What action are you taking?
        Dr. Gottlieb. We have sent warning letters to a number of
    companies to ask them to remove products from the market. And
    when we send a warning letter, that is a legal action, and if
    the company doesn't comply, we could go to court and seek an
    injunction against the manufacturer. You know, this has
    exploded, Congressman, and----
        Dr. Harris. Oh, I know.
        Dr. Gottlieb [continuing]. And, you know, we are taking a
    risk-based approach, but with more resources, we can not only
    accelerate our policymaking process here to try to create a
    legal framework that will form the basis of more effective
    enforcement action but also put more resources behind the
    enforcement activity.
        Dr. Harris. Well, so you don't have the legal framework in
    place to enforce----
        Dr. Gottlieb. We have the legal framework in place to
    enforce right now. I think what Congress wants is a framework
    that could allow us to better differentiate between where this
    could be permissible and where it is clearly crossing the line.
    You know, I am hearing a lot of different voices on this issue
    from a lot of different folks. Right now, they are all
    presumptively illegal, and we have been taking enforcement
    action based on risk.
        But what I think we would ideally like to do, having heard
    from Congress very clearly on this, is try to create a
    framework, that if there are places where CBD can be
    appropriately marketed as a food product, and safely, perhaps
    in very low concentrations, whatever the scientific criteria
    might be--and it would need to be a science-based process that
    ultimately defines what is permissible--have the framework to
    do that, and that would make it more efficient for us to then
    take enforcement action where risks are being created.
        I don't know the science on this. It could be, at low
    levels, CBD might not pose a risk to consumers. And if that is
    the case, then we need to define what that is and where it
    could be marketed as a food product and not. Right now, we
    can't do that. To your point, everything is illegal. We could
    be taking enforcement action against all of it, and if I do
    that, that is the only thing that my agency will be doing right
    now.
        Dr. Harris. OK. But you can take action and--so you don't
    believe that you could, just by taking action against a few
    companies--I don't know, are these the letters in your--in the
    statement, these are the three companies that got letters:
    Advanced Spine and Pain, Nutra Pure, and PotNetwork Holdings?
        Dr. Gottlieb. And we also put out a statement yesterday
    about other concerns we had, including my statement about the
    concerns I had with respect to what some of the big box stores,
    like CVS and Walgreen's, are attempting to do here. And we are
    going to be calling them up to have a discussion with them
    about it. I do think this is going to have a deterrent effect.
    So you don't see a lot of legitimate food packaging companies
    and large stores putting CBD products into their stores and
    into their food products right now because they know it is
    illegal. I think they are all trying to work with us to see
    what a legal pathway would look like. But they are not doing it
    right now.
        So I do think these steps are going to have a deterrent
    effect. So we have to see where we are in 6 months. Because to
    your point, there is a lot of people out there and----
        Dr. Harris. How about the flavored vaping products that are
    being marketed online with CBD?
        Dr. Gottlieb. All of that causes concern to us.
        Dr. Harris. OK.
        Dr. Gottlieb. They are all a public concern.

                                FLAVORED CIGARS

        Dr. Harris. So just one very brief point, I noticed that--
    what is the action you are taking on the flavored cigars? I
    mean, this--because my understanding is the usage is going
    down, but still it may still be inappropriate. But the usage is
    going down. So how aggressive is the FDA going to go after
    flavored cigars?
        Dr. Gottlieb. Well, cigars are the largest growing segment
    of tobacco use among African American teens. So I don't know
    that it is going down overall, but it is certainly not going
    down in the segments where we have deep public health concerns.
    The guidance that we promulgated several weeks ago that will be
    finalized shortly would ban characterizing flavors in all
    nongrandfathered cigars. We also seek to advance a rulemaking
    process to ban characterizing flavors in the grandfathered
    cigars. We would need to do that if the rulemaking was
    committed. I don't believe any characterizing flavor should be
    in any combustible tobacco product.
        Dr. Harris. OK, but grandfathering is probably the way you
    will go at first?
        Dr. Gottlieb. Well, we will seek to ban.
        Dr. Harris. Right.
        Dr. Gottlieb. Ultimately, once our full policy framework is
    in place, there shouldn't be any characterizing flavor in any
    cigar.
        Dr. Harris. Yeah, OK, thank you very much.
        I yield back. Thank you, Mr. Chairman.
        Mr. Bishop. Thank you.
        Dr. Gottlieb, once again, I would like to extend our
    appreciation for your work. During your tenure, you have been a
    wonderful advocate for public health, transparency, and you
    have been willing to take on some very, very tough issues. You
    certainly have my respect and that of my colleagues as you have
    heard today. But before we close, I wanted to turn the floor
    over to you to share with us a little bit about your
    experiences and any lessons learned as the Commissioner of FDA
    that might be instructive for us.
        Dr. Gottlieb. Well, I appreciate that, Mr. Chairman. I will
    share with you some of the advice that I imparted on my
    successor, Ned Sharpless, who I think very highly of, and I
    think is an outstanding public health official, who is going to
    lead the agency very effectively. And this is a lesson I
    learned having worked at the agency before and with multiple
    Commissioners. I think that as a sort of Commissioner coming
    into this agency, you need to come in with a clear sense of
    what you want to accomplish from a broad standpoint when it
    comes to public health and advancing the public health mission
    of the agency. And I came in with the sense that we needed to
    be doing things a little bit differently, a little bit more
    when it came to the opioid crisis. I wanted to try to use the
    tools of the agency to try to address public health issues
    related to challenges with access to affordable drugs. There
    were other areas where I wanted to see if we can use the
    agency's tools in a more robust fashion to effect certain
    public health goals.
        But how we ultimately address those issues, the idea is the
    policies, that came from the career leadership. It came from
    the center directors. It came from the professional staff. If
    you are going to make enduring policy inside FDA, that is the
    way you need to go about making policy. You need to have that
    engagement directly with the scientific and professional staff
    and respect the policymaking process inside the agency.
        And so the very first thing I did was make sure that I meet
    every week with the center directors, and hardly a day goes by
    that I don't engage with them directly. Those relationships are
    among the most important relationships that I have in terms of
    my ability to effectively lead this agency, accomplish things
    on behalf of the agency and the public health of the country,
    and accomplish policy goals.
        So that is the advice that I left my successor. I know he
    took it to heart, and I know that is the way he has operated at
    the National Cancer Institute (NCI). So I am very confident
    that the agency is in good hands.
        Mr. Bishop. Thank you, Dr. Gottlieb, for being here today.
    We really appreciate your taking time to share your knowledge
    and your experience with us. I think it is safe to say that we
    have all appreciated working with you and your efforts at FDA,
    and we look forward to working with your successor. And, of
    course, we wish you the best in your future endeavors. So,
    again, thank you.
        And, with that, this subcommittee is adjourned.

                                                Tuesday, April 9, 2019.

        U.S. DEPARTMENT OF AGRICULTURE'S FISCAL YEAR 2020 BUDGET REQUEST

                                   WITNESSES

    HON. SONNY PERDUE, SECRETARY, U.S. DEPARTMENT OF AGRICULTURE
    ERICA NAVARRO, BUDGET OFFICER, U.S. DEPARTMENT OF AGRICULTURE

                       Opening Statement--Chairman Bishop

        Mr. Bishop. The Subcommittee will now come to order. Good
    morning, and welcome to today's hearing on the Department of
    Agriculture's fiscal year 2020 budget.
        I'm pleased to introduce our witnesses this morning:
    Secretary Sonny Perdue. The Secretary and I have a three
    decades-long relationship. He has a deep commitment to our
    farmers, ranchers, and to our rural communities.
        Before we begin, I want to say that we need to get a
    supplemental disaster bill through Congress. I know that the
    Secretary shares my sense of urgency about this. The House
    passed its bill in January, and we are ready to go to
    conference with the Senators as soon as it passes the bill.
        I know that all House Members are committed to ensuring the
    areas of the Midwest that were hit with monumental floods just
    a few weeks ago have the funds that they need, as well as the
    folks impacted by the tornadoes last month in Alabama and
    Georgia.
        Twenty-six of the 29 counties that I represent in Georgia
    are rural, with average populations of between 10,000 to 15,000
    people. These counties are some of the most economically
    disadvantaged counties in the Nation. They face immense
    challenges in healthcare, nutrition, rural housing and
    utilities, broadband and economic development.
        As chairman, I am intensely focused on rural development. I
    believe that the ZIP codes in which a child is born, or a
    family lives, should not prevent them from realizing their full
    potential.
        The administration's interagency task force on Agriculture
    and rural prosperity correctly recognized five key indicators
    of Rural Prosperity: e-connectivity, quality of life, rural
    workforce, technological innovation, and economic development.
        But unfortunately, once again the administration has put
    forward a woefully underfunded budget request that fails
    agricultural communities and rural America. Many of the short-
    sighted proposals contained in the administration's request
    have been submitted by the Department before and will be
    rejected by the Subcommittee once again. I am somewhat
    surprised that the fiscal year 2020 budget request is
    essentially a carbon copy of the past few years. The Department
    submits this at a time when the agricultural and the rural
    economies of our Nation face significant challenges.
        This budget comes to Congress with a reduction of over $4.2
    billion, or 21 percent, in discretionary funding from Fiscal
    Year 2019, and it seeks to re-open the farm bill with
    significant legislative requests to change mandatory programs.
    The proposed elimination of programs such as Food for Peace,
    McGovern-Dole, the Commodity Supplemental Food Program, Summer
    EBT, rural watershed protection programs, and nearly all of the
    rural housing loan and grant programs is wholly unacceptable.
        Other programs face drastic cuts. I was extremely
    disappointed to see that rural broadband funding was cut by
    $350 million. One of the greatest barriers to entry into the
    modern economy in rural America is access to adequate
    broadband. I have children in my district who go to the local
    library after school or after football practice, at hours when
    the library is closed, just to access the internet. They sit in
    their parents' cars, outside the library, to do their homework.
    I find that unacceptable in 2019.
        I was disappointed that the budget cuts agriculture
    research by over $179 million. I was disappointed to see that
    under this budget there would be significant staffing
    reductions, specifically in Rural Development and the Farm
    Service Agency.
        There are also, once again, many legislative proposals
    related to the Supplemental Nutrition Assistance Program, most
    of them rejected by Congress in the 2018 farm bill. We expect
    to reject them again.
        Finally, the proposed relocation of ERS and NIFA. As the
    Secretary and my colleagues know, I and most knowledgeable
    stakeholders of these agencies strongly oppose this, as well as
    the proposal to move ERS under the Chief Economist. We will
    discuss this a little bit further today.
        Mr. Secretary, I believe that you are honestly trying to
    bring positive changes to USDA, and we are always looking for
    ways to do things more efficiently. My concern is that the
    Administration has not asked for appropriate resources and
    staffing. I want to ensure that the resources that this
    subcommittee provides are used as intended.
        I also believe that to make rural America a priority, you
    must invest the necessary resources. You must put your money
    where your mouth is. While this budget falls short, I pledge to
    do my best to work with you and Ranking Member Fortenberry to
    develop a bill worthy of the farmers, the ranchers, the rural
    communities who rely so heavily on the services provided by
    USDA.
        So hopefully, the conversation today will provide some
    insight into the disconnect between the budget proposal
    submitted by the Department and the economic realities that
    rural America faces.
        Again, I would like to thank you for being with us today,
    Mr. Secretary, and by the way, I would also like to thank you
    and your cousin, our junior Senator from Georgia, Senator David
    Perdue, for your presence and the very thoughtful comments you
    made at the ham and egg breakfast last Friday, at our state's
    second land grant university, the Fort Valley State University.
        Now let me ask our distinguished ranking member, Mr.
    Fortenberry, if he has any opening remarks.

                 Opening Statement--Ranking Member Fortenberry

        Mr. Fortenberry. Yes I do, Mr. Chairman. Thank you so much
    for convening this hearing.
        What is this ham and egg breakfast I didn't hear about?
    This is the first I've known about this, so maybe we can better
    coordinate next year.
        Anyway, Mr. Secretary, nice to see you. How in the world
    did you navigate that media scrum out there? I was so excited
    to see the Secretary of Agriculture attracting 20 national
    cameras outside of the Appropriations hearing on the budget. It
    is an unprecedented event, so I hope that went well for you
    outside.
        Secretary Perdue. ``Release the reporters''.
        Mr. Fortenberry. I think that's a pretty good summary.
        Anyway, one other quick story before I start my remarks. I
    was--as we visited about a month ago over at the Department, I
    had stopped by Ms. Navarro's office. I believe that's the same
    office, interestingly, that I had when I was an intern in the
    USDA. So interns had a bigger status back then, but--maybe that
    is a result of tight budgets, putting Ms. Navarro in that
    space, but it was a pleasure to see you and thank you for
    being--again, for being here today.
        Mr. Secretary, before we dive into the budget request, I do
    want to commend you for your leadership over the last few
    years. The Department's efforts across a vast portfolio of
    responsibilities is immense. Perhaps not well understood, and
    USDA touches the lives of hundreds of millions of people in the
    United States and abroad in one way or another.
        And in particular, I want to express my appreciation for
    what you and your staff have done in providing assistance to
    farmers and ranchers in my state and neighboring states of the
    Midwest, who have endured the devastating effects of the
    flooding. These were three 500-year events along three rivers
    that converged in a moment, due to rain on top of frozen
    ground, on top of rising temperatures, on top of melting snow,
    that created a flurry of ice and sludge that impacted levees
    and created swiss cheese types of effects all up and down these
    rivers, devastating many communities. But thank you for your
    eager and willing response, as we unpack the damage here
    further.
        A natural disaster like this can also, in some ways, create
    blessings in disguise. In that regard, what I mean is, our
    Nation will oftentimes put aside politics and other differences
    in order to simply just lend a helping hand to our citizens,
    and I think Americans want Congress to actually do the same; to
    put aside any differences, and find consensus and quickly pass
    some type of budget supplemental that will provide additional
    help to my constituents affected, those from Chairman Bishop's
    district, and many more who have waited and waited for some
    help.
        Let me add, over the past year, your Department has
    assisted producers in other ways, dealing with the effects of
    trade disputes, assisting rural communities--communities in
    rebuilding inadequate infrastructure, and fed those who were
    hungry, across the world. So for that, I want to commend you,
    and as we've all heard you say before, Mr. Secretary, ``do
    right, and feed everyone''. What a great summary of your
    values.
        The Department has a number of challenges, obviously, that
    we are going to discuss today, as well as opportunities. Top on
    that list is the implementation of the farm bill, enacted last
    December. And we would like to hear from you about the farm
    economy against the backdrops of some challenging financial
    conditions.
        I want to also recognize your actions and efforts to
    streamline certain functions within the Department, in engaging
    with customers and striving to improve service and enhance
    engagement. You are trying to, clearly, repair the relationship
    between the USDA employees and their customers, so efforts to
    upgrade the effectiveness of websites like Farmers.com should
    ultimately save farmers and ranchers time, if they don't--can't
    drive in to the FSA or NRCS county office to process paperwork.
    Other efforts, such as the proposed relocation, from my
    perspective, of ERS and NIFA--they may be controversial, but
    they are based upon good intent, to save our constituents'
    hard-earned taxpayer dollars.
        The subcommittee will need to keep abreast of the
    Department's actions and planned actions, as it relates to
    these efforts, including an assurance that any reduced staffing
    levels are not negatively impacting the delivery of important
    services.
        In turning to the 2020 budget requests, there are some
    initiatives that will likely receive bipartisan support, and
    other proposals that I'm sure none of us can get behind, for a
    variety of reasons. I agree with your proposed increases in
    rural development for community facility grants, business and
    industry loans, as well as distance learning and telemedicine
    grants.
        On the other hand, steep cuts to rural housing programs,
    international food aid and crop insurance cannot find an
    acceptance right here. When it comes to rural housing, it will
    be extremely challenging for our rural communities to grow
    without access to low-cost loans and grants. While this
    subcommittee has always supported responsible investments, in
    light of the 22 trillion dollar national debt, it is my
    perspective that some of these cuts would actually be very
    counter-productive.
        Whether the items in the budget are true policy positions,
    or just our annual budgetary theater, we are going to unpack
    that, and I listen--I look forward to listening to your
    thoughts and rationale for some of these reductions, especially
    given the challenges of the farm economy and rural America.
        So again, I want to thank you for being with us today, and
    look forward to fullness of discussion with you.

          REORGANIZATION OF THE OFFICE OF BUDGET AND PROGRAM ANALYSIS

        Mr. Bishop. Thank you, Mr. Fortenberry.
        Secretary Perdue, in my opening statement I failed to
    mention the--a letter that I had just recently seen. In fact, I
    saw it just as I was leaving the office to come down to the
    hearing. It was from you, with regard to a planned
    reorganization of USDA's Office of Budget and Program Analysis.
    You indicated in the letter that it is--it would realign the
    functions and the staff internal to OBPA, to clarify roles and
    responsibilities for the four primary business processes.
        I read the letter, and my staff had already seen the
    letter, and it seems as if that is an insightful move, to more
    efficiently operate and streamline those processes, so I just
    want you to know that I would personally, and I think our staff
    would concur in that; you will probably be getting a letter
    from us forthwith indicating that.
        I also failed to welcome your Budget Officer, Ms. Erica
    Navarro, who is accompanying you, and we want to welcome you
    both, and at this time I'd recognize you for your statement,
    and also let you know that your entire written statement will
    be included in the record.

                      Opening Statement--Secretary Perdue

        Secretary Perdue. Well, thank you, Chairman Bishop and
    Ranking Member Fortenberry and distinguished members of the
    subcommittee. I really do appreciate the spirit in which we
    were welcomed here this morning. I think, again, while we may
    find some differences of opinion, I don't think we have
    differences of intent in trying to serve the American people.
    And I very much appreciate that spirit.
        I also appreciate, really, the natural tension that our
    founders created between the executive branch and the
    constitutional role of budgeting and appropriating and
    oversight of the congressional role in that regard. And we--our
    goal, as I have indicated to you before, is to be, where we
    can, agreeable and compliant, certainly not defiant without
    reason of defending what our recommendations are.
        So I appreciate very much the relationship that we enjoy
    with you and your members. And we look forward to continuing,
    even when we can't, maybe, finally agree on the fundamentals of
    what policy is there. But we understand your constitutional
    role and responsibility. And we respect that and we want to
    behave and communicate as transparently as we can our thoughts
    about budgeting and how we--we use the money that is
    appropriated.
        We stand ready to be responsive in defending and
    communicating about how that was utilized. So thank you for
    that opportunity. It is no surprise that you began with a
    disaster that has been on the minds of our constituents,
    really, since last fall when you witnessed, in your district,
    primarily, and I think Representative Aderholt's district in
    southeast Alabama as well a terrible hurricane, Michael, there,
    that I've never seen that kind of destruction that far inland
    with pecan trees, which is a mainstay of your district, and
    cotton, certainly, destroyed the way it was.
        And we are very anxious. Your constituents and constituents
    throughout those areas and the Carolinas in a previous
    hurricane and the more recent floods, as far as the wildfires,
    are waiting anxiously, some of them literally devastated. We
    have got--as you all know, we have safety net provisions. The
    Farm Safety Net is alive and well, and you all have
    appropriated safety net functions like emergency livestock
    provisions, watersheds and those kind of things, and the
    Environmental Quality Incentives Program for losses. But it
    doesn't contemplate utter devastation like we've seen.
        So I appreciate both of you mentioning that, and hopefully
    we can come to a reconciliation. I do agree with Ranking Member
    Fortenberry. This is a time where Congress has demonstrated its
    ability to put partisanship aside and typically respond on
    behalf of your citizens. And I hope that we can do that as
    well. Certainly trade is a big issue that we hear about in the
    agri-economy across the country. And it is never over until it
    is over. We are seeing some positive signals from China in that
    regard. But we are not just focusing there. Ambassador
    Lighthizer will be over tomorrow speaking to a committee about
    trade responses with Japan as a big market.
        Actually, Under Secretary Ted McKinney has been circling
    the globe since he came on board last year looking for new
    markets. We don't want to put all of our eggs in the China
    basket. But that seemed to be progressing, but it is never over
    until it is over in that regard. You mentioned infrastructure
    to a certain degree. And I didn't realize our broadband history
    was as bad as you made it sound, Mr. Chairman. I thought we had
    been doing better.
        In broadband, we are beginning to receive the applications
    in just a couple of weeks for the money that you appropriated
    last spring and for the--the rural broadband there, we have
    gone through a very careful and judicious application process.
    Since the beginning of last year, we have given technical
    assistance to many different groups. I am delighted in the fact
    that various groups are showing a lot of interest from Electric
    Membership Corporations and rural telecoms and other nonprofits
    in these different areas, as well as communities themselves
    over applying for this.
        It will be three different tranches of money that we think
    will absolutely help the connectivity that you describe that I
    agree with you that is so--is so critical in that regard.
    Obviously, you all passed a great farm bill in 2018, December
    20. And our Department is working feverishly to implement that
    farm bill. You understand your constituents rely on the rules
    and regulations of specificity that USDA provides to them. And
    we are hoping to get those out.
        In fact, we focused on dairy particularly. That has been
    the sector that is under the most stress. And we are on track
    for the--the dates that I gave the full Committee earlier on
    those types of things. We will begin to get returning money
    over previous premiums later this month. And we believe that we
    will have the full program implemented by that June timeline
    that we--we indicated earlier in that regard.
        So we are working on all those areas of the farm bill
    implementation. Now speaking to the budget, I look forward to
    answering your questions and your subcommittee questions over
    the--over the budget. You know that there is--obviously, it is
    a time of great risk here. But we believe that our
    administration has taken the step of providing a fiscally
    responsible budget that doesn't continue to kick the can down
    the road on a $22 trillion deficit.
        While no one likes cuts, we at USDA are prepared, if we
    could implement this across to government-wide, to do our share
    in returning to fiscal responsibility in all of these areas.
        Many are positive things in the--in the budget that--I know
    you mentioned some negative things. And we look forward to
    discussing those with you. But there are also many positive
    things in the budget as well. But we do believe the
    administration is prepared to propose a budget that is fiscally
    responsible and deals with some of the realistic issues that we
    have here regarding national debt.
        And I want to commit to you that whatever resources are
    provided by you all as the appropriators, we will do our very
    best to provide the kind of customer service that I think your
    constituents want and deserve each and every day. In providing
    for them, we hope that we have been responsive to your members
    and requests over constituent issues heretofore.
        And we look forward to continuing to provide the most
    efficient and effective customer service to agents in the
    Federal Government. We, first of all, consider you and your
    subcommittee and members of Congress as our primary customers
    with whom we expect to be responsive and responsible for those
    funds. And I appreciate the opportunity to testify this morning
    and look forward to your questions.
        [The information follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Bishop. Thank you very much, Mr. Secretary. We
    appreciate your efforts. My colleague, Ms. McCollum chairs the
    Interior Subcommittee of Appropriations. And she has a hearing
    that she needs to chair very shortly. So with the
    subcommittee's indulgence, I would like to forgo my opening
    questions and yield to Ms. McCollum so that she may ask her
    questions quickly and be able to go on to the subcommittee that
    she has to chair this morning. So I recognize Ms. McCollum.

                            MINERAL WITHDRAWAL STUDY

        Ms. McCollum. Thank you, Mr. Chair, and I look forward to
    repaying the kindness and the courtesy that you've extended to
    me today. Secretary Perdue, you were talking about taxpayers
    and our obligation to live up to commitments we make to our
    taxpayers. You have responsibility over our national forests.
    And it's shared between Mr. Bishop's subcommittee and the
    subcommittee I chair, Interior Environment.
        And two years ago, you testified before the Interior
    Environment Subcommittee. And, at that hearing, I asked you
    whether the mineral withdrawal study, which the taxpayers were
    paying for, and the watershed of the Boundary Waters Canoe Area
    would continue.
        Your response to me and to the rest of the interior
    subcommittee was--and I quote, ``I think your statement
    regarding the two-year study over sound science, none must know
    what to do without the facts based on sound science, and we are
    absolutely allowing that to proceed. You also know that your
    state has a shot at that after the recommendation as well. So
    we are determined to proceed in that effort and to let it run
    its course. No decision will be made prior to the conclusion of
    that.'' And I end your quote, sir.
        Secretary Perdue, those were very reassuring words to me at
    the time because you were following the direction of Congress.
    But those words were completely belied by your actions. You
    failed to live up to your words when you announced in September
    the abrupt cancellation of the mineral withdrawal study, 20
    months into a 24-month study review, 20 months of collecting
    public input, 20 months of science-based assessment.
        And all you released was a one-page press release and that
    is completely inadequate. We still have not seen any of the
    science behind the science-based decision. I have sent multiple
    letters, first in November and then again on March 1, along
    with the chair from the Natural Resources Committee, asking
    your agency to release the relevant documentation from the 20-
    month review. Your own press release said the review included,
    and I quote from the press release, ``Mineral resource report,
    a biological and economic impact assessment, potential impacts
    to water resources, wilderness areas and cultural resources.''
    Secretary Perdue, were all of those reports completed as part
    of the environmentals assessment?
        Secretary Perdue. I can't answer that question directly,
    ma'am.
        Ms. McCollum. So if you don't have complete scientific
    reports to review before making your decision to cancel the
    withdrawal, one has to ask what your decision was based on. Do
    you have any idea what your decision was based on, sir?
        Secretary Perdue. Yes, ma'am. I do. Would you like me to
    describe?
        Ms. McCollum. I would like the documentation that you said
    that you weren't aware of so you couldn't answer my original
    question.
        Secretary Perdue. Certainly. We will do our best to provide
    that.
        As stated in USDA's December 11, 2018 letter to you and
    Congressman Grijalva, the Regional Forester of the Eastern
    Region submitted an application to the Bureau of Land
    Management (BLM) for an administrative withdrawal on December
    14, 2016. DOI accepted the application and issued a Federal
    Register notice providing for the 2-year segregation on January
    19, 2017. The Forest Service initiated work on a withdrawal
    package and held public meetings during a 15-month period. On
    September 6, 2018, I announced the cancellation of the Rainy
    River mineral withdrawal application. The documents being
    prepared for the withdrawal application were never finalized.
    The incomplete application package was not reviewed by agency
    officials.
         Applicable Federal laws, such as the National
    Environmental Policy Act and 16 U.S.C. 508b, provide for
    procedural review and considerable discretion regarding new
    mineral leases. The State of Minnesota likewise has
    environmental review processes for mineral development for the
    protection of natural resources. A case-by-case approach,
    rather than an inflexible 20-year withdrawal, will ensure
    adequate review of future lease offerings. Should the BLM
    decide to lease National Forest System land--assuming the
    requisite Forest Service consent to such leasing--the lease
    terms and conditions, lease stipulations required by the Forest
    Service, and the requirements of any operating plan would
    undergo close review and require approval by the Forest
    Service. I am confident the processes presently in place
    preserve the high-quality fishing, wildlife viewing, and
    recreational opportunities Minnesotans and visitors from around
    the world enjoy in the Boundary Waters Canoe Area Wilderness.
        Ms. McCollum. Are you aware, sir, that the very same month
    that the abandoned mineral withdrawal proposal in--you
    abandoned the mineral withdrawal proposal in Minnesota that the
    United States Forest Service recommended withdrawal of mineral
    leases on national forest lands in Montana, which is adjacent
    to a national park, and in Washington State within a national
    forest?
        Secretary Perdue. I am aware of that.
        Ms. McCollum. All three of these withdrawals were proposed
    in response to the serious threat of acid drainage from gold
    and copper sulfide ore mines. Can you explain to me why the
    Forest Service has a different standard for withdrawal from the
    study in Minnesota? Minnesota's withdrawal is international
    forest. It's adjacent to a national park, and it's adjacent to
    a national wilderness area.
        Secretary Perdue. When I learned that, I think, Minnesota
    really has the last vote on this as a State government where
    the Governor had determined already that he was not going to
    allow this to go forward, it made sense for me to proceed,
    there has not been one permit issued. There will not be one
    permit issued until it's a complete environmental impact
    statement and study based on that and it looked to me to be
    duplicative after I realized that after my statement to you in
    May of 2017 at my first hearing. And, therefore, the State of
    Minnesota has the last vote on this. And I would expect them to
    do what the citizens of Minnesota would decide.
        Ms. McCollum. Well, sir, I respectfully disagree with your
    analysis of this. Once the Forest Service didn't go forward on
    the study, BLM started moving forward on lease renewal. Once
    the study wasn't completed and I asked for all the information
    on it, the taxpayers paid for it. I have not received it. So,
    sir, I feel that--that the Forest Service did not fulfill its
    congressional obligation by moving forward with the full 2-year
    study.
        And the watershed that the Boundary Waters is in--all water
    is precious, but it makes no sense to me at all that the Forest
    Service abandoned its due diligence resource. I look forward to
    receiving the information from you. But I take this issue very
    seriously. You are stopping--the study started a roller coaster
    of events that will lead to, possibly, the destruction of these
    pristine waters. Thank you, Mr. Chair and thank you, sir.
        Secretary Perdue. Thank you, ma'am.
        Mr. Bishop. Thank you, Ms. McCollum.
        Mr. Fortenberry.

                          DISASTER ASSISTANCE PROGRAMS

        Mr. Fortenberry. Mr. Secretary, there is a lot of
    consequences to flooding, some of which are--couldn't be
    perceived before it actually happens, one of which is the loss
    of onsite grain that was stored. You know, you're dealing with
    the immediate aftermath of floodwaters rushing over fields,
    drowning cattle, covering fields in debris and sediment, making
    the possibility of planting not only difficult, maybe even
    impossible in many areas. But another manifestation of this has
    been the loss of grain stored onsite.
        So are--do you--so I want to ask you two questions. Are you
    looking at that issue through the lens of any flexibility that
    you have in current programming or as a part of the disaster
    assistance package that is potentially coming through Congress?
    And then, secondly, I think it would be helpful, particularly
    for the public, if you could just tick through a high-level
    summary of what the USDA is already doing in response to the
    flood.
        Secretary Perdue. Sure. Unfortunately, I would love to
    answer in the affirmative that these stored grains would
    qualify for the safety net that is there. They do not
    currently. And that is why the disaster appropriation
    supplemental is so important to cover issues that were not
    covered in the destruction and devastation by the floods
    flooding there. But this is an area that is not legally or
    statutorily approved under our safety net provisions currently.
        Certainly, the second part of your question, there is the
    Emergency Conservation Program where we pay a cost share on
    practices recovering stream banks and other types of debris/
    sand removal, regrading the land, filling gullies and restoring
    other properties in that way as well. Certainly one of the uses
    is the Livestock Indemnity Program where the cattle or
    livestock losses can be paid for that--due to the disaster and
    that is--there is an adult cow rate based on that. It is 75
    percent of the national average, fair market average so that
    helps.
        The Livestock Forage Program that is utilized to feed, for
    cattle feed and livestock feed, also qualifies for grazing
    losses due to drought, flood or fire in that regard. And then
    there is emergency livestock assistance for livestock as well.
    And that is another program that FSA can advise your producers
    and farmers about that.
        The Emergency Watershed Program is another that, again,
    helps with debris removal from the streams and culverts and,
    again, helps to reshape stream banks. And that is--in a flood,
    that is certainly necessary. Vegetative cover, repairing levies
    and other conservation practices have been destroyed by the
    floods. Those are examples of that. And we'd be happy--on our
    website, farmers.gov, you go if you have had a disaster, see
    what you qualify for. And I would advise your constituents to
    take advantage of that.

                              ONSITE GRAIN STORAGE

        Mr. Fortenberry. Thank you. One other subset of this is, do
    you have any idea--and it can be just an approximation of how
    many farmers actually use private insurance to indemnify on-
    stored--on-site storage of grain because I am trying to get a
    handle on just how large the problem is. I suspect that is
    pretty small but I don't know.
        Secretary Perdue. We don't know, either, the exact number.
    I expect it is very, very, very small.
        Mr. Fortenberry. I see.
        Secretary Perdue. Commercial operations, elevators, have
    that kind of stock coverage for their operations. But typically
    producers, once it is out of the field and crop insurance is no
    longer a factor, most of them do not cover the stock within
    their bins over their--their grain production. So I think it's
    a very, very small number.
        Mr. Fortenberry. So in the supplemental disaster package
    that's being written currently, are there--is there enough
    flexibility in this regard to potentially help you to help with
    the problem of onsite grain storage that's been lost?
        Secretary Perdue. We would love to be involved in helping
    the language as the disaster bill moves along to make sure that
    gives them the flexibility. The 2017 disaster bill was fairly
    flexible based on giving the USDA an opportunity to design the
    program to help the most consumers and the most customers out
    there. But that was not contemplated or specified. And we would
    like to probably have some additional language that would
    ensure that.
        Mr. Fortenberry. OK. Mr. Chairman, I think this is a very
    important point, either in terms of the architectural
    flexibility or some specificity for the Secretary so that he
    can help with this particularly devastating consequence of
    these floods, which is a secondary effect that was completely
    unanticipated. So if we could work directly with you all on the
    type of language that you are perceiving that you need, either,
    again, at a high level of flexibility or specifically targeted
    to this, that would be very helpful to me, Mr. Chairman.
        Secretary Perdue. We would be happy to give technical
    assistance----
        Mr. Fortenberry. Thank you.
        Secretary Perdue [continuing]. Over the language we think
    would give us----
        Mr. Bishop. Thank you, Mr. Fortenberry.
        Ms. Lee.

                           SNAP LEGISLATIVE PROPOSAL

        Ms. Lee. Thank you very much. Good morning, Mr. Secretary
    and Ms. Navarro; right? Thank you very much for being here.
    First of all, let me just say it's no secret that some of us
    believe that this $220 billion cut in SNAP benefits is cruel.
    And the Harvest depression-era food box for SNAP recipients,
    it's stigmatizing. I mean, how in the world can this box keep
    up with families who are unhoused or even low-income families
    who rely on their EBT card, as they are forced to live--and we
    know the huge homeless population in their cars or with
    friends.
        And so I just wanted to mention, you know, currently,
    unhoused SNAP recipients are able to get benefits within three
    days of onsite application. And it can be also mailed to a
    homeless shelter. So I don't understand this new Harvest box. I
    know you say it is to reduce administrative waste. But it seems
    like you are layering more paperwork on warehouses and what
    have you. And it is to reduce--you say to reduce fraud. But it
    seems like it is going to go in the opposite direction. And so
    can you kind of talk about why you think this is a dignified
    way to help those who need help?
        Secondly, and I will try to do this very quickly, you know,
    it is no secret that I am a former food stamp recipient. And it
    is a bridge, really, over troubled water for many people.
    Three-quarters of a million people would lose their SNAP
    benefits simply because they can't find work through no fault
    of their own.
        We have waivers now which you want to eliminate in your
    budget where there--when the unemployment rate is at a certain
    level. There is significant pockets, in my district, for
    example, of real unemployment rates by--with people of color
    and communities of color where workers have been displaced, and
    yet you are talking about eliminating this waiver in your
    proposed rule.
        And, finally, let me just ask you, with regard to people
    who have serious health conditions and with disabilities, one
    in four SNAP recipients are people with disabilities. Your rule
    claims to only target so-called able-bodied adults without
    dependents. But individuals with disabilities and serious
    health conditions who don't receive Social Security Disability
    benefits would be at risk of losing food assistance if they
    can't log 20 hours of work per week. So many people face
    barriers to work, especially those who are disabled and have
    chronic health conditions. It's mean-spirited. I think it's
    wrong, and I hope that you would reconsider all of these
    proposed cuts and rules because people need this program
    desperately.
        Secretary Perdue. Thank you, ma'am. I'd love the
    opportunity to visit with you in order to give you more
    thorough than we can do in this meeting today our thoughts
    about that. Certainly when you describe them as cruel and
    stigmatizing in that kind of way, we have proposed the Harvest
    box again. Grocery shopping is changing. Many of your most
    affluent citizens get their groceries delivered to their
    doorstep in that way.
        We think it is a very effective way and we'd love--if you
    all don't want to authorize it at all, to give us an
    opportunity to have a pilot program to prove the concept in
    that way and to do that. Regarding the able-bodied decisions,
    that probably--the definition describing ``able-bodied'' may
    need some fine-tuning on that. Certainly we are talking about
    people who are able to work. When I think they hear the term
    ``able-bodied,'' people who are able to work from ages 18 to
    49, not senior citizens, not parents with dependents, not
    pregnant women, able-bodied adults without dependents.
        We think 20 hours a week of either volunteer, training or
    work is reasonable based on the 1996 law that was still
    contained in the farm bill that was passed this year. The
    waiver provisions also, when there are pockets of higher
    unemployment there in this time of national low unemployment,
    when a particular region has a localized unemployment rate
    higher, I think, of--than the national average by a factor,
    then that qualifies for the waiver. We are not doing away with
    that waiver at all but localized unemployment pockets for
    whatever reason will qualify, along with the fact that the
    states also have a 12 percent--no excuses--12 percent margin
    that they can designate through their 12 percent waiver that
    was passed in the farm bill. So I'd love the opportunity to
    personally visit with you to help really persuade you. We are
    not trying to be cruel or stigmatize people who are on food
    stamps.
        Ms. Lee. Thank you, Mr. Secretary. I look forward to
    meeting with you, but I can't help but say, when you look at
    one in four SNAP recipients who are disabled with chronic
    health problems, they are going to have to choose between
    paying their medical bills or food.
        Secretary Perdue. Well, I wouldn't consider them able-
    bodied so, anyway, we will have to define that.
        Mr. Bishop. Dr. Harris.

                             TRANSPORTATION STOPAGE

        Dr. Harris. Thank you very much and thank you, Mr.
    Secretary, for being here. And, you know, I know the--because
    Congress has kind of handcuffed the administration in terms of
    the budget and caps until Congress takes action--and I
    appreciate the Department had a pretty tough job because you
    actually have to follow the law, I mean, as set forth by
    Congress with the caps set under the original Budget Control
    Act.
        Anyway, a couple of things. First of all, you know, I'm
    glad that the Department did propose the new rule for the able-
    bodied receiving SNAP benefits. I think that is the right thing
    to do. And I hope that that--that you are able to go forward
    with that effort. I think that is important that, you know, we
    give people a--you know, we help them when they are in need but
    we also help them get back into the--into the workforce,
    certainly what we need to do with a full working economy right
    now.
        I also want to indicate my support for the move to relocate
    NIFA and ERS. I think that there--that--you know, obviously
    taking into consideration the possibility that geographic
    proximity may be important, there really is no need for these
    to be inside the Beltway. And I would hope that, throughout the
    Department--and I think the Department has one of its--one of
    the points of emphasis is getting the rural economies going.
    And certainly moving parts of the government into rural areas
    provides a stabilizing effect on the local economies, as I am
    sure you can appreciate the cyclicity of the agriculture
    industry and the non-cyclicity of the government in general.
        So citing those kind of institutions which are agriculture-
    related in rural areas, I think, is a good idea. Two areas of
    concern. One is I--and I'm sure you are aware of it, the hours
    of service requirement for trucking livestock around.
    Obviously, in my district, the poultry industry is very
    important. And, clearly, you know, you can't--if you run into
    traffic, you can't just stop a truck with a truckload of birds.
    Bad things happen if that happens. So could you just, very
    briefly, indicate what is being done to address that issue?
        Secretary Perdue. We have been working with the Federal
    Motor Carriers, the Department of Transportation, for over a
    year. And that issue has first became aware that the--the rules
    on safety, hours of service, were negatively impacting not only
    livestock transfers but also fresh vegetables. And some of
    these hours of service were creating some unintended
    consequences. Fortunately, they've been--they have been
    reasonable.
        We have some proposed rules coming out that will better
    define agricultural products and agricultural exemptions. So
    from an interagency perspective, we feel like we've gotten the
    attention of the Federal Motor Carriers. And, hopefully, by
    this summer, we can see some resolution of some of those hours
    of service issues over the electronic logging devices.

                              ROUNDUP CONTROVERSY

        Dr. Harris. Good. And I'm glad to hear that.
        Finally, one is issue is this issue, the Roundup
    controversy. You know, in my district, as you know, grain is
    very important. The ability to use a very effective agent like
    Roundup is exceedingly important in maintaining our high crop
    yields. And I personally am worried when I hear about multi-
    hundred billion dollar settlements or jury verdicts when my
    understanding is that the EPA, the NIH have both concluded that
    this is not a carcinogen, that--you know that the value of the
    company has decreased 25 percent due to this, and this is just
    the tip of the iceberg in terms of the cases. I'm worried that
    it could disappear. Could you--that the use of Roundup could
    disappear. They could choose just not to assume the risk of
    selling it anymore. What would the impact of that be on our
    agricultural community, especially our grain production?
        Secretary Perdue. I think it would be devastating,
    Congressman. I think, again, much of the productivity increases
    you've seen over the last 25 years since these type of crop
    protection chemicals have been out have been almost exponential
    in that way. If we're going to nine and a half to ten billion
    people by 2050, we're going to need all the tools at our
    disposal. I'm afraid that while the groups that oppose these
    types of uses have not been able to win on the science side,
    they're chosen the litigation route. And you go before juries
    with some sad cases of people having cancer, and they used this
    product once or twice in the yard and are having multimillion
    dollar awards. I'm hoping that the appeals court will see
    through this and make better decisions about that. But it would
    be literally devastating to our productivity capacity
    worldwide. What we're seeing in the European Union along this
    route, I call it a technology-free zone, and I think, again,
    they will pay the price for this in the future.
        Dr. Harris. Well, thank you. Is there anything the
    Department can do to educate Americans about the importance of
    cutting-edge technology, like Roundup and the GMO crops
    obviously that keep our American farmers the best in the world?
        Secretary Perdue. Well, we try to advocate for sound
    science and good scientific discovery about that, which, as you
    indicated, NIH and others have indicated, there is no health
    risk there from these chemicals. This is a topical chemical
    that does not transfer in the soil. And actually it works on
    the product that you do not want, the weeds, rather than the
    crop that's produced. So we are concerned. All we can do is
    continue to communicate what we think the truth that science
    does. EPA certainly has the ultimate responsibility of
    approving or disapproving these chemicals. We work with them in
    helping them to have the research they need to make the best
    decisions in that regard.
        Dr. Harris. Thank you very much. Yield back.
        Mr. Bishop. Thank you, Dr. Harris.
        Mr. Secretary, it is now my turn.
        Secretary Perdue. OK. I thought you'd already had your
    turn. [Laughter.]

                           RELOCATION OF ERS AND NIFA

        Mr. Bishop. As you know, two weeks ago we had a hearing on
    the proposed relocation of ERS and NIFA. Like Hallmark, you
    were unable to attend, but you cared enough to send the best.
    And you sent your representative, Ms. Kristi Boswell, to
    articulate the Department's position on why this is a good
    idea.
        However, in my opinion, her best efforts were not
    sufficient to overcome the well-documented and well-reasoned
    case against such reorganization and relocation. We heard from
    four former USDA officials with a total of 70 years of
    experience in the USDA research agencies. We heard from Dr.
    Gail Buchanan and Dr. Catherine Woteki, both of whom are former
    Undersecretaries for the Research, Education and Economics
    Mission Area. And they served under President Bush and
    President Obama respectively for 10 years.
        We also heard from Dr. John Lee and Dr. Katherine Smith-
    Evans. Both of them are former Administrators of the Economic
    Research Service and combined have 60 years of service spanning
    from President Reagan to President Obama. In total, their
    experience speaks for itself. The understanding of these
    agencies' functions and how they fit into the greater research
    community are what's clear from their eloquent testimony.
        Besides those individuals who testified, there's an
    enormous number of groups and individuals who publicly oppose
    the plan, including the National Farmers Union; the Association
    of American Veterinary Colleges; the American Statistical
    Association; the National Coalition for Food and Agriculture
    Research; at least another 104 agriculture, science and food-
    related organizations; at least 24 university departments of
    agriculture and/or economics; at least 37 deans, provosts, et
    cetera of university agriculture departments; more than 1,150
    individual scientists from 47 states.
        On the issue of the ERS specifically, besides those who
    testified, a list of senior government officials publicly
    opposed includes two former Deputy Secretaries of USDA, two
    former Chief Statisticians of the United States, several past
    Undersecretaries outside of the REE area from both parties,
    past heads of NIFA and ERS, three former heads of the National
    Association of NASS, former heads of the Census Bureau, two
    former heads of the Bureau of Labor Statistics, three former
    heads of the Energy Information Administration and multiple
    former senior statisticians at the IRS, the Justice Department,
    the Commerce Department and the CDC.
        I understand the Department's position, but after that
    hearing, I still do not agree that this is a good decision. It
    does not make any sense, and it seems to be a solution in
    search of a problem.
        You indicate that you want to move ERS and NIFA to be
    closer to the stakeholders. But upon close examination, this
    doesn't hold water. Farmers and ranchers may be informed by ERS
    reports, but they are not direct recipients or users of most of
    the ERS products. ERS and NIFA are not regulatory or farm
    program agencies. These agencies do not implement farm programs
    like FSA or NRCS or inspect plants like FSIS.
        You indicate that this will benefit taxpayers, but we still
    do not have a cost benefit analysis that was used to make this
    decision.
        Finally, you claim the move will help USDA attract and
    retain highly qualified staff. This, too, is questionable. The
    subcommittee has only heard anecdotes about commute times, home
    prices and Ph.D. lifestyles. We've seen no actual analysis to
    back up the claim that it will be easier to hire outside of
    Washington, DC.
        Your response, sir.
        Secretary Perdue. Mr. Chairman, I'm just amazed that all
    those people you mentioned could all be wrong. [Laughter.]
        Certainly this is maybe one of those areas where you and I
    are friends, but we'll have to disagree over the issue going
    forward.
        We are somewhat restrained or constrained right now on a
    cost benefit analysis, because we have not narrowed that list
    down to the final few and looking for their final invest
    proposals over the cost benefit. When that happens, we will
    present that to you all in the subcommittee, so that you all
    can evaluate that from the best value perspective. We think
    those reasons that we've been giving and Kristi so well-
    articulated that day are bona fide and beneficial to retracting
    and retaining those type of talents that we want in both of
    those agencies and organizations.
        Mr. Bishop. Mr. Secretary, we hear the assertion, but we
    don't see the data to back it up. We don't see the problem. It
    seems the case of--is--back home in Georgia, they would say if
    it ain't broke, don't fix it. And we don't see that it's being
    broken. And all of these experts indicate to us that it's not
    broken, that, in fact, if we do this relocation and the
    reorganization as you're proposing, that it will break it as
    opposed to allowing it to continue doing the work that it's
    doing. So I--and my time is up. I'll revisit this in my next
    round. But if you'd like to comment, then I'll allow you to
    make it----
        Secretary Perdue. I appreciate that.
        Mr. Bishop [continuing]. Your comment, and then I will
    yield to Mr. Moolenaar.
        Secretary Perdue. Some of the experts you talk about were
    around in the USDA before the internet was developed and the
    ability to communicate and get work done today. It's a
    different day in research and others, and we'll, again, as we
    narrow these down, have a real cost benefit analysis. We will
    further communicate our reasons and our recommendations and our
    value and our decision. So thank you.
        Mr. Bishop. Sir, it seems like the cost benefit analysis
    should be before the fact rather than after the fact. It seems
    like after the fact you'll be justifying what you did as
    opposed to using the cost benefit to make the decision.
        Secretary Perdue. We had a beginning cost benefit analysis
    of what we estimated. What I want to provide to you are the
    actual cost benefit of the exact location.
        [The information follows:]

        USDA received 136 Expressions of interest from 35 States to
    host ERS and NIFA. USDA has retained a consulting firm to
    evaluate those Expressions of Interest, which recently narrowed
    down the list to 67 possible locations. The consultant will
    provide a benefit-cost analysis during the site selection
    process, and the results of the analysis will be made available
    as soon as feasible.

        Mr. Bishop. Thank you.
        Mr. Moolenaar.

                         DAIRY MARGIN COVERAGE PROGRAM

        Mr. Moolenaar. Thank you, Mr. Chairman.
        Secretary, thank you. For your presence here. I wanted to
    talk with you a little bit about dairy. I'm from Michigan, and
    dairy farmers make up a large portion of our agriculture
    industry in my district and in our state. A lot of uncertainty
    there. The Dairy Margin Coverage Program established in the
    farm bill is going to help, and last month I joined 76 of my
    colleagues in a letter to you expressing the importance of
    implementing the Dairy Margin Coverage Program as soon as
    possible, and I want to thank you for your response. I'm
    wondering if you could comment on what you anticipate in terms
    of enrollees for the Dairy Margin Coverage Program as compared
    to the old Margin Protection Program and then how long the
    processing period will last.
        Secretary Perdue. I think, again, the Dairy Margin
    Protection Program that was designed in 2014 for most everyone
    didn't perform as they had hoped, and it really got kind of a
    bad name, the MPP program, and that's one of the reasons you
    all chose to refund the premiums from that, and those will
    begin going out very soon, hopefully by the end of the month,
    in that regard. That kind of makes up for it, and then a new
    name I think also helps.
        I expect the enrollment, certainly from those herds that
    are under the 250, 300-count herds will virtually be everyone.
    I can't imagine why a dairy farm would not sign up for the
    program that you all have designed under this new program.
    Certainly larger dairies that are over that cap may not find it
    as beneficial in that regard. But certainly the up to 250, 300
    cows, it seems like to me it would be a no-brainer.
        Mr. Moolenaar. OK. Thank you. And then, as you know, this
    is a crucial safety net for farmers, and many of us are hoping
    that we can even move up the start date. Is there a scenario
    where the Farm Service Agency might be able to open up prior to
    the June 17 goal?
        Secretary Perdue. This is a pretty aggressive goal that we
    are struggling to meet, and it's still on track. I don't think
    that we can do that any earlier. There are a few steps here to
    do it. It's a fairly complex program. We had to go back.
    Unfortunately, the first two years of the Margin Protection
    Program were kept on paper and spreadsheets, and we didn't have
    a database.
        As you know, the reimbursement program has to go back and
    find out who the record of owner--the owner of record was in
    that dairy farm and, make sure the money gets to the right
    people. There have been some changes of ownership, going out of
    business and others. So it's a very laborious process to get
    that done. So I think the June 17 date is a pretty aggressive
    date to get that done. I'd like to tell you we can get it done
    sooner, but we're probably not going to able to meet any sooner
    than that.

                     UNITED STATES-MEXICO-CANADA AGREEMENT

        Mr. Moolenaar. OK. Thank you. And just to follow up on some
    of the dairy issues, I'm encouraged under the USMCA that Canada
    has agreed to increase market access for dairy products from
    the U.S. and ending their class 7 pricing screen. Obviously
    it's important that we pass the USMCA. One of the questions I
    get is this use of broad-based tariffs, how that's going to
    affect the passage of the USMCA. I'm wondering if you feel that
    some of these--if the Administration might be able to address
    some of the disputes over tariffs on imports of steel and
    aluminum before the USMCA either is voted on or goes into
    effect.
        Secretary Perdue. Well, it's no secret I've advocated to
    the administration over the resolution of the 232 Steel and
    Aluminum Tariffs between Mexico and Canada. If the President
    would choose to utilize potential quotas, tariff-rate quotas in
    lieu of tariffs, I think that would resolve and make the
    ratification of the USMCA in all three countries more likely to
    occur sooner.

                        BROADBAND PROGRAM/OPIOID CRISIS

        Mr. Moolenaar. I know we're running out of time, but two
    other issues I wanted to just touch on. Rural broadband, the
    fight against opioids, those two issues. I know the farm bill
    had efforts in both of those areas. Can you make any comments
    on those?
        Secretary Perdue. Yes, our Rural Development is active in
    the opioid crisis. In fact, our former Assistant to the
    Secretary that was in charge of Rural Development, we have lost
    her to the drug czar to work. She'd done such a good job in the
    opioid area in RD and USDA that she's working full-time on that
    now, and she knows our programs in Rural Development, so we'll
    be able to work more in sync with what the Administration's
    goal is in eliminating the opioid epidemic.
        And certainly broadband is an issue that we look for these
    applications coming in April--end of April, April 23rd, in
    order to evaluate and get money out, starting hopefully in the
    early summer.
        Mr. Moolenaar. OK. Thank you very much.
        Thank you, Mr. Chairman. I yield back.
        Mr. Bishop. Ms. Pingree.

                                 CLIMATE CHANGE

        Ms. Pingree. Thank you very much, Mr. Chair.
        And thank you, Mr. Secretary and Ms. Navarro, for being
    with us today. And, Mr. Secretary, I appreciate the many areas
    you've been willing to work with me on this. The topic of
    agriculture is a big concern in my state and certainly with me.
    And I know the Chairman did an excellent job expressing his
    concerns about the relocation of NIFA, ERS and you were kind
    enough to give me some time outside of the Subcommittee to
    express my concerns with you and I think you and I have reached
    an impasse. But I will look forward to see any future studies
    you're able to produce. But I'm going to count myself in the
    camp of, as the Chairman said, someone who doesn't agree with
    this particular move. But I have such limited time, I want to
    ask you a couple other questions today.
        I've also had a little bit of a chance to talk to you about
    the issues around climate change and the USDA's role and
    expressed with you, which I think you share this concern, that
    it's very concern when talk about climate change, which I
    consider a very pressing issue for us, and I think you've seen
    this particular majority is putting a huge focus on that, but
    often people want to lay all the blame at the feet of the
    farmers and not think about the opportunities there for farmers
    to be real participants. Many of them are, with our
    conservation programs, and we're fortunate to have another
    hearing tomorrow where the Acting Associate Chief of NRCS will
    be with us, so we're going to be able to talk about soil health
    and a lot of those programs.
        But I'm particularly interested in this notion of how the
    USDA can continue to play an important role in assisting
    farmers and sequestering carbon in the soil. I think most
    people think about--when we're sequestering carbon, they all
    think, well, we should go plant a tree and not understand that
    organic matter in the soil holds a tremendous amount of carbon
    and can be a really big part of mitigating that.
        And so I know it's a topic you're giving some thought to,
    but I'm just interested if you could talk to us a minute about
    the potential USDA role in measuring that or participating and
    anything you'd like to say.
        Secretary Perdue. Absolutely. I very much appreciate the
    question because, as you know, farmers and producers have been
    somewhat really very intense victims of climate change from
    droughts to floods to other things. And the types of things
    that USDA is doing from a research perspective, from an applied
    research and an extension delivery is trying to help mitigate
    those changes and also contribute.
        You mentioned one that we've been really guilty of not
    talking about enough, of how farmers can be part of the
    solution of greenhouse gas emissions by capturing more carbon.
    Their practices that they are doing now regarding no-till,
    leaving that organic matter in the soil, and carbon sinks that
    way as well as cover crops, all three of those practices help
    to capture carbon in the soil.
        And if you think about all the arable acres we have in this
    country, it's amazing the tons of greenhouse gas and CO2
    emission that we could capture in our soils if we have, I
    think, the incentivization of maybe a carbon market from
    Agriculture to do that. USDA would love to play a part in that.
        We think it could probably be developed in the private
    sector, but there has to be some sort of regulatory referee I
    think out there to quantify that and the degree of capture as
    well as making sure the rules are complied with and people
    don't--there have been other efforts here that haven't done
    that because they've been unregulated, and we think we could
    provide some help in that regard.
        Ms. Pingree. Do you see a role--from my conversations and
    what practices are going on now, I understand that there aren't
    readily acceptable measurement tools. And so kind of, as you
    said, you have to have a fair referee. Do you see a role for
    the USDA in doing more with that?
        Secretary Perdue. We do. Research and sensors and
    technology are being able to quickly identify, quantify, and
    measure the degree of soil capture in the soil would be one of
    those tools. And I think that technology is really available
    now. We just need to learn how to deploy it in a ubiquitous
    fashion.
        Ms. Pingree. There are seven climate hubs, apparently, as
    part of the USDA. Is that anything you're actively engaged with
    or that you're working with?
        Secretary Perdue. I thought we had ten, but it may be
    seven.
        Ms. Pingree. Even better.
        Secretary Perdue. I think there are ten there. And they are
    obviously in various regions, internationally even, and we have
    one in Puerto Rico that talks about different effects of
    climate change, how we can and how it can affect and inform our
    farmers about the mitigation techniques of climate, how they
    can be part of that solution. So they serve as practical
    research applications and real on-the-ground data--recovery
    data assessment tools around the country.
        Ms. Pingree. I'm about to run out of time, so I don't have
    time to follow up. But I'd like to learn a little bit more
    about what we're actively doing through those and I can follow
    up with you on that. But thank you for your time.
        Thank you, Mr. Chairman.
        Mr. Bishop. Mr. Pocan.

                      AGRICULTURAL PROGRAMS AND FACILITIES

        Mr. Pocan. Thank you very much, Mr. Chairman. I appreciate
    it.
        And thank you, Secretary, for being here. I actually have a
    follow-up on two questions Mr. Moolenaar had right off the bat.
    I want to also add about the Margin Protection Program. About a
    quarter of the people in the program are farmers in Wisconsin.
    We lost 700 dairy farms last year. Our herds are down about 40
    percent in the last decade. So, you know, milk prices are low,
    and quite honestly, the President's trade policies have really
    hurt a lot of dairy farmers. So the earlier we can get that
    going would be very much appreciated, because it impacts a lot
    of farmers, not just in Michigan, but also Wisconsin. So I
    really would appreciate that.
        Also, to rural broadband, I know in 2019 we added the
    provision to make sure the speeds were a little higher. I think
    we were only at three Mbps download. We're required--we made
    sure it was 25. But with the cut to funds for rural broadband,
    by the USDA's own report, 29 percent of farms in the U.S. don't
    have broadband. 39 percent don't have that speed of Mbps. So if
    you're almost at 40 percent of the farms with all the work
    that's happening--we just had someone in talking to us about,
    you know, tracking cows, et cetera via broadband--we really
    need that money more than you could imagine. And they say about
    10--I think it's billion dollars is what's needed to actually--
    it's one estimate to get rural broadband out there, any cuts--a
    $315 million cut is 3 percent of that. It's a big cut. So I
    just want to reinforce those two messages.
        As you may know, the University of Wisconsin in Madison is
    home to one of the top plant breeding and genetic programs in
    the country. It's a large part. It has a very close partnership
    with the USDA, the Agricultural Research Service. The vegetable
    crop research unit has been working on innovative plant traits
    with farmers across the world. Out of that facility, however,
    it is really, really seriously outdated and needs to have a new
    vegetable crop research unit there working with ARS. I don't
    think right now it's on a list to do that, but if you could
    take a look at that, it is a seriously outdated facility.
        Secretary Perdue. We will. Unfortunately, we see a lot of
    those. I go on campuses across the country, and all the state
    buildings are new and modern, and some of our Federal buildings
    look the shabbiest of any on campus.

                 SNAP BENEFITS/SWINE SLAUGHTER INSPECTION RULE

        Mr. Pocan. Yeah. So just if you could specifically look at
    that one, I would really appreciate it, because we would really
    like to get that--it's one of the top priorities for our
    university, looking forward on some of the agricultural
    programs they're doing.
        Let me just go real quick to SNAP. So I know that with the
    work requirement, I just want to share a little experience from
    Wisconsin where this has failed miserably. It is not a good
    provision. From July 2015 to December 2018, over a 100,000
    Wisconsinites lost their SNAP benefits, but only 31,000 were
    connected with jobs. And so when you have that big of a cut,
    this is going to have a real impact on people, and often these
    are noncustodial parents and families that aren't going to get
    that.
        Realistically, Mr. Secretary, 6 years ago I did a week of
    SNAP of when we did a SNAP challenge here, $31.50. I don't know
    if you've ever had a chance to do a SNAP challenge, but I'll
    tell you when you do, you have a different appreciation.
        I bought a bag of oranges, I bought peanut butter, I bought
    the cheapest bread I could I find, I bought my ramen noodles, I
    was ornery all week. You can check my office.
        And, you know, you go to the Trump Hotel here in town and a
    cocktail could be $25, right? But now we're at $33.50? That has
    not kept up with inflation over the 6 years in a realistic way
    on food and food products.
        So this is something that I really wish you'd take a look
    at, because it has not worked in Wisconsin. It's not worked the
    way I think people try to intend to. Instead it has been
    punitive, and that is a real problem.
        And then the last area I think I can get to is under the
    monetarization of swine slaughter inspection rule. You know, as
    you're probably aware, meat packing workers are injured at a
    rate almost 2\1/2\ times other industries. They face illness at
    rates 17 times that of workers in other industries. It's
    estimated that--the USDA has estimated that the number of
    Federal inspectors in pork plants could decrease by 40 percent
    under the proposed rule, and I think we have real concerns over
    worker safety and on the product that comes out, on people's
    safety on eating the swine with this rule in place. So can you
    address that at all? We just have great concerns.
        Secretary Perdue. You know, I had shared some of those same
    concerns when they described that to me. What I found was most
    of this effort has to do with presorting the animals to make
    sure those from a visual perspective that don't look healthy
    initially are not processed along in between the others, which
    streamlines that process. We're not having a carcass that does
    not have a USDA inspector put that stamp on there. That's not
    the intention at all. The plant personnel who are doing that
    are the ones who are sorting and gathering and maybe even
    sending back prior to slaughter and that is a more efficient
    process. So the line speed, if you're uniform in that way, can
    operate in a better efficient fashion. What we're doing is
    asking the plant people to presort those animals. USDA
    inspectors are looking at every animal that's slaughtered.
        Mr. Pocan. And we'll still be watching very closely.
        Secretary Perdue. I understand.
        Mr. Pocan. On people as well. Thank you.
        Secretary Perdue. Sure. As will I.
        Mr. Bishop. Mr. Cuellar.

                           TRADE ON THE TEXAS BORDER

        Mr. Cuellar. Mr. Chairman, thank you so much.
        Mr. Secretary, thank you for being here. I wanted to talk
    about trade. I'm a big supporter of what I call NAFTA 2.0. And,
    as you know, being from the State of Texas, Texas does a little
    bit of agriculture, and I want to talk about two things that
    affects us down there.
        One of them has to do with the Department of Agriculture
    and how you support CBP in facilitating legitimate trade
    through agriculture inspections and other methods at the U.S.
    border. One of the things I would ask you to look at is if you
    can have your folks review to make sure there's sufficient of
    your personnel down there, because whether it's in Pharr, Texas
    or Laredo, Texas or wherever the case might be, there's been a
    lack of some of your folks down there. And if you tell us what
    we need to do to try to get the chairman and the ranking member
    of the subcommittee to put a little bit of money because we
    want to make sure we facilitate that trade through our ports of
    entry. So I would ask you to have your folks look at that, work
    with the subcommittee, and certainly we want to be helpful on
    that part.
        Then I have another question about avocados before my time
    runs out.
        Secretary Perdue. We'll certainly look at the APHIS
    staffing there on the borders. You're hearing that they've been
    slowed down or not enough people to process in a timely
    fashion?
        Mr. Cuellar. Yes. That is one. The other one is--it has to
    do not with y'all. But as you know, because of, you know, the
    people coming across, they move CBP--they move 750 CBP officers
    from doing port inspections to what I call changing diapers and
    doing other things that are not their mission. And that has
    slowed down the trade. So I've been--I sent five suggestions to
    the CBP Commissioner, Mr. Kevin McAleenan, which he understands
    this very well. So I'm waiting for him to give us some ways
    that we can move the trade. So anything you can help us down
    there at the border to facilitate and what we need to do to
    provide you the proper resources, please let us know.
        Secretary Perdue. That cross-border commerce is very, very
    important not only to Texas, but to the overall agriculture
    economy of the United States. So it's really important we
    expedite those as much as possible.
        Mr. Cuellar. Right. And thank you for your effort last--I
    think it was last effort, last April, about making sure of the
    withdrawal. Because when it comes to that trade, there are
    three options. One, withdrawal, which is a mistake.
        Secretary Perdue. Right.
        Mr. Cuellar. Two, keep the status quo. And No. 3, look at
    this new trade agreement with a lot of improvement that we have
    done. So I certainly want to say thank you for your effort to
    make sure. Because every state, including Hawaii and Alaska--
    not only the 48 continental States--have trade with Mexico.
    Every day there is more than 1.5, 1.7 billion dollars of trade
    between the U.S. and Mexico. That's over a million dollars
    every single minute. So it's very important. I know you
    understand that. So I do want to thank you for talking to the
    President about the importance of those negotiations. Now, let
    me talk to you about avocados.
        Secretary Perdue. Right.

                           AVOCADO TRADE WITH MEXICO

        Mr. Cuellar. If you want to see a crisis at the border,
    it's when you stop avocados from coming in. As you know,
    there's--I sent you a letter, along with John Cornyn, Senator
    Cornyn, Ted Cruz, and other Texas members. And I think we are
    still waiting for a response. We sent it back in November. And
    basically what we are asking is, there's an APHIS final rule
    that was published in May 2016, dealing with avocados.
        And I think what we are waiting for is the required
    operation workplan has to be signed; where we bring in the
    State of Halesco. Maybe some other states, to expand. Because I
    think right now we are just dealing with the State of
    Michoacan, in Mexico. But we are trying to expand it, and make
    sure there's no risk to the public. And unless, if I didn't get
    a copy of the letter. And it was sent only to Senator Cornyn
    and Senator Cruz. I haven't seen a response. But I would ask
    you to look at that, and if it hasn't been signed, I would ask
    you to do that.
        So it's not only the trade agreement, but it's also this
    workplan. At least on that particular effort. And of course the
    work that you all do at the border. And I have met some of your
    folks that do a heck of a job. And I would ask you to just keep
    working with us. I got about 20--19 seconds now. Fever ticks.
        Secretary Perdue. Yeah.

                                  FEVER TICKS

        Mr. Cuellar. Fever ticks. We've been adding money on this
    issue. The quarantine in Texas--and that could affect the
    cattle industry. The quarantine is not shrinking. And we have
    added millions of dollars. It's not shrinking. We have to think
    outside the box, because if we think we are going to dip every
    cow, it's not going to work. We have to think outside the box.
    Because there's wildlife. There's animals across the Rio
    Grande. So I just--any way we can work with this, let us know.
        Secretary Perdue. OK.
        Mr. Cuellar. And that's very important, on that. So I just
    want to say thank you for the work that you all are doing.
        Secretary Perdue. Thank you, sir. I thought we were making
    progress on fever ticks. I'll have to check with APHIS again on
    that. But certainly that continues to be a problem, and can
    affect the whole Texas and larger cattle industry.
        [The information follows:]

        I agree with you that we must address wildlife and animals
    crossing the border. For this reason, APHIS used the additional
    funding provided in recent years to treat free-ranging wildlife
    for cattle fever ticks (CFT) as well as inspecting livestock
    crossing the border. Beginning in FY 2017, APHIS increased the
    use of feeders with medicated corn to treat tick infested
    white-tailed deer on private property and expanded these
    feeders to wildlife refuges in FY 2018. APHIS also used
    appropriated funding to collaborate with the Agricultural
    Research Service on several projects including: studies on
    anti-parasitic products that prevent or control ticks; on-going
    research to create cost-efficient ultraquiet sprayers for
    treating ticks found on wildlife; and research and testing on
    the release of natural parasites that target CFT. APHIS will
    continue to work with our partners to develop new strategies to
    prevent CFT infestations from occurring both within and outside
    of the permanent quarantine zone. While this continues to be a
    problem, we are seeing progress. In FY 2018, APHIS saw the
    number of newly tick infested premises decrease from 165 in FY
    2017 to 110 (41 premises inside the quarantine zone, 69
    premises outside the quarantine zone).

        Avocados, I know, this is very important in Mexico. And we
    have discussed with them, we have some issues obviously with
    them over potatoes and things we would like to get some
    resolution over as well. But we don't want to start a guacamole
    revolution here, with no avocados.
        Mr. Cuellar. That would be the crisis at the border.
        Mr. Bishop. Thank you, Mr. Secretary. Mr. Secretary, is----
        Secretary Perdue. By the way--and can I respond?
        Mr. Bishop. Yes. Go ahead.
        Secretary Perdue. My staff just told me that letter of
    response on avocados was sent on February 1. So if you have not
    received--if your office doesn't have a copy, let us know. And
    we'll get you another copy.
        Mr. Cuellar. Yeah. I would like to see if we have a copy.
        Secretary Perdue. OK. All right.
        [The information follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Cuellar. Thank you. Thank you, sir.

                REORGANIZATION OF ERS UNDER THE CHIEF ECONOMIST

        Mr. Bishop. Thank you, Mr. Secretary. My turn again. Back
    to ERS, and the Chief Economist. You indicated that a copy of
    the beginning cost/benefit analysis had been furnished. I think
    there have been several requests from this subcommittee as well
    as from Senator Roberts and Senator Stabenow on the Senate side
    for the beginning cost/benefit analysis. And none of us, it's
    my understanding, have received that. What we have received
    are, again, anecdotal comments. But no cost/benefit analysis
    that led to the decision to consider this. Now the proposal to
    move ERS under the Office of Chief Economist doesn't reflect
    the differences between the two agencies. ERS is one of the 13
    OMB designated principal statistical agencies of the United
    States.
        According to the National Academy of Sciences, there is a
    mandate for these agencies, and I quote, ``to be credible,
    trustworthy and unhindered in its mission, a statistical agency
    must maintain a position of independence from undue external
    influences, and avoid the appearance that its collection,
    analysis or dissemination processes might be manipulated for
    political or partisan purposes.''
        Now, its independence is safeguarded under the Code of
    Federal Regulations by the Under Secretary for Research,
    Education and Economics, who was designated as USDA's Chief
    Scientist. The Under Secretary specifically and uniquely
    directed to quote, ``develop mechanisms to address scientific
    integrity,'' end of quote, in the Department. There's no such
    language in the Code of Federal Regulations with respect to the
    Chief Economist. In fact, the Chief Economist is charged with
    such functions as the coordination of economic analysis and
    checking for consistency in Departmental analytic consumptions,
    consistent with the Secretary's policy implementation.
        These are very important functions. But they are not
    research. The Under Secretary for Research, Education and
    Economics is the sole person in charge with overseeing
    scientific integrity in the Department and is the person who
    can safeguard this, and not the Chief Economist. Your comments
    on that, Mr. Secretary?
        Secretary Perdue. Certainly. The designation that you
    indicated would not change if this were realigned under the
    Office of the Chief Economist. I guess one of the things that I
    fail to understand as far as any kind of undue influence--to
    which I concur--is that your Under Secretary for Research,
    Education, and Economics is a political appointee confirmed by
    the Senate there. I would suggest to you, if anyone is more
    subject to political influence, it would be someone appointed
    by the administration.
        Mr. Bishop. Sure. But Mr. Secretary, they have clearly
    designated different functions. The Chief Economist's function
    is basically to the Secretary, whereas the other one is
    directly responsible for maintaining the scientific integrity
    of the research.
        Secretary Perdue. I would hope----
        Mr. Bishop. Pursuant to the National Academy of Sciences
    designation.
        Secretary Perdue. I would hope, sir, that----
        Mr. Bishop. And the OMB designation.
        Secretary Perdue. I would hope that the Under Secretary for
    Research, Education, and Economics would also feel a little bit
    that he works for the Secretary of Agriculture as well. If
    that's not the case, we probably need to revisit that. The
    Office of the Chief Economist is a career position, of which it
    is the same as the previous Administration. And the Office of
    the Chief Economist is the chief user of the ERS data. So those
    are the reasons it does not appear that today we are going to
    be able to resolve this issue. But one of these days we are
    going to resolve our differences on this.
        Mr. Bishop. Yes, sir. And my time is about to expire on
    this. But we have these thousands of individuals and people
    with all of these years of experience in the agency, who have
    seen the interaction, and political interference from time to
    time. And they feel very strongly that they need to maintain
    the separateness that currently exists, in order to maintain
    that integrity for the research.
        OK. Mr. Fortenberry.

                             INTERNATIONAL FOOD AID

        Mr. Fortenberry. Thank you, Mr. Chairman. Mr. Secretary, I
    want to talk to you about two additional things: International
    Food Aid, and Rural Broadband. Let me turn to food aid first.
    International Food Aid is indispensable to America's
    humanitarian outreach. Our impulse is not to simply sit around
    while other people die. And we have done this for decades. It's
    a part of the fabric of who we are. Secondly, it's inexplicably
    intertwined with good diplomatic relations.
        And third, very much related to our own national security
    and we create the conditions for stability throughout the
    world. Finally, our international food aid gives us great
    conditions for market access for us and our farmers, as well
    as, indirectly, becoming a price support mechanism. It's zeroed
    out in this budget. And that's not realistic.
        Now, Andy Harris, Congressman Harris, said it very well.
    Congress's own law mandates that you meet certain budgetary
    caps and there's certain constraints there. However, I think,
    Mr. Secretary, you probably would realize that you were not
    going to not hear this from me, to place an accent mark and an
    emphasis on just how critical this programming is for the well-
    being of not just farmers and ranchers, but America and the
    world itself. Let me stop there, and let you respond. Then I
    want to turn quickly to rural broadband.
        Secretary Perdue. I don't think you are going to get any
    disagreement with me, sir.

                                RURAL BROADBAND

        Mr. Fortenberry. Fair enough. Let's turn to rural
    broadband. The Chairman gave some anecdotes that I think
    demonstrate both the possibilities and then still the gaps. We
    have, in the last two budgets, given you $600 million and $550
    million, this past year. Can you briefly unpack what the
    American Broadband Initiative is achieving?
        Before you do that, I want to read some language that I
    have actually submitted for this year's appropriations process,
    which I eagerly anticipate the chairman will delight in. It
    says this. And what I am driving at here is, broadband is more
    than a wire. It's more than a program. It has to nest itself
    within an ecosystem of what I call the potentiality for
    livability.
        And so this is the language I submitted: ``You should work
    on developing metrics that can impact across functions such as
    telehealth, telecommuting, precision agriculture and the
    economic benefit to diverse populations. Metrics that assess
    the quality of life, livability, impact on community inclusion,
    and vitality in building community social capital.''
        These are a little bit less tangible than miles of wire,
    than customers served. But it is actually a critical function
    to assure that the Broadband Initiative--that I think most of
    us agree with, as again, the 21st Century architecture for how
    we move forward with a whole list of concepts on rural
    development--ought to be considered.
        So, these words are kind of open-ended, and it's a bigger
    challenge. But I think they are absolutely necessary. They're
    not abstractions. They're absolutely necessary to making sure
    that your initiatives around broadband actually complete the
    fullness of the mission of what we are trying to achieve.
        Secretary Perdue. I agree with you whole-heartedly. In
    fact, I think what you have articulated with the description is
    what I call the transformative moonshot opportunity of
    ubiquitous broadband. What we will see is the cultural
    transformation of rural America take place, because of, I
    think, as the chairman has talked about, sitting in parking
    lots of libraries or fast food restaurants, getting a signal
    there. But just the education component. The telemedicine
    component. The entrepreneur e-commerce component. The
    precision-agriculture component. All of that changes the
    culture. I do literally believe that ubiquitous broadband has
    the ability to bridge the urban-rural gap that we see dividing
    more and more in this country.
        Mr. Fortenberry. I think we have got some work to do. That
    is very well-expressed. Thank you. Work to do, though, in
    translating that subset of subsidies and the mechanism by which
    we subsidize the provision of broadband into metrics that
    assure the outcome of this greater vision. Or else I am worried
    that we lay wire.
        Secretary Perdue. We would love to have your input as we
    continue to revise and reform the criteria of these
    applications.
        Mr. Fortenberry. Right. Good.
        Secretary Perdue. And looking at that----
        Mr. Fortenberry. OK.
        Secretary Perdue [continuing]. That's what we have spent
    almost a year doing, in order to try to get the criteria of
    unserved areas, which was the goal of that.
        Mr. Fortenberry. Well, I welcome that comment. I think it
    is very important.
        Secretary Perdue. Mm-hmm.
        Mr. Fortenberry. This shows an alignment of, again,
    imaginative possibility, and not just more money for
    traditional programmatic requests.
        Secretary Perdue. No, we are kind of like energy. All of
    the above.
        Mr. Fortenberry. OK. Thank you.
        Mr. Bishop. Ms. Pingree.

                            ORGANIC DAIRY LIVESTOCK

        Ms. Pingree. Thank you, Mr. Chairman. Thank you again, Mr.
    Secretary, for being here today. And I do want to appreciate my
    colleagues. I won't ask too many questions about SNAP benefits.
    But I really appreciate and concur, they are exactly the same
    concerns I hear from my home State of Maine. So I whole-
    heartedly agree. I want to ask you a question about the origin
    of organic dairy livestock. You are always great about talking
    about protecting the integrity of the USDA Certified Organic
    Seal. And the 2018 farm bill reiterates that, protecting the
    integrity, effective oversight of organic production practices,
    to ensure organic products meet consistent standards for all
    producers. But there's no consistent enforcement of organic
    dairy standards.
        The industry, organic dairy industry, has been waiting I
    think 15 years for this issue to be addressed. And the USDA
    actually removed the origin of organic livestock rulemaking
    from the Unified Regulatory Agenda in 2017. So it was there,
    and now it's gone. This is one place where I think everyone in
    the organic industry is very united. So, will you be planning
    to take regulatory action? And if not, why not?
        Secretary Perdue. When you say ``everyone,'' we have found
    there's a good bit of division within the industry over the
    organic standards in dairy, and doing that. So we'd like to
    hear more of what your conclusions are based upon, so we can
    learn from that. But we would love to have a regulatory
    standard everyone feels that is fair and can comply with. But
    we hear, frankly, right now, a good bit of division over
    winners and losers in the dairy organic space. But we are
    willing to enforce those criteria. It is important to have
    integrity of the process. But I'd like to know more about what
    your concerns are in that area.
        Ms. Pingree. Well, that's news to me. So, and again, it may
    be a little hard to drill down on it right here. I know one
    practice I hear about quite a bit is taking conventional calves
    and moving them into organic herds. And many of the smaller
    producers feel that's a disadvantage. And I don't know if this
    is disagreement between the large producers and small
    producers. But I am of the opinion that we can arrive at a
    scientific basis for what organic integrity is. And maybe we
    just need to spend a little time talking about where the
    differences are.
        Secretary Perdue. We will do that. I think it's, my
    information is a little more complex than that. But we will
    talk about that.
        Ms. Pingree. OK. Well, I will take that question offline
    with you, and perhaps see if we can pursue it. I think there's
    just a general feeling that those standards need to be arrived
    at.
        Secretary Perdue. OK.

            FOOD WASTE/INTERAGENCY BIO-GAS OPPORTUNITIES TASK FORCE

        Ms. Pingree. And that today, there are winners and losers,
    only they don't tend to be the small producers. They're the
    ones that operate with a higher standard. Let me just take
    another quick question. And I wanted to say that I appreciate
    how much the USDA and you in particular have embraced the
    issues around food waste. When we talk about environmental
    problems, food waste is a tremendous source of methane gas when
    it ends up in a landfill. And yet another way we need to deal
    with that. And I think this afternoon the EPA and the USDA are
    having a joint event. And I appreciate being asked to
    participate.
        I have a feeling we'll be busy voting on the floor, so I
    may not be there. But I just think moving forward on this,
    getting a liaison, continuing to do this work, is very
    important. And what I have learned, how much activity goes on
    in European countries in particular with all areas of the waste
    stream, they are just so far ahead of us. And that's not always
    surprising. But I am glad to see that you are embracing this
    and also working with the EPA, as it is an environmental issue.
        I am interested in the establishment of an Interagency Bio-
    Gas Opportunities Task Force. I think that's called for in the
    2018 farm bill. Because bio-gas can be an on-farm solution for
    both dealing with animal manure, which can be an enormous
    problem, as well as food waste, in the areas where we have seen
    it be successful. We have one operating in Maine. And it's just
    a really good solution. It produces bio-gas, which is a
    valuable thing, and reduces methane just being lost into the
    environment. So, I am wondering how--if you could give me an
    update on the establishment of that? And are there sufficient
    resources to prioritize getting that task force up and running?
        Secretary Perdue. Certainly. Again, that's part of the farm
    bill implementation. And I can't give you specificity this
    morning regarding the progress that we have made in the forming
    of that group. But I do know that USDA has been involved in the
    bio-digestor areas. Particularly at large concentrated animal
    feeding operations that would help to, again, process this gas
    and the waste there in a very beneficial way. We'll continue to
    do that, and be informed when we get this council done. I do
    want to mention, back on food waste. I appreciate you
    mentioning that. Again, this is really a cultural issue. We're
    trying to start with the youth, over really making food waste
    at our plates a moral issue. Of just portion sizes and those
    kind of things. Learning to. Like, buffets, you see, ``Take
    what you can eat, but then don't throw away the rest.'' And
    much of the waste comes from that area. This is a long-term
    cultural thing like smoking or seatbelts. I know we'll continue
    at it, to get the real impact over food waste.
        Ms. Pingree. Yeah. And when I worked on a comprehensive
    bill on food waste, that was one of the areas was really the
    public education. I think people have no idea we waste 30 to 40
    percent. And some of the best efforts going on today are in
    schools. Share tables, or things to encourage young people. I
    am way out of time. But thank you very much for your work on
    that. And thank you, Mr. Chairman.
        Mr. Bishop. Ms. Lee.

                          SNAP TIME LIMIT WAIVER RULE

        Ms. Lee. Thank you very much. Just a second. Let me just go
    back to the SNAP cuts. $220 billion in SNAP cuts. And then with
    the new rule, it looks like over three-quarters of a million
    people are going to lose their SNAP benefits. The reason I say
    it's cruel, and really morally wrong, is one, we have three-
    quarters of SNAP recipients are working, first of all, already.
        Secretary Perdue. Mm-hmm.
        Ms. Lee. Secondly, two-thirds of SNAP recipients are
    children, the elderly, the disabled. And so you are talking
    about people who need food assistance, in the wealthiest
    country in the world. And so this is mean-spirited. It's wrong.
    And it's going to hurt a heck of a lot of people. And it's
    going to lead to more hunger. Would you clarify? Again, you
    said, you mentioned that, in your proposed rule, as it relates
    to the unemployment area waiver--I wasn't clear whether or not
    this is a blanket waiver? You're going to repeal that? Or
    eliminate that? Or are you doing this by unemployment
    statistics in a region? Or how is this going to work?
        Secretary Perdue. Regional statistics. In the rule, the
    regulations are, if a localized area has an unemployment rate
    at a factor times the national rate. I can't recall how many
    points above it is specifically. But then they can apply for a
    waiver, and it would be approved. What's happened, I was a
    governor, Ms. Lee. And what we did is, my role as governor was
    to draw down as much Federal money as I could. Because Georgia
    didn't have any skin in the game regarding our food stamp
    money. You folks were paying for it all. So my goal was to get
    all we can. We've seen states that have state-wide waivers
    where they may have one county that fits that criteria. But you
    also, in the farm bill, allowed for 12 percent exemptions for
    no reason at all. They can just designate 12 percent
    categorical exemptions.
        Ms. Lee. OK. Well, I understand that, Mr. Secretary. But
    just--and again, I am using my district as an example. The
    unemployment rate may be coming down. But when you look at
    African Americans and people of color, it's not. And there are
    no jobs or job training programs, if in fact we wanted to
    reduce this, you know, this unemployment rate.
        So this waiver is going to hurt people who are looking for
    jobs, and the jobs just aren't available because of the budget
    cuts in workforce training and all of the other areas and
    programs that we need to make sure that we do provide for jobs
    for communities of color and people of color. I hope you go
    back and look at that. Because you can't just look at the
    overall unemployment rate when you grant a waiver.
        Secretary Perdue. Well, maybe we can come----
        Ms. Lee. Or repeal the waiver.
        Secretary Perdue [continuing]. And visit with you, and look
    at your district specifically from a----
        Ms. Lee. And that's just an example.
        Secretary Perdue [continuing]. Demographic perspective.

                            INDUSTRIAL HEMP PROGRAM

        Ms. Lee. OK. Now, let me ask you about industrial hemp.
    Because in the farm bill, we have legalized the production of
    industrial hemp. It's caused a lot of excitement across the
    country, and in California. Now, I understand you are working
    on the rules and the regulations about the production, insuring
    and marketing this relatively new crop. Some may be
    complicated, because it's new.
        And so I'd just like to know where you are in the process
    of developing these regulations for industrial hemp, and when
    can we expect to see a draft? And also we said--I believe in
    the farm bill it was to implement it, as much sums as
    necessary. And I don't believe we have appropriated any funds
    yet for the Industrial Hemp Program. And so I'd like to find
    out how much you believe USDA is going to request or need to
    implement this.
        Secretary Perdue. Well, you are correct. And there's a lot
    of excitement and interest. It's probably created as much
    interest as anything in the farm bill. Maybe because it's new,
    or because it's CBD oil. And it's all the new fad of medicine
    in that regard. And it probably has a little bit of allure,
    because the plan is very, very similar to its Federally illegal
    cousin, the high-THC marijuana plant.
        But the fact is, we are not expediting this like we are the
    dairy program. We're taking this slow. States will still have a
    primary responsibility in the regulation of that. They are
    submitting their applications to USDA now. We probably--it's
    2019 planting season now. We won't have the rules and
    regulations out for the 2019 planting season. Our goal is to
    have them out in plenty of time for the 2020 planting seasons,
    where we approve the state lands, and the states will provide
    fees for participating. And they will be the primary regulator
    of the Federal rules in that regard.
        Ms. Lee. OK. Thank you very much, Mr. Secretary.
        Secretary Perdue. Thank you.
        Ms. Lee. And I look forward to meeting with you.
        Secretary Perdue. Thank you. Thank you.

                                 ERS/NIFA MOVE

        Mr. Bishop. Mr. Secretary, my turn again. Going back to ERS
    and NIFA. Of course, we have discussed your proposal to
    relocate ERS and NIFA outside the greater Washington area. And
    now that your budget is out, I have some additional questions.
    And here's what jumps out at me. You request an increase of
    $267 million to renovate the USDA Headquarters Complex. $60
    million to renovate the Carver Center in suburban Maryland. $25
    million to pay for the cost of moving ERS and NIFA staff
    outside the Washington area. It's a total of $352 million this
    year. The renovations will vastly increase the seats available
    in USDA owned, rent-free space in the National Capital region.
        Sufficient space will be available to keep ERS and NIFA in
    the Washington area and not incur relocation costs, buy-out
    costs, early retirement costs, likely commercial rent costs in
    a new location, not to mention the disruption of the agency's
    activities in the process of the transition. In fact, even
    without any renovations, you currently have 1,675 unoccupied
    seats in the Washington area right now. That's enough to
    provide for NIFA, whose lease is up in January, and probably
    ERS as well. How, in any way, does it make budget sense to move
    ERS and NIFA outside of DC when there is rent-free space here
    available?
        Secretary Perdue. Well, sir, if there were rent-free space
    available, why are we renting space for NIFA that expires in
    January? That's the----
        Mr. Bishop. Good question.
        Secretary Perdue. That's a great question, is it not? And
    we are doing a comprehensive space analysis of all of that.
    That's why our recommendations over this renovation gets a lot.
    But we have got other agencies. APHIS is in Riverdale. We've
    got other places out here in Patriot's Plaza. We've got a lot
    of utilization.
        Mr. Bishop. Just the question, Mr. Secretary, I just want
    to make sure that we have got the proper cost/benefit analysis
    up front.
        Secretary Perdue. And that's what----
        Mr. Bishop. Let me transition to another area. And you can
    respond later to that question.
        Secretary Perdue. Certainly.
        [The information follows:]

        USDA received 136 Expressions of Interest from 35 States to host
    ERS and NIFA. USDA has retained a consulting firm to evaluate those
    Expressions of Interest, which recently narrowed down the list to 67
    possible locations. The consultant will provide a benefit-cost analysis
    during the site selection process, and the results of the analysis will
    be made available as soon as feasible.

                      RURAL DEVELOPMENT BUDGET REDUCTIONS

        Mr. Bishop. I have serious concerns about your budget
    proposal and staffing levels at Rural Development. This is the
    heart of USDA's mission, and the huge reductions to staff and
    resources are alarming to us. Compared to the 2018 actuals,
    Rural Development would lose more than 750 staff years, which
    is a cut of 17 percent. Rural Development would be cut by more
    than $1.5 billion, a cut of 35 percent. And our home state of
    Georgia had 100 Rural Development staff on October 1st, 2017.
    But as of March 18th, 2019, it had only 76 people.
        I know that your budget has to hit a number, but it is also
    a statement of priorities and values and from these reductions,
    I don't see Rural Development as a priority for USDA. With all
    due respect, how can you justify these cuts considering in your
    opening statement and your written testimony, you emphasized
    the importance of facilitating rural prosperity and economic
    development for our rural communities? Why are they not in the
    budget, and why doesn't your budget reflect those priorities
    and those values for Rural Development? I'm very passionate
    about rural America.
        Secretary Perdue. Well, as I am, and I think again, the
    contrast that you indicate really has to do with the way the
    budget is formulated, certainly. The Administration has decided
    that some of these programs through the Rural Utilities
    Service, and with EPA and their water program, certainly rural
    housing with HUD, and the Rural Business Service with the Small
    Business Administration be consolidated, and you will see some
    of the efforts in that regard. I can't necessarily say that I
    agree or disagree with that, although we are going to do the
    best with the value of money that we are given to facilitate
    those programs.
        Mr. Bishop. I have about 30 seconds left, and I'm going to
    yield that back and allow Mr. Fortenberry to go ahead, and I
    have one more round of questions that I want to get to.
        Mr. Fortenberry. All right, OK.
        Mr. Bishop. And it won't be ERS or NIFA.
        Mr. Fortenberry. My turn, Mr. Chairman?
        Mr. Bishop. Yes.

                            FARMER TO FARMER PROGRAM

        Mr. Fortenberry. Thank you, thank you. Mr. Secretary let me
    talk to you about a small program that I am not only aware of.
    It was started by my predecessor, Congressman Doug Bereuter,
    called The Farmer to Farmer Program. So, the potentiality is
    enormous in terms of what we are trying to achieve with the
    full integration of U.S. agriculture into international
    markets, again, consistent with our diplomatic space
    initiatives that the Department plays a critical role in as
    well.
        So, The Farm to Farmer Program is a USDA program, but then
    is outsourced to USAID. For my perspective, it has become
    fragmented over the years, doled out, is not adequately
    branded. Think about a farmer, a producer, who spends a
    lifetime with a specialty in grain sorghum or millet or rice or
    corn or livestock production that has a capacity to potentially
    do something overseas to help his neighbor to develop
    agricultural practices among those who are marginalized or
    poor. Again, taking the best of America's humanitarian impulse
    and sharing it with people worldwide.
        That is the fundamentals of The Farmer to Farmer Program,
    but again, I think it is lost or never adequately developed a
    brand. I think this is an ideal program for USDA to take back
    that is completely consistent with your diplomatic missions,
    takes on a certain lyricism and poetry to what you're doing,
    but if it could be regenerated with inside your Department, I
    think the potentiality to reach the greater intentions of your
    mission are really there.
        Again, it's a small program, but I am very interested in
    this because it is a hybrid program that cuts across multiple
    intended outcomes.
        Secretary Perdue. We would welcome that. I am not sure
    really the genesis of moving it to USAID. We were working with
    private sector partners who have experience as well as the
    World Food Program and Governor Beasley in that effort in some
    of these countries as well to do that. There is, certainly. I
    can almost see it like, I guess, its score, the big business
    executive's thing from a farmer perspective, you know, doing
    that kind of thing.
        Mr. Fortenberry. Yes, you mentioned Governor Beasley doing
    a tremendous job with the World Food Program. Again, let's
    think creatively about the constructive partnerships that could
    potentially be out there that use our expertise of our farmers
    and their good heart and good will to be an adjunct to our
    diplomatic missions to help the poor around the world. This has
    huge potentiality and we have got a Foreign Agricultural
    Service that, from my perspective, doesn't really touch this at
    all as far as I am aware.
        And yet, tremendous amounts of resources devoted there with
    embedded personnel and embassies throughout the world. Why
    couldn't this be folded under there? Why couldn't David
    Beasley's, or the World Food Program, which enjoys tremendous
    international stature led by the United States? Be a partnering
    component in solidarity with this?
        Again, tie the extension model in our country has been a
    tremendous model if we get where the economic development
    largest of our own country comes from, but again, it is
    consistent with those ideas as well. Transferring technology
    and assistance to those in need by the farmers who have the
    capacity at a certain point in life to be effective volunteers
    force worldwide. It is like a diplomatic agricultural corps.
        Secretary Perdue. I am not aware. I am not aware of whether
    that is a statutory move or administrative move, but I would be
    happy to explore that with you.
        Mr. Fortenberry. Well, I would appreciate that. I kind of
    slogged through this in the last farm bill, and we got some
    modifications. Not fully to where I want to go because again,
    what I am talking about is a substantive realignment of the way
    in which the program has been implemented. I don't know if you
    have the flexibility to do that or not. Perhaps you do but
    again, I think this could serve many, many purposes that are
    consistent with the vision of the Department.
        Secretary Perdue. We do similar types of things, certainly,
    in our Foreign Agricultural Service, that I think is in 63
    countries, so I think the potential is there.
        Mr. Fortenberry. All right. I yield back, Mr. Chairman.
    Thank you, Mr. Secretary.

                          LIVESTOCK INDEMNITY PROGRAM

        Mr. Bishop. Thank you, Mr. Fortenberry. Mr. Secretary, this
    is not about ERS and NIFA. A constituent of mine whom I believe
    you know must be dealing with one of the more interesting and
    bizarre Livestock Indemnity Program cases in history. His flock
    of organic chickens are preyed upon by bald eagles. There are
    now close to 80 bald eagles on this property, as I have been
    told. I have been to his farm and I have witnessed three, four,
    five bald eagles in one tree. It is quite a sight to see, and
    it is quite a unique problem.
        Since 2015, FSA has denied his claims to receive payment
    under the Livestock Indemnity Program on several occasions. He
    has appealed all of those decisions to the Office of Hearings
    and Appeals, which ruled in his favor every time, saying FSA's
    decisions were erroneous, but still, FSA refuses to act on the
    Livestock Indemnity Program applications.
        It has been nearly 5 years, and he still has no closure one
    way or the other. Can you discuss why FSA could ignore the
    Office of Hearings and Appeals' rulings, and can you give me a
    sense of how many Livestock Indemnity Program applications are
    denied by FSA, and are they often overruled by the Office of
    Hearings and Appeals, and what becomes of them once they are
    overruled?
        I understand that most Livestock Indemnity Payments are due
    to livestock that are lost to extreme weather. Is this just a
    case of FSA not having a lot of experience with predatory bird
    claims, or does the Office of Hearings and Appeals have the
    authority to determine the final payment or the settlement of
    this case? I mean, he has been waiting for five years and
    continually upheld by the Office of Hearings and Appeals, but
    USDA just refuses to pay him.
        Secretary Perdue. Well, those are good and complex
    questions. I will have to get back with you on the answer. I
    did not realize we could not comply with the Office of Hearings
    and Appeals ruling on that, but I will have to determine where
    we are, you know, and answer all the questions regarding the
    amount of livestock indemnity. Are there any other cases where
    it is not death or caused by a disaster or those sorts of
    things, but I am not aware of anything else from a predatory
    nature. I guess the sheep crowd could probably claim from
    wolves or bears or whatever, but I am not aware of those. But I
    am not aware that we could totally disregard the Office of
    Hearings and Appeals' decision.
        Mr. Bishop. It is our understanding and we have seen the
    decisions that have been referred back to FSA repeatedly with
    instructions from the Office of Hearings and Appeals, and FSA
    just does the same thing over and over again, almost as if they
    are determined that this individual and this farm will not get
    relief from FSA under the Livestock Indemnity Program.
        Secretary Perdue. I will get you a response on that.
    Hopefully, it will be more satisfactory than NIFA and ERS.
        [The information follows:]

        The National Appeals Division (NAD) has issued several rulings
    dealing with the referenced producer for 2015 and 2016 Livestock
    Indemnity Program (LIP) applications for assistance. None of the NAD
    rulings make any final determination on the producer's eligibility for
    LIP benefits. NAD merely ruled that the Farm Service Agency (FSA) erred
    when it initially denied the producer's LIP applications and determined
    that FSA must reexamine the loss evidence to determine if the producer
    had provided reliable records to substantiate their losses. In a
    subsequent appeal, NAD determined that FSA erred since a final decision
    on the LIP applications had not been made.
        In response to the latest NAD ruling, FSA is moving forward to
    bring the 2015 and 2016 LIP applications to a close and has reached out
    to the producer with regard to these applications. FSA will issue a
    final decision and if the producer does not agree, the producer can
    choose to seek an administrative review of that decision.

                       Closing Statement--Chairman Bishop

        Mr. Bishop. All right. Thank you very much, Mr. Secretary.
    We will look forward to that. We know that you are definitely
    service-oriented, and you want to make sure that the
    stakeholders of USDA get the full customer service to which
    they are entitled.
        Mr. Secretary and Ms. Navarro, thank you for being here
    today. We look forward to working with you as we continue the
    Fiscal Year 2020 Appropriations process. I know that there are
    a few things that you are going to get back with us on, and we
    look forward to submitting a few additional questions for the
    record, but we appreciate your diligence in getting the
    responses to us in a timely manner.
        So again, I would like to thank you for your cooperation
    and thank you for the job that you work so hard to do for the
    constituents and the stakeholders of USDA, because we want to
    make sure that we continue to produce the highest quality, the
    safest, and most abundant, the most economical food, fiber, and
    fuel anywhere in the industrial world.
        So, again, thank you for being here and with that, the
    subcommittee is adjourned.
        Secretary Perdue. Thank you, Mr. Chairman. Thank you.

                                             Wednesday, April 10, 2019.

      ECONOMIC OPPORTUNITIES FOR FARMERS THROUGH SUSTAINABLE AGRICULTURAL
                                   PRACTICES

                                   WITNESSES

    KEVIN NORTON, ACTING ASSOCIATE CHIEF, NATURAL RESOURCES CONSERVATION
        SERVICE, USDA
    NATE POWELL-PALM, CERTIFIED ORGANIC FARMER, MONTANA
    JASON WELLER, SENIOR DIRECTOR OF SUSTAINABILITY, LAND O'LAKES, SUSTAIN,
        MINNESOTA

                        Opening Statement by Mr. Bishop

        Mr. Bishop. The subcommittee will come to order.
        Good morning, and let me welcome everyone to today's
    hearing.
        First, I would like to give a shout-out to some of my
    colleagues, Ms. Pingree, Ms. McCollum, and Congresswoman
    DeLauro, for suggesting the topic for our hearing this morning.
    I am delighted that we are having the hearing.
        Today's topic is sustainable agriculture, specifically the
    economic opportunities for farmers through such sustainable
    agriculture practices.
        To be sure, farmers have known for a long time that
    implementing simple practices, such as crop rotation and no-
    till, can increase both soil health and the bottom line.
        There is a renewed focus more broadly now on
    sustainability, and rightly so. Our farmers, consumers, and
    industry are more conscious than ever about how their actions
    will impact air quality, water quality, soil health, and animal
    life. Consumers want to know where their food comes from, and
    they are increasingly drawn to products that are produced in a
    sustainable manner.
        That is why I am very excited about our witnesses and the
    discussions that we are about to have this morning. Agriculture
    is a leader when it comes to sustainability and conservation,
    and it deserves public recognition for what it has done and
    what it is doing in this area.
        Moreover, sustainable practices can reduce the impact of
    natural disasters--and, unfortunately, as we have seen too
    often over the past several years, droughts and flooding have
    cost farmers billions of dollars--improve sustainability, and
    help reduce those negative impacts.
        This is an exciting time for agriculture. New technology
    and research allow farmers to make more precise and cost-
    effective business decisions. They can increase yield, while at
    the same time decreasing waste. I think everyone can agree that
    it is a win-win. And that is what we want to convey today:
    Agriculture is doing its part.
        One of the bigger challenges for farmers is just
    understanding all of the tools that are available to them. We
    discussed this yesterday with Secretary Perdue, as a matter of
    fact, and I hope we can explore that today here as well.
        Our panel includes Jason Weller, a senior director for the
    Land O'Lakes SUSTAIN Program. I am pleased to note for some
    colleagues who have been on the subcommittee as long as I have
    that Jason worked for this subcommittee and then went to USDA
    and ultimately became the chief of NRCS.
        Welcome back, Mr. Weller.
        Mr. Weller. Thank you, sir.
        Mr. Bishop. We also have Nate Powell-Palm. Nate is a young
    farmer from Montana who has taken sustainability to heart and
    he shows what is possible with a little hard work. Let me
    rephrase that and say a lot of hard work.
        Finally, Acting Associate Chief Kevin Norton of the Natural
    Resources Conservation Service. He is here to fill out the
    picture of Federal resources that can help farmers undertake
    sustainable practices and to share his years of experience on
    the ground at NRCS with us.
        So I will defer the comments from our ranking member, Mr.
    Fortenberry, until his arrival. But with that, I would like to
    recognize our distinguished guests for brief oral statements,
    and then we will proceed with questions. And without objection,
    the entire written testimonies will be included in the record.
        So please proceed in any order that you wish. You can go
    left to right, you can go Mr. Weller first. It does not matter.
        So if you would, we will start with Mr. Palm.
        Shall I say Powell-Palm or Palm?
        Mr. Powell-Palm. Powell-Palm, please.
        Mr. Bishop. OK. Mr. Powell-Palm.

                      Opening Statement by Mr. Powell-Palm

        Mr. Powell-Palm. Thank you, Chairman Bishop, and thank you,
    Ranking Member Fortenberry, when he is here, and distinguished
    members of the subcommittee, for the opportunity to testify
    today.
        My name is Nate Powell-Palm and I am a first-generation
    grain farmer and cattle producer from Belgrade, Montana. On my
    farm, Cold Springs Organics, I raise just about 875 acres of
    durum wheat, yellow peas, grass hay, alfalfa hay, and cattle.
        I got my start in agriculture when I was 9, when my parents
    let me purchase a steer to raise and take to the Gallatin
    County Fair. My parents themselves aren't farmers by
    profession, but certainly by heart.
        From that experience with the 4-H calf, I became determined
    to get into the cattle business. When I was about 12 years old
    I applied for and was awarded a junior agriculture loan from
    the Montana Department of Agriculture for $3,400 to purchase
    three bred cows, a little bit of fencing, feed, and a stock
    trailer to haul them around in.
        After three calf crops, my small herd was growing, I was
    really enthusiastic. However, my bank account was not growing.
        And so, in 2006, I became acquainted with certified organic
    agriculture. I purchased certified organic hay from a few
    really pioneering farmers in Helena, Montana, and over the next
    2 years I learned about this world where farmers actually
    request to be certified and inspected and they are really
    interested in having the excellence of their farming practice
    recognized and to sell into a market where demand is
    outstripping supplies. Folks are really interested in
    purchasing and paying a premium for the crops that certified
    organic farmers are growing.
        So in 2008, I applied for and received organic
    certification, and I just had my 11th annual organic
    inspection.
        After my first organic inspection, I quickly joined the
    Montana Organic Producers Co-op, which is a 22-member regional
    marketing organization for grass-fed certified organic beef,
    and after joining it I was able to realize about a 30 percent
    premium on my calves and finished animals. And because of that
    premium and that stability in the market, I was confident that
    I could go out and start expanding my operation and thinking
    about leasing more land and possibly hiring someone.

                               CERTIFIED ORGANIC

        Shortly after my junior year of college I sent out 90 cold
    call letters trying to tell local landowners that if they would
    lease to me, I would get their farm certified organic, I would
    be able to pay them above market rates, and I would be able to
    start a process of building soil on their ground. And I think
    that I got about 10 letters back and they were all really
    excited about the prospect of working with me. And so that is
    ultimately how I came to lease about 875 acres in the Gallatin
    Valley in Montana.
        By 2017, I had 240 acres in a grain rotation along with the
    balance in hay and pasture. And while I had good markets for
    the wheats, I knew I could really improve my soil and my crop
    rotation if I could be raising and selling legumes, including
    yellow peas, garbanzo beans, lentils, but I just needed to find
    a customer, a contract customer.
        So in 2016, I joined the Organic Trade Association, and
    during their annual fly-in, several farmers were invited to sit
    in on the Grain Council panel. And at this meeting, we really
    tried to express to grain buyers, large institutional grain
    buyers, that the folks who are buying grain really need to buy
    an entire rotation, not just wheat or not just one crop,
    because in order to diversify our farms we need to be able to
    sell those respective crops.
        And so in that meeting there was a representative from
    Annie's Mac and Cheese, which is a subsidiary of General Mills,
    and the folks at Annie's reached out to me and said they wanted
    to reimagine their traditional pasta products by incorporating
    yellow peas into their rotation. And so, by doing so and
    working with me, they would give me a market for my yellow
    peas.
        And just a brief history on yellow peas and why they are so
    fantastic. They fix nitrogen, which is the biggest fertility
    input that farmers have. And so, by fixing nitrogen, I am
    getting paid to grow my own fertilizer.
        They are also going to purchase my durum wheat. And they
    are going to make this protein-packed certified organic product
    that is something that consumers are really interested in
    purchasing.
        So the first batch of this pasta here hit the shelves in
    the spring of 2018, and we have our second edition of single
    origin pasta coming out, incorporating more farmers and more
    rotations from Montana.
        And so when farmers can receive a premium in the market for
    sustainable practices it is a win-win. I chose organic to do
    that, and everything I have just shared with you is possible
    because of the trust consumers place in the organic seal. It is
    this transparent rigorous certification process that allows
    farmers to be economically compensated for clearly defined land
    stewardship practices.
        In order for this opportunity to stay available to farmers
    like myself, USDA must accommodate and be accountable to
    advancing organic standards and to emphasize continuous
    improvement in an organic public-private partnership. And I
    hope others have the availability and this opportunity stays
    available to farmers in the future.
        Thank you.
        [The information follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Bishop. Thank you, Mr. Powell-Palm.
        Mr. Weller.

                        Opening Statement by Mr. Weller

        Mr. Weller. Good morning, Mr. Chairman and Mr. Fortenberry
    and members of the committee. I really appreciate the
    opportunity to be here today.
        Mr. Powell-Palm, drop mike. I think you just summarized
    really the sustainability journey that in part we are trying to
    advocate for. My former colleague, continued colleague, Mr.
    Norton, and I have been friends and peers for a long time, and
    we have been in the space of sustainable agriculture through
    USDA.
        Let me talk a little bit, back up a little bit, and first
    talk about my pride in terms of public service in having
    served, of course, this committee, but also in other Federal
    offices. But, of course, really proud of my time and being a
    colleague of Kevin Norton and the NRCS team at USDA.
        But also equally proud of my time now working for a farmer
    cooperative. And so I joined the Land O'Lakes team about 2
    years ago. And in part working for a co-op, having the
    discipline, but also responsibility to work for America's
    farmers and for members of our cooperative system to help them
    be successful.
        And that has really been a shared vision between USDA and
    ultimately our cooperative owners and our cooperative system,
    is how do we help farmers like Mr. Powell-Palm be economically
    successful, but also not just be successful 1 year, it is
    really for year over year, multiple seasons, multiple crops, if
    not multiple generations.
        And so, ultimately, that is what we aspire to do through
    Land O'Lakes, but also through USDA, and how do we help ensure
    the economic and profitability success of producers like Mr.
    Powell-Palm, but also ensure the vitality, the productive
    capacity of our environment and our soils and our waters to
    grow for generations to come.
        So none of this is possible, and in part I just want to
    also then commend the committee for its leadership and talk
    briefly about how the programs that you all oversee and invest
    in truly are an investment in the public trust, in this case
    providing for the foundation upon which the science, the
    conservation programs, the practices, the delivery
    infrastructure, to take all this expertise out in the field and
    allow for producers like Mr. Powell-Palm to be successful.

                   THE NATURAL RESOURCES CONSERVATION SERVICE

        And so more than ever now, seeing it from the private
    sector and seeing it from where I work with the cooperative
    system hat, you have to have a place like USDA, and in
    particular an organization like NRCS. It is the only thing like
    it on Earth. It is a special place that employs visionaries and
    leaders, people like Gilbert Borrego from New Mexico, Tim
    Griffiths from Montana, Dr. Dave Naugle from Montana, Jane
    Hardisty from Indiana, Leonard Jordan from Georgia.
        There are leaders and visionaries across this organization
    who toil and work day in and day out to provide service to the
    public, but also crucially service to the farmers, and it is
    upon their shoulders upon which we now stand. And much like how
    in other sectors where the public has invested in science that
    return on investment not only creates an internet or creates an
    aerospace industry, it also creates a really successful and
    vibrant agriculture sector.
        So coming to Land O'Lakes, the Land O'Lakes story. We are a
    98-year-old farmer co-op. We started in St. Paul, Minnesota, 98
    years ago as a dairy creamery. And this cooperative system
    approach, where farmers are coming together to co-invest for
    their shared benefit, to invest in innovation, but also then in
    shared support for each other is really the cooperative way.
        And so I am really proud to be now working for a Land
    O'Lakes cooperative system where now I represent and proud to
    be here talking for and speaking on behalf of 3,700 owners
    across the whole system, include dairy operators, row crop
    farmers, local and regional farmer cooperatives, and
    independent ag retailers, collectively coming together.
        And Land O'Lakes as a board having the vision and to create
    now the unit I work for, this team called Land O'Lakes SUSTAIN,
    where our goal is to help our cooperative system build up the
    capacity and expertise to work in partnership with NRCS, but
    then also to be able to then work directly with growers like
    Mr. Powell-Palm across the United States to help them identify
    conservation opportunities on their lands.
        In this case, conservation being in balance, the balance
    being profitability and ensuring they are successful for this
    crop season, but also always having that stewardship hat on and
    ensuring the long-term capacity or their fields to be
    productive year over year.
        And so I am excited for today's hearing. This is a really
    important topic. And that is about our future ability not to
    just feed ourselves, but the world, but always holding in
    balance this ability to address changing weather, extreme
    conditions. But ultimately helping that family farmer be
    successful and stay on the land and be able to pass that asset
    and that land in that rural community, keeping that intact and
    allowing it to be passed on to future generations.
        So thank you very much for today's hearing. I look forward
    to the conversation.
        [The information follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Bishop. Mr. Norton.

                        Opening Statement by Mr. Norton

        Mr. Norton. Thank you, Mr. Chairman, Ranking Member
    Fortenberry, and the subcommittee members. I really do want to
    take this time to express our appreciation to you for your
    continued support of the conservation programs that Jason spoke
    about. In fact, I am really having trouble getting my thoughts
    together after the inspirational message that he had around our
    partnership with agriculture producers, and it really is a lot
    of what I wanted to talk about with you all today.
        It is a great honor and opportunity to be here with you. As
    the Natural Resources Conservation Service, we were born out of
    the Dust Bowl 70 years ago, over 80 years ago, a terrible
    environmental disaster that brought birth to our agency. And we
    have moved forward hand in hand with agricultural producers
    ever since.
        Our model is trained conservationists on the farm with the
    individual producer, working with their land resources. Their
    business model is their model, it is different from one farm to
    the next. Their capacity to accept change is something that
    they have to deal with themselves, and it takes a professional
    conservationist working with them on their farm to make that
    happen.
        It is a model that has worked well. It is a partnership.
    Number one, our number one partner--and we will talk more about
    partners--but our number one partner is that private landowner.
    Seventy percent of the United States of America is under
    private ownership in agriculture production, and they are the
    person that we need to be working with if we are going to make
    meaningful change and support to the agriculture community.
        It is an effective model, as I said earlier. Our farmers,
    ranchers, forest landowners, they are on the front lines of
    weather volatility. As Jason mentioned, we had fires in the
    West, in the Central Plains, we have had just as recent as a
    month ago the bomb cyclone. Those farmers, those ranchers,
    those forest landowners feel the effects of those.
        Our conservation programs actually create a buffer to a
    certain extent to those kinds of events, does not solve them.
    But if we can help minimize the risk, then they have a greater
    opportunity to be successful on the other side of this event
    with all the other support that might come their way through
    the agriculture community.
        We are in the community. We have 2,100 offices scattered
    across the country. Those individuals are living in those
    communities, they are a part of that community. Our employees
    feel the same things those farmers are feeling as they are
    dealing with the events of weather, the climate, the changes in
    the markets. They are right there in those communities with
    them, so they understand. And it is a great model that we have.
        We work with producers large and small, whether it is a
    small producer just getting started that is growing his
    operation, as we have heard from Nate. There are folks out
    there that are just like that. We work with them.
        We work in the urban agriculture space. We do hoophouses.
    We work in these food deserts to help create opportunities.
        In my home State of Louisiana, we have a visible presence
    in New Orleans and have helped stand up a farmers market there
    through the USDA programs and wonderful produce. It rivals
    anything you will see in a grocery store and it is right there
    on the street corner available to the folks that don't have
    access to those fresh fruits and vegetables and produce. So we
    are in the community, we are a part of that.
        You know, I think back in my time how agriculture has
    changed. And as it has changed, it has created great
    opportunities. Our objective from the very early part of our
    agency has been to treat each acre on an individual farm within
    its needs and capabilities, including the landowner or the
    producer's goals and objectives. As we move to precision
    agriculture, we are seeing a greater ability to actually do
    that.

                     BENEFICIAL DEVELOPMENTS IN AGRICULTURE

        I will share with you real quickly about a farmer that is a
    friend of mine. Ten years ago in the State of Louisiana I went
    out on his operation, he had embraced geospatial technologies,
    precision agriculture, had a cotton stripper on his farm. The
    GPS unit had gone out, his yield monitor was not working like
    it was supposed to be, it was parked there.
        His father-in-law, who he was renting and operating on his
    place, could not conceive, he had a cotton crop to get out of
    the field, but would not take that working piece of equipment,
    except for a yield monitor, would not take it to the field and
    get that crop out. And he said: You have to understand that if
    I put that piece of equipment in the field without the data it
    is going to return to me I have lost my year's work in
    understanding what is going on on my farm.
        He was able, because of the data he was given through this
    precision agriculture technology, he was able to identify the
    places on his farm that were not productive that he was putting
    more resources in than it was returning to him in terms of
    profit. He was able to make those changes.
        And they are now, through the use of our programs, he used
    the Conservation Reserve Program for some buffers, he used the
    Environmental Quality Incentives Program, even the Wetland
    Reserve Program, and he was able to take those marginally
    productive areas that were really costing him money and take
    them and put them into a conservation use.
        So we have those kinds of success stories all the way
    across the landscape and things that we are encouraging with
    the programs that you all have provided us the resources to
    deal.
        As these things have changed, as agriculture has changed,
    the farm bill has drawn us to a greater investment and a
    greater and a broader mission as an agency. If you go back to
    the 1985 farm bill, the first one, that had the conservation
    title in it, it was about soil erosion and wetland
    conservation, that was it. That was really the focus.
        And you look at every successive farm bill since, they all
    have challenged us to work with producers in a broader
    landscape to expand our work, to look at water quality,
    wildlife habitat, grazing land resources, all those kinds of
    things.
        And I will say this. When you go back to the Dirty
    Thirties, the Dust Bowl, to today, I would say the American
    agriculture producer has a great story. We are sustainable. We
    produce more food on less cultivated acres than we did back in
    history. We are removing streams from the 303(d) list, water
    quality, impaired streams, we are removing those from the
    303(d) list.
        We have through the farm bill, conservation programs, and
    the private landowners utilizing our programs delisted the
    black bear, the smelt, several different species. And there
    are, what, 12 other species, Jason? He envisioned the Working
    Lands for Wildlife.
        We put the wheels to that thing and we have probably 12
    other species that are probably not on the--actually more, but
    I am comfortable with 12--that are not on the Endangered
    Species List because of the engagement with the private
    landowners using these conservation programs.
        We have a tremendous success story. It is all driven by
    locally led conservation, not making decisions here, having
    these resources, moving them out, as you all have given them to
    us, to the local level, because the things that are going on in
    Maine are different than the things going on in Georgia. The
    needs of those producers are different, the crops, the climate,
    the variability.
        The Plains. I was raised in Oklahoma, the Plain State of
    Nebraska, I am very familiar with living out in that kind of an
    environment, very different. We need to have our conservation
    programs locally driven.
        So I will just close real quick. We have a lot of work
    going on, the climate hub space. Those are just tremendous, 10
    of those around the country. We are using those to assess our
    natural resource conditions, what is going on in these events
    like this, so that we can make adjustments as we have through
    the history of our programs to be better and more effective
    with the agriculture producer, to promote resiliency, to
    mitigate drought through those kinds of things.
        I will leave you with this closing remark. And I want to
    take you back in time. As I was preparing for this, as a young
    man in the Future Farmers of America, I remember a quote, and
    it just rings real true to me. It is from William Jennings
    Bryan. It says, ``The great cities rest upon our broad and
    fertile prairies. Burn down your cities and leave our farms and
    your cities will spring up again as if by magic. But you
    destroy our farms, and the grass will grow in the streets in
    every city in the country.''
        And I believe that is true. I believe that working
    relationship we have with agriculture, I believe we are
    sustainable. I think it is the partnership of the Federal
    investment with the private sector through the programs that
    you have authorized us to do that we can have a stronger, more
    resilient, and sustainable agriculture years into the future so
    that our children enjoy the blessings that we have today.
        Thank you very much, Mr. Chairman.
        [The information follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Bishop. Thank you.
        At this point let me recognize Mr. Fortenberry. We deferred
    his opening statement earlier.
        And, Mr. Fortenberry, would you like to make an opening
    statement? If so, I recognize you for that purpose.

                      Opening Statement by Mr. Fortenberry

        Mr. Fortenberry. Yes, Mr. Chairman. Thank you very much for
    recognizing me. I apologize for my tardiness. If you knew where
    I was, though, I think you would be happy by the distraction.
    It was at a meeting on conservation.
        Let me just truncate my opening remarks. I want to tell you
    all three things: Conservation is development, sustainable
    business is good business, and stewardship is a noble value.
        And what we have in our society, what we have in our
    economy, what we have in our agricultural policies is an
    alignment of these three variables, that sustainability can be
    good business when thoughtfully developed in harmony with other
    needed outcomes of the economy, that the value of stewardship
    is something that unites and does not divide, and that all of
    this can actually be a new way to think of the term
    development.
        It is not just building more and more, it is using what you
    have in a responsible manner, which actually creates the
    opportunity for enhanced income, well-being, and longevity of
    the very practice, whether it be a farm or a business.
        And so this is a very important discussion. I want to thank
    you, Mr. Chairman.
        As a bit of an aside, several years ago I undertook a
    project, it is a little bit remote from the considerations
    here, but it is related to this idea of stewardship. It got hot
    in Nebraska and I turned the air conditioner on and it didn't
    work. So I called the repairman after I did what I could do in
    lay terms. And he opened it up and there was a mouse that had
    gotten in there and chewed the wires.
        So he replaced the capacitor, turned it back on, and it
    started to smoke--the capacitor, not the mouse. And he said,
    ``Jeff, just sorry, it is done.'' So OK, that is $3,000.
        I started to think through this. I am highly interested in
    the whole concept of distributed energy generation, which is a
    component, an emerging field actually, in agricultural
    production. And so I began to look at the financial dynamics of
    installing a geothermal system. And it is complicated.
        But after having worked with the HVAC company, having used
    the Federal tax credit, having leveraged the energy loan
    program in my own State, having gotten a rebate back from the
    manufacturer, and having gotten a certain subsidy from my own
    utility, the financial package made enough sense for me to tip
    that balance.
        I wanted to do it anyway because of the example it sets of
    moving toward a more sustainable future, energy future, but we
    went ahead and did it.
        Now, the payout is a bit longer than I perhaps would have
    liked, but nonetheless, I will probably get 20 years of cost-
    free energy from that once the initial capital is paid off.
        Again, there are barriers to entry here, but if we can
    overcome them through smart public policy and certain subsidies
    when necessary where there is not a market dynamic that can
    sustain this, but the larger externality costs certainly
    justify it, where there are young new generations of people who
    are actually expanding the agricultural family.
        I come from a production ag State. That is the backbone of
    who we are. We help feed America and feed the world and we are
    very proud of that. There are a lot of young people who may
    never have access to a thousand-acre grain production facility
    because they just don't have the land or the capital, but they
    are starting to do niche markets, organic farming, farm to
    table, participating in farmers markets, being employed
    elsewhere but doing this on the side.
        This is exciting news. And the Department of Agriculture's
    program or the agricultural programs at the University of
    Nebraska are growing, because there is a convergence of
    fields--conservation, international development, environmental
    security and stewardship programs, along with traditional
    agronomy and animal husbandry and other programming elements.
        So I think this is actually a very exciting time to discuss
    all of these things, Mr. Chairman. And I really wish we could
    get beyond getting into political lanes when we are confronted
    with the hard, hard realities of extreme weather events and the
    reasons for those and actually look toward the solutions that
    move us toward a sustainable energy future that reduces our
    overdependence on hydrocarbons to run our economy and looks for
    the harmonious balance of sustainable development that you
    talked about, Jason.
        By the way, Derek Kilmer, Congressman Kilmer from
    Washington State, I think could be your brother. You look very
    much alike.
        Do you agree with that? Does the panel agree?
        I am sorry to divert like that, but I am looking at you and
    thinking that at the same time.
        Mr. Weller. There are worse comparisons.
        Mr. Fortenberry. So actually, instead of all of what we are
    talking about being somehow reasons for divisiveness, are
    actually reasons for consensus.
        Thank you, Mr. Chairman.
        Mr. Bishop. Thank you, Mr. Fortenberry.
        Votes have been called. We will try to move through this as
    quickly as we can and we will reduce the normal questioning
    time from 5 minutes to 3 minutes.
        Let me start off. Both Mr. Fortenberry and I have both had
    some unfortunate recent experience with natural disasters in
    our districts. In my case, it was Hurricane Michael and in his
    case it was the devastating floods that washed through much of
    the Midwest a few weeks ago. Obviously, we can't stop Mother
    Nature, but we can mitigate the devastation that she wreaks, at
    least to some extent.
        Would each of you care to discuss how you think sustainable
    practices can contribute to farmers' and communities' abilities
    to withstand natural disasters and to bounce back?

                   SUSTAINABLE DISASTER SOLUTIONS

        Mr. Norton. I will weigh in here real quick.
        You know, whenever you look at this idea, you can't stop a
    natural disaster and it is going to have impacts.
        I actually have heard from a farmer in Nebraska that is
    very much engaged in the cover crop effort, and he showed me
    pictures. The flood engaged his property. And the damage that
    he had is not near as visible as other properties that were not
    using cover crops, those kinds of things.
        So you can do the best you can, be as healthy as you can,
    and then whenever the illnesses, the storms hit you, hopefully
    you aren't hit as hard and you are more resilient and able to
    respond back. Certainly you all have given us some tools
    through the appropriations and programs. We have used the
    Environmental Quality Incentives Program to go back in and
    repair work that we had done on farms back through history.
    There is the Emergency Conservation Program that also provides
    resources to do that work. And then we are there with the
    communities.
        In your State specifically, irrigation systems that we have
    put in place, we are back in there cleaning them off, repairing
    them, and reestablishing irrigation, which is critical to some
    of the crops that are produced in Georgia.
        So we engage, move in, as I said, we are right there in the
    community, we move in very quickly and start trying to work to
    help producers.
        Mr. Bishop. Mr. Weller.
        Mr. Weller. I am sorry, I still have goose bumps from Mr.
    Fortenberry's opening remarks.
        Really passionate, sir. Thank you very much for your
    illustrative and insightful comments.
        Real quick. What we are trying to do through our system is
    really to help our producers best manage their soils. And Kevin
    talked about that. Nate has talked about it as well. And that
    soil management is really the foundation of our food system. It
    not only feeds us, but it is how you care for that most
    valuable asset, the farmer. This really will help farmers
    withstand strong storm events, variable weathers, drought, and
    flood.
        And so it is really then working through our cooperative
    system, helping farmers identify the right mix of practices on
    their farms and in their fields, to help improve the soil
    carbon, the soil organic content, the structure. But really the
    physical, chemical, and biological properties of the soil
    system will help it better withstand extreme weather.
        Mr. Bishop. Mr. Powell-Palm.
        Mr. Powell-Palm. Thank you.
        We have to both be resilient in our environmental
    practices, but also for the economic reality of the farm. And
    so when we have markets that reward farmers for their
    ecological stewardship, we also have the ability to have more
    resilient farms from a business point of view. Organic farms
    are 35 percent more profitable than the average farm.
        And so when you hit weather events, which are going to be
    inevitable, the ability to bounce back from that setback is the
    difference between a community closing shop and people leaving
    and being able to recover after a natural disaster.
        Mr. Bishop. Thank you.
        Mr. Fortenberry.
        Mr. Fortenberry. Mr. Chairman, since I gave a longer
    opening speech, why don't I defer to the rest of the panel who
    may have questions before we have to vote and just yield back.
        Mr. Bishop. Thank you.
        Ms. Pingree.

                         SOIL QUALITY

        Ms. Pingree. Thank you, Mr. Chair.
        And I have to say this kind of made my week, and it is a
    short week. But I am so grateful to the chair for having this
    hearing, which I think is a really important topic for all of
    us.
        I am thrilled to listen to the ranking member talk about
    his renewable energy system and how he put all that together,
    so that is critically important.
        And yesterday we had Secretary Perdue in here and we got a
    chance to talk to him a little bit about the positive side of
    what agriculture can do with carbon sequestration and opening
    up carbon markets to farmers and how we are going to go about
    doing that.
        So to me it is a big week, I can go home now. Actually we
    are going home, so it works out.
        I don't have a lot of time to ask questions, but I would be
    interested, Mr. Norton, to hear a little more about the process
    of how we use some of these wonderful conservation practices
    that we already have and better quantify what is going on in
    the soil so that farmers can take advantage of potential carbon
    markets out there.
        I get really frustrated in this wonderful debate we are
    having about climate change and it is incredibly important that
    we do tackle this. But so often people's understanding doesn't
    go beyond planting a tree. And while I come from a forested
    State, we love trees, I also want to understand this topic we
    have been discussing a little bit today, recognizing that
    farmers play this amazing role in sequestering carbon in the
    soil, but we have to have good conservation practices.
        And then more importantly, we have to be able to measure
    that and be able to have that sustainable in a market. And I
    know that is something that best rests at the Conservation
    Service. And so can you talk a little bit about where you are
    with that and how you see us moving forward?
        Mr. Norton. Certainly. So number one is we do have a tool
    called the COMET tool that actually does give producers the
    opportunity to quantify, look at their operations, start
    quantifying the services, the carbon things they are
    sequestering. So we have that going on.
        Beginning in 2011, we started a process through our
    Conservation Innovation Grants of going out to the private
    sector, to research entities, to nonprofits, and helping build
    that science behind the carbon sequestration. We rely heavily
    on the Agricultural Research Service and our land grant
    universities to also fill that space.
        We are making headway. We are having conversations today
    with organizations around the soil health and how we can
    quantify the buildup of carbon in those soils so that farmers
    can begin to communicate, potentially access markets, and make
    exchanges on those benefits. So we are working in that space.
        Ms. Pingree. I am going to quickly cut you off, because I
    am going to run out of time and I want everyone else to have a
    chance.
        Jason, do you want to comment at all?
        And, Nate, I will follow up with you after the committee so
    I can ask more questions.
        But are farmers using these tools?

                            UTILIZING NEW TECHNOLOGY

        Mr. Weller. They are. And this is in part through Land
    O'Lakes.
        We have made an investment through Land O'Lakes SUSTAIN to
    build that kind of technology that leverages the public data
    that USDA has created and many of the tools that Kevin just
    talked about and puts it into a platform where then one of our
    sales agronomists from one of our co-ops can go out and work
    with a producer like Nate and not just understand the flux and
    the complexity, but actually visualize where in their field
    they are gaining carbon, where they are losing carbon, where
    erosion is occurring, and how then to mix and target the right
    conservation system on that field to reduce the loss of carbon,
    if not increase the adoption of carbon in the soils.
        Ms. Pingree. Great. And, again, I will follow it up.
        Thank you for your wonderful testimony, Nate.
        I yield back.
        Mr. Bishop. Ms. McCollum.
        Ms. McCollum. Thank you, Mr. Chair.
        Good to see you, Mr. Weller. Thank you for being here. It
    is always good to have one from Minnesota here.
        And to Mr. Powell-Palm, having spent so much time at the
    Richland County Fair as a youth, congratulations on your 4-H
    win.

               ADJUSTING TO EVERPRESENT CLIMATE CHANGE

        I am going to focus a little more on climate change. This
    is a copy of a map that the Star Tribune published, working
    with the University of Minnesota Center for Forest Ecology.
    Scientists looked at three scenarios, one with a major decrease
    to CO2 emissions, one with a minor decrease, one with no
    decrease.
        Under the scenario where there is no decrease in CO2
    emissions, scientists estimate by 2070 most of Minnesota's
    boreal forests will disappear and our State's ecosystem would
    resemble that of Kansas.
        No offense to Kansas, but we like our trees in Minnesota,
    being the Land of 10,000 Lakes.
        So producers are already facing climate change, and you
    gentlemen know that well, whether extreme weather or disasters
    caused by weather that is so extreme.
        So could you--maybe I will address both questions at the
    same time to Mr. Weller--can you talk maybe a little bit about
    what Land O'Lakes SUSTAIN is doing to help with the adaptation
    of climate change?
        And, Mr. Powell-Palm, any recommendations for this
    subcommittee--I know your generation is very concerned about
    climate change--what we can do to help producers like yourself
    make the adjustments?
        Thank you.
        Mr. Weller. So it starts first with building the capacity
    for our agronomists in the field. These agronomists work
    through local farmer co-ops and ag retailers. Every day they
    are out working with growers to identify the right agronomy
    system or practices on their fields that are ultimately going
    to help them to be the most profitable and productive.
        But we are now weaving into this agronomy conversation, it
    is now a sustainability stewardship conversation. And so for us
    addressing extreme weather and a changing climate is about what
    is the right mix of soil management and nutrient management
    practices that will help that farm be profitable and be more
    resilient, but also reduce the loss of soil carbon and nitrous
    oxides into the atmosphere.
        That is something we start with the farmer, to help them
    achieve what is most profitable and effective for that farm.
    And then through our system we are linking those farmers back
    downstream with food companies. So we have food company
    partnerships, like with Campbell Soup Company and with Tate &
    Lyle, which is an ingredient manufacturer company, who are very
    interest in climate change. And so now we are creating a farm-
    to-fork system.
        Ms. McCollum. I see the clock running, so we will follow up
    more back home.
        Mr. Weller. Absolutely, OK. Thank you.
        Ms. McCollum. Mr. Powell-Palm.
        Mr. Powell-Palm. Thank you so much for the question.
        A recent study came out showing that certified organic
    farms sequester 26 percent more carbon than a regular
    conventional farm. And why that is so impactful is that we--and
    not to--I realize--I will follow with Representative Pingree--
    but, OK, that we need a market, adoption of processes and
    technology needs a market incentive.
        Consumers want to purchase certified organic food. And so
    through that market we are able to monetize those practices and
    reward producers for those practices.
        And so by fully funding the National Organic Program and
    making sure that we are trying to pursue as much as we can the
    support of those programs that have already been proven out to
    have a market possibility, then we are able to see a lot more
    quickly adopted practices.
        Ms. McCollum. Thank you, Mr. Chairman.
        Mr. Bishop. Ms. DeLauro.
        Ms. DeLauro. Thank you very much, Mr. Chairman.
        Just a quick note. I don't know whether Mr. Weller looks
    like Mr. Kilmer, but I feel very proprietary toward Mr. Weller.
    He served as staff with this subcommittee for many, many years,
    including when I was chair.
        And what a delight to see you on this side of the table,
    Jason. It is really great.
        Let me just see if I can in 3 minutes get most of this in.

                    NAVIGATING BUDGET CUTS

        NRCS' budget request cuts, a $40 million cut from the
    Agricultural Conservation Easement Program, elimination of the
    Conservation Stewardship Program. The House farm bill also
    proposed eliminating CSP. That was rejected, I might add, on a
    bipartisan basis.
        So to you, Mr. Norton. Look, you are not here to defend
    what you are doing about the budget, but could you shed light
    on what the impacts would be if we allowed these cuts, other
    cuts to conservation to be enacted?
        Let me also say there is a $16 million cut to sustainable
    agriculture in the budget. I don't know what are the negative
    efforts of that.
        To Mr. Powell-Palm, we have the withdrawal of rules related
    to organic animal welfare standards. Tell me about the
    rollbacks there and the impact on organic farmers.
        So let's go. Mr. Norton, where do we go on the budget, what
    impacts?
        Mr. Norton. So certainly it is a process and that is how
    this is moving forward. We will do with the resources that you
    all give us, we are going to do the best we can to be as
    effective with those resources.
        Ms. DeLauro. I understand. Are you going to--just tell me
    if you can do--if you are of the view you can do more with
    less. I got a yes or no here, because my time is running.
        Mr. Norton. So, no, we can't.
        Ms. DeLauro. OK.
        Let me ask you, Mr. Weller, about the cut to sustainable
    agriculture.
        Mr. Weller. So we are working very hard to build upon
    public-private partnerships. And we are working very hard then
    to link our farmers and our local cooperative system with NRCS
    at the State and local level.
        And so cuts in the NRCS capacity on the ground, the
    professionals that work in the field, but also the programs
    they deliver, if they are cut or reduced that absolutely
    impacts the ability for our farmers to do what is needed.
        Ms. DeLauro. To be able to do for sustainability. Thank
    you.
        Yes, on the organic farmers and the trust in the public in
    organic farming.
        Mr. Powell Palm. Absolutely. So the Organic Livestock and
    Poultry Practices rule, which was not finalized, is a critical
    component of moving our industry forward.
        As I said in my opening statement, organic farmers want to
    be regulated because they have a relationship with consumer
    trust. And as we are continuously moving toward continuous
    improvement we are hoping that we can see OLPP come to fruition
    and actually being finalized because the consumer expects it of
    us and it makes sure that we have consistency in the rulemaking
    process.
        Ms. DeLauro. OK. We should be moving in that direction.
        Thank you all very, very much.
        Thank you, Mr. Chair.
        Mr. Bishop. Thank you.
        We are pressed for time and I apologize, but I am so happy
    that our witnesses were here. I think this was very, very
    helpful.
        To Mr. Weller, Mr. Norton, Mr. Powell-Palm, thank you all
    for being here today. We really appreciate your taking the time
    to come out and share with us your knowledge and your
    experience and to give us your advice and counsel.
        From the testimony, I am excited about the future of
    farming and I believe that we have the responsibility to
    protect our planet and the environment. But farming needs to be
    economically viable in order to keep farmers like Mr. Powell-
    Palm, the people Land O'Lakes represents, and the people USDA
    serves in business.
        Again, thank you all for your testimony.
        With that, the subcommittee will stand adjourned.

                               W I T N E S S E S

                                  ----------
                                                                       Page

    Boswell, Kristi J. senior advisor to the Secretary of Agriculture   205
        Prepared statement...........................................   208

    Buchanan, Gale A.................................................   162
        Prepared statement...........................................   165

    Dunn, Hon. Neal, a Representative in Congress from the State of
      Florida........................................................   167
        Prepared statement...........................................   169

    Fong, Phyllis K., Inspector General, U.S. Department of
      Agriculture....................................................   135
        Prepared statement...........................................   137

    Gonzalez-Colon, Hon. Jennifer, a Delegate in Congress from the
      Commonwealth of Puerto Rico....................................   171
        Prepared statement...........................................   174

    Gottlieb, Scott, M.D., commissioner, Food and Drug Administration

        Prepared statement

        Answers to submitted questions...............................    44

    Hebrink, Rod, president and chief executive officer, Compeer Farm
      Credit.........................................................   293
        Prepared statement...........................................   295

    Jackson Lee, Hon. Shelia, a Representative in Congress from the
      State of Texas.................................................   190
        Prepared statement...........................................   194

    Jensen, Mark, president and chief executive officer, FCS of
      America/Frontier Farm Credit...................................   300
        Prepared statement...........................................   302

    Lee, John E., Jr.................................................   242
        Prepared statement...........................................   243

    McGovern, Hon. James P., a Representative in Congress from the
      State of Massachusetts.........................................   179
        Prepared statement...........................................   183

    Norton, Kevin, acting associate chief, Natural Resources
      Conservation Service, U.S. Department of Agriculture...........   441
        Prepared statement...........................................   444

    Perdue, Hon. Sonny, Secretary, U.S. Department of Agriculture....   385
        Prepared statement...........................................   388

    Pointevint, Paxton, president and chief executive officer,
      Southwest Georgia Farm Credit..................................   308
        Prepared statement...........................................   310

    Posey, Hon. Bill, a Representative in Congress from the State of
      Florida, submitted statement...................................   199

    Powell-Palm, Nate, certified organic farmer, Belgrade, MT........   426
        Prepared statement...........................................   429

    Ramaswamy, Sonny, president, Northwest Commission on Colleges and
      Universities, submitted statement..............................   263

    Smith Evans, Katherine...........................................   248
        Prepared statement...........................................   250

    Thompson, Hon. Glenn, a Representative in Congress from the State
      of California..................................................   162
        Prepared statement...........................................   165

    Tonsager, Dallas P., board chairman and chief executive officer,
      Farm Credit Administration.....................................   268
        Prepared statement...........................................   270

    Weller, Jason, senior director, Sustainability, Land O'Lakes,
      Sustain, MN....................................................   434
        Prepared statement...........................................   436

    Woteki, Catherine E..............................................   235
        Prepared statement...........................................   237