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

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

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


                                         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.
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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.
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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.
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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.
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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:]
    
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                                            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.
    [The information follows:]
    
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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.
    [The information follows:]
    
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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:]
    
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]    
        
    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