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


    AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION, AND 
                RELATED AGENCIES APPROPRIATIONS FOR 2021

_______________________________________________________________________

                                 HEARINGS

                                 BEFORE A

                           SUBCOMMITTEE OF THE

                       COMMITTEE ON APPROPRIATIONS

                         HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SIXTEENTH CONGRESS

                              SECOND 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

  USDA Office of the Inspector General..                              1
  Hearing on FCA's Fiscal Year 2021 Budget Report.....               31
  Food and Drug Administration_Status of Operations..................51
  Members' Day..........................                             69
  United States Department of Agriculture............................81
  Food and Drug Administration..........                            117

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

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          Printed for the use of the Committee on Appropriations
          
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                    U.S. GOVERNMENT PUBLISHING OFFICE                    
44-095 PDF                  WASHINGTON : 2021                     
          
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                         COMMITTEE ON APPROPRIATIONS

                        NITA M. LOWEY, New York, Chairwoman
                        
MARCY KAPTUR, Ohio				KAY GRANGER, Texas			
PETER J. VISCLOSKY, Indiana			HAROLD ROGERS, Kentucky
JOSEï¿½ 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 2021

                              ----------                              

                                        Tuesday, February 11, 2020.

                  USDA OFFICE OF THE INSPECTOR GENERAL

                               WITNESSES

PHYLLIS FONG, INSPECTOR GENERAL, USDA, OFFICE OF THE INSPECTOR GENERAL
ANN COFFEY, DEPUTY INSPECTOR GENERAL, USDA OFFICE OF INSPECTOR GENERAL
GIL HARDEN, ASSISTANT INSPECTOR GENERAL FOR AUDIT, USDA OFFICE OF 
    INSPECTOR GENERAL
PETER PARADIS, SR., ACTING ASSISTANT INSPECTOR GENERAL FOR 
    INVESTIGATIONS, USDA OFFICE OF INSPECTOR GENERAL
    Mr. Bishop. The subcommittee will come to order.
    We are gathered today for our oversight hearing, and we 
will entertain the USDA Inspector General, Ms. Phyllis Fong. I 
would like to welcome everyone to the subcommittee's first 
hearing of the calendar year.
    Thank you to our witnesses, Ms. Fong, Ms. Coffey, Mr. 
Harden, and Mr. Paradis. I have a strong interest in your work 
and what you do. We have got to do everything that we can 
possibly do to eliminate fraud, waste, and abuse and 
mismanagement. We need to ensure that all of the USDA programs 
over which our subcommittee has jurisdiction and oversight are 
operated with the best possible efficiencies in order to create 
the best possible outcome for those who are customers of the 
agency.
    As I mentioned at last year's hearing, I have concerns 
about the number of audit recommendations that remain open and 
the agency's efforts to close them out. Your last semi-annual 
report shows 351 recommendations that are still pending 
corrective actions, some as old as 1996.
    On the investigation side, it looks like the OIG Hotline 
has had a pretty busy year with the number of complaints having 
increased by more than 35 percent over 2018.
    So today I would like to hear more about your plans to 
conduct adequate oversight of USDA programs and the challenges 
that you face in ensuring agreed upon recommendations are 
implemented and complaints are appropriately addressed.
    In addition, I would like to ensure that whistleblower and 
civil rights issues are getting thoughtful and proper attention 
throughout USDA.
    I look forward to discussing with you those issues as well 
as other important issues.
    And I want to say, again, that we really appreciate all of 
the work that the OIG staff does and all that you do to help 
our government work more efficiently and effectively.
    Now, our distinguished Ranking Member Fortenberry has been 
delayed and I will defer his opening remarks until his arrival. 
In the meantime, I will recognize Mr. Aderholt, a former chair, 
for a welcome and any remarks that he might care to give at 
this time.
    Mr. Aderholt. Thank you, Mr. Chairman.
    Well, welcome all of you, Ms. Fong, Ms. Coffey, Mr. Harden, 
and Mr. Paradis. Thank you for taking time to be here. On 
behalf of the ranking member this morning, who I know will be 
joining shortly, we are always glad to have you to this 
subcommittee to hear about your work in oversight. The work 
that you do as oversight, of course, we deem as very important, 
and what we look forward to hearing from you today are some 
things that how we can try to help you with the funding process 
to make your job easier, better, and more accountable to the 
American people.
    So with that, I will just close and say, we look forward to 
your testimony, and thanks, again, for being here.
    Mr. Bishop. Thank you, Mr. Aderholt.
    And before Ms. Fong begins, a reminder to members that as 
is customary with our subcommittee, our 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, with some exceptions because members do have some 
conflicting meetings and I will try to accommodate them to the 
extent that we can. I would like to alternate majority and 
minority members, and we will adhere to the 5-minute rule.
    And, Ms. Fong, without objection, your entire written 
testimony will be included in the record. And I will now 
recognize you for your statement and then we will proceed with 
questions. You may summarize or you may give an entire 
statement. It is completely up to you.
    Excuse me. Since Mr. Fortenberry has arrived, if I can 
allow you to delay for a moment, I would like to recognize Mr. 
Fortenberry as soon as he is able to be seated for any opening 
remarks that he would like to give at this time.
    Mr. Fortenberry. Thank you, Mr. Chairman.
    Mr. Bishop. Mr. Aderholt gave a welcome and announced that 
you would be arriving shortly. And so at this time, I would 
like to recognize our distinguished ranking member, Mr. 
Fortenberry, for any opening remarks that he might have.
    Mr. Fortenberry. Thank you, Mr. Chairman. Thank you for 
your indulgence. I apologize for coming late. I am sure Mr. 
Aderholt's opening was lofty and eloquent as usual. So thank 
you.
    I will be very quick since I am delaying everyone.
    Ms. Fong, thank you for coming, and thank you all for being 
here. We have interacted for a number of years now and 
appreciate your fine work.
    So there are really three things. One is, you were charged 
with the responsibility of overseeing programmatic integrity, 
to make sure that the moneys add up, but as a second chapter of 
that job, to make sure that there is program effectiveness. I 
want to explore that question a little bit deeper.
    Of course, we look for the possibilities of fraud and bad 
actors in government programming that result in potential theft 
or misuse of money, but also by putting up guardrails to your 
work ensures that good people actually remain accountable and 
that is important as well.
    But the third part of this is not just the accounting and 
the fraud or the waste, it is the idea of, again, 
effectiveness, and I want to go into that a little bit deeper. 
I am also simply going to ask you when we get to questions, if 
you were sitting right here and I was sitting right there, what 
would you ask me?
    Thank you, Mr. Chairman.
    Mr. Bishop. Thank you, Mr. Fortenberry.
    Now Ms. Fong.
    Ms. Fong. Well, thank you very much, Mr. Chairman, Ranking 
Member Fortenberry, Mr. Aderholt, and all of the members of the 
subcommittee. We are very pleased to be here today, and we have 
enjoyed our interactions with you over the past year in various 
ways and on various issues.
    And I want to just on behalf of the entire staff of OIG 
thank you for your support over the years and your interest in 
our work. It really means a lot to all of us to know that you 
are watching us and that you care about what we do. So thank 
you so much.
    We mentioned, Mr. Chairman, that my written statement is in 
the record, so I just want to spend a few minutes today talking 
about some of the ongoing work that we have, which we may not 
be able to get into in great detail, but I think it will give 
you an idea of the issues we are dealing with, and then we can 
get on to the questions and answers.
    So in the area of security, safety, and public health, we 
are currently looking at USDA agency's security controls for 
managing user access to the IT systems. Cybersecurity is 
critical to USDA, so that is why we are engaging in that work.
    We are also evaluating APHIS' activities to ensure that dog 
breeders comply with the Animal Welfare Act in response to 
concerns by the members.
    In the second area of our portfolio, to ensure that USDA 
delivers program benefits effectively and with integrity, we 
have a number of ongoing reviews of disaster-related programs. 
And this is particularly in recognition of the funding that 
your committee has provided to us over the past number of 
years. We are really ramping up our oversight of disaster 
delivery this year. We have got five audits in process across 
the portfolio.
    We are also looking at, in a different area of USDA, USDA's 
implementation of the trade mitigation packages, as well as FAS 
grant selection for the Agricultural Trade Promotion Program. 
We recognize that trade is a very important topic for all of us 
and we want to keep oversight of those funds.
    In our third area of focus we are looking at the 
Department's ability to manage its resources effectively to 
deliver programs. And so we are always engaged in our annual 
reviews of improper payments, that is a high priority for us, 
as well as the Department's financial statements to ensure that 
financial management is effective. We are also looking at the 
Office of the Assistance Secretary for Civil Rights portfolio, 
in particular their oversight of the civil rights program 
complaint process. We want to ensure that that office is 
handling those kinds of complaints appropriately and timely.
    And then in the area of crop insurance, we are looking at 
RMA's activities to improve insurance products developed by 
private parties under Section 508(h) of the Federal Crop 
Insurance Act.
    I should also mention that in addition to these areas of 
focus, we have a number of ongoing reviews in response to 
requests from Members of Congress. Last year we received a 
number of requests that we looked into various activities at 
the Department, and these range across the Department's 
portfolio. They concern topics such as FSIS swine slaughter 
rulemaking, scientific research integrity and capacity, 
potential duplication in housing programs, delivery of disaster 
nutrition assistance funding to Puerto Rico, and SNAP 
electronic benefits transfer services at farmers markets.
    So I think that gives you an idea of the range of interests 
that we are hearing from our oversight members in Congress.
    So in closing, I want to just thank you, all of you, for 
your continuing interest in our work. We appreciate the funding 
you have made available to us, both through the regular 
appropriation process as well as the disaster supplemental 
appropriation process. And we hope that you support the 
President's request for us for $100.3 million for fiscal year 
2021.
    Thank you very much, and we are happy to respond to your 
questions.
    Mr. Bishop. Thank you very much, Ms. Fong.
    At this time, without objection, I would like to recognize 
the gentlelady from Minnesota out of order as she is currently 
chairing a hearing and we would like to make sure that she is 
able to ask her questions before she departs.
    Ms. McCollum. Thank you, Mr. Chair, and thank you to the 
committee members for your understanding and respect.
    Well, as you pointed out, you conduct audits, inspections, 
and review, and make recommendations on how to improve USDA 
programs and how they operate it. So I am here to ask for your 
help.
    Last year at a hearing I brought up to the Department of 
Agriculture their abrupt decision to cancel a mineral 
withdrawal study on the Rainy River Watershed in Minnesota. It 
is adjacent next to the Boundary Waters Canoe Area Wilderness. 
The study was canceled in 2018, 20 months into a 24-month 
study, with nothing more than a one-page press release.
    A year before, Secretary Perdue testified before the 
Interior, Environment Subcommittee on May 25, 2017, that the 
study would be completed and that, and I quote, ``No decision 
will be made prior to the conclusion of that,'' end of quote. 
Yet a decision was made when the Trump administration 
officially renewed two Federal mineral leases for Twin Metals 
in May 2019.
    I have sent multiple letters to Secretary Perdue, along 
with chairs from the Natural Resources Committee, first 
November 2018 and again March 2019, asking USDA to release the 
relevant documentation from the 20-month review.
    I also asked the Secretary about the cancelation of the 
study at the USDA budget hearing on April 2019. He told this 
committee he knew what the Forest Service decision was based on 
and he would do his best to provide documentation to us. I have 
yet to receive any information or documentation from the 
Secretary.
    A nongovernmental organization has also tried to obtain 
relevant documentation and correspondence, filing a Freedom of 
Information Act request with the USDA. They received this most 
entirely redacted document with the administration claiming 
deliberative process privilege.
    This is what they got. This is all I have gotten. I didn't 
even get this. One page after another, nothing.
    While it seems that the privilege applies to records as 
predecisional, it seems clear that the Forest Service and the 
USDA did make a decision when they canceled the study. They 
made a decision when they canceled the study September 2018. 
The taxpayer-funded information from the nearly completed study 
has been denied to Congress, to the American people, despite 
our numerous requests.
    So that begins to beg a question: What is being hidden? I 
want to see the parts of the study that were completed. When 
should I be able to reasonably expect to get this from the 
USDA? I think I have waited long enough. And would you say that 
this level of reaction to a Forest Service study is normal to 
have something so redacted? Can you help me?
    Ms. Fong. I understand your concerns. I am not familiar 
with the document itself, so I don't know if the exemptions, 
how they were applied. And I can understand why you are 
concerned.
    My sense is I remember you bringing this up at our hearing 
last year and it sounds like you engaged in direct dialogue 
with the Secretary and the Department. I am not sure what we 
can do to help at this point, but we would be happy to chat 
with you.
    Are you involved in any of that, Gil?
    Mr. Harden. No, we are not involved with it, but what I was 
going to offer is that if we can get together with your staff 
to maybe formulate some questions that we might be able to look 
at.
    Ms. McCollum. That would be terrific. Thank you so much.
    Mr. Chair, to my fellow committee members, thank you very 
much. I am going to return back to my committee to chair it. 
Thank you, sir.
    Mr. Bishop. Thank you.
    Mr. Fortenberry.
    Mr. Fortenberry. Ms. Fong, what should I ask you?
    Ms. Fong. Well----
    Mr. Fortenberry. I don't like when I get such questions 
either. They are always the hardest. But sometimes it is 
important to take a step back and ask a simple question. You 
have the hands on and the eyes on in a much more intimate way 
than we do. So what do you see?
    I have a construct of various specific questions here and 
we can go to that, but I would rather you tell me what I should 
see.
    Ms. Fong. Well, let me start by just commenting that we 
find it extremely valuable to have the perspectives of Members 
of Congress as we formulate our work and our priorities, to 
have insight into what you see as challenges, information that 
you may need to make your policy decisions. It helps us to 
formulate priorities and to focus our oversight.
    Mr. Fortenberry. All right. I will take responsibility 
back.
    Ms. Fong. No, seriously.
    Mr. Fortenberry. Is China stealing our data?
    Ms. Fong. Oh, well, okay.
    We are very aware in the IG community as a whole, and the 
IGs get together every month----
    Mr. Fortenberry. At USDA.
    Ms. Fong [continuing]. We are very aware of the general 
threat by other countries, more than one, countries seeking to 
steal data. We are very aware that the Department of Justice is 
involved in these issues. There have been media reports on it. 
We are monitoring it. We are engaged as appropriate. And we 
would be happy to provide briefings whenever it is appropriate 
for us to do that.
    Mr. Fortenberry. Do you need to do that in another setting 
or do you just not know the answer?
    Ms. Fong. If there were briefings to be had, we would do it 
in another setting.
    Mr. Fortenberry. Okay. Thank you.
    There are some reports that our food aid was not stored in 
a safe and sanitary manner. Is our food aid safe?
    Ms. Fong. You are referring to a recent audit that we did--
--
    Mr. Fortenberry. Yes.
    Ms. Fong [continuing]. On the storage by AMS of grain 
destined to go overseas.
    We found that the grain storage was not keeping the grain 
safe. There were rodents and other infestations. We made some 
recommendations to AMS to deal with those issues for oversight. 
We certainly--I believe we reached management decision on those 
recommendations. So we will be watching AMS to make sure that 
they implement those recommendations.
    Mr. Fortenberry. I would assume this is a specific incident 
that is not generalizable to a larger trend?
    Ms. Fong. The problem that we found was that AMS' 
oversight, in general, lacked controls. They weren't exercising 
the appropriate degree of oversight, as illustrated by the 
situation we found in those specific grain storage places.
    And, Gil, feel free to comment.
    Mr. Fortenberry. Well, look, the United States is the most 
generous country in the world in this regard, and we have a 
very strong and well-deserved reputation for our outreach for 
humanitarian purposes. So, again, if you can quantify--
certainly we don't want anything to spoil that reputation. 
People, obviously, who are the recipients of this don't need to 
read a news report that this might not be safe.
    So that is why I am trying to quantify the extent of this 
simple problem, easily corrected, an incident, or, let's be 
honest, if it is generalizable to a larger scale issue, to 
quantify the size of this problem.
    Mr. Harden. We did quantify a certain amount of loss of 
commodities that if AMS had looked at their processes and 
procedures in terms of how the bags could have been restored 
that they may not have lost as much for shipment to foreign 
countries. And that merely meant being able to use food grade 
tape on the bags to close up the holes as opposed to having to 
bring somebody in to sew the bags shut. We identified about 1.7 
million pounds that could have been----
    Mr. Fortenberry. Just put that in context of the larger 
quantity.
    Mr. Harden. It is a small fraction of the----
    Mr. Fortenberry. A very small fraction.
    So this is actually a good outcome. You caught a very small 
fraction of a problem before it was scaled to a bigger problem. 
Is that a fair assessment?
    Mr. Harden. Yes.
    Mr. Fortenberry. Okay. And steps are under way to mitigate 
this issue?
    Mr. Harden. Yes, sir.
    Mr. Fortenberry. Okay. All right.
    Thank you, Mr. Chairman.
    Mr. Bishop. Thank you very much, Mr. Fortenberry.
    Ms. Fong, your annual plan indicates that you will address 
whistleblower reprisal complaints. Whistleblower disclosures 
expose waste, fraud, and abuse, and according to your website 
can save lives as well as billions of taxpayer dollars.
    Recent events have raised alarms about whistleblower 
protections, especially against reprisal. Especially disturbing 
are reports that whistleblowers are facing increasing 
retaliations from within the agencies and managers are ignoring 
OIG-substantiated reprisal cases.
    I am concerned that the current climate of attacking and 
making threats against whistleblowers may discourage 
disclosures or penalize the people who try to do the right 
thing.
    First question. What have you noticed at USDA related to 
whistleblower disclosures? And do employees feel protected when 
they come forward? In cases where you found retaliation, do you 
feel USDA management is responding timely and appropriately?
    And the second has to do with USDA cooperation. I 
understand that you are looking into several cases where USDA 
may have concealed data or information that should have been 
used in making policies, or at least they should have been 
shared with the public. I am thinking of Ms. McCollum, her 
inquiry to you. At best it could have been a rush to make 
decisions without a sound data-driven basis, or worse, it was 
an intentional attempt to hide contrary evidence.
    Are you seeing this lack of reliance on facts in your 
audits or inspections of USDA programs and is USDA cooperating 
with your staff to provide all of the relevant information that 
is necessary to do a complete job? How can you ensure that your 
staff gets what they need?
    Ms. Fong. Okay. Two very important topics for us as an IG 
office.
    Whistleblower protection is critical to our ability to do 
our job. We take whistleblower protection very seriously, and 
we do work with whistleblowers across the spectrum of our 
activities in audits as well as in investigations.
    Our policy is to treat anyone who brings information to us 
as a potential whistleblower. And as you can imagine, in our 
audits and investigations we talk to many, many people, many 
employees.
    We are responsible and we have the whistleblower 
coordinator function within our office, which is the person who 
provides information on whistleblower protection to all 
employees of the Department.
    Our coordinator does a tremendous job. She is certified by 
OSC. And over the years we issue countless directives, 
announcements to people telling them of the avenues available. 
She is available to talk with anyone. We have a number of 
people who reach out to her.
    But let me just--you know, we could talk about 
whistleblowers, many different aspects of it. We are very 
committed to protecting them whenever we deal with them.
    On the topic of data and whether we get access to what we 
need, like any IG office, we need access to data that the 
Department has. We have not had a situation where I have had to 
go to the Secretary and say the Department is not cooperating. 
We have not had that situation.
    Now, we work very hard at the staff level, the management 
level, the policy level to make sure that Department employees 
understand their requirements to cooperate with us. We spend a 
lot of time educating and informing new officials, new program 
managers, about the need to cooperate and the consequences of 
not cooperating. And as a result, I think we have a 
constructive relationship within the Department at this time.
    Mr. Bishop. The concern that I have is in the operation of 
the various agencies and as they formulate policy, that those 
policies are based not necessarily on fact-driven data. And in 
your oversight and in your reviews of those agencies' functions 
do you find that there are instances of that where decisions 
are being made that are not fact based, which would taint the 
quality and the integrity of those decisions?
    Ms. Fong. Do you have any comments?
    Mr. Harden. I have some general thoughts.
    One, we have not had any findings----
    Mr. Bishop. Your microphone.
    Mr. Harden. Sorry, sir.
    We have some general thoughts. We have had not had any 
findings or report to date where we have come to that kind of 
conclusion where what is being said is policy is not based on 
fact.
    With respect to using an example of the swine slaughter 
inspection rule, we have questions that relate to data. And we 
have been working with FSIS and they gave us access to the 
information so we could answer the questions that were raised 
to us.
    Some of those questions deal with transparency requirements 
or things made public. I am not ready to talk about those 
conclusions just yet because we are in the final stages of 
getting a draft report to the agency, having our typical exits 
and their responding to it. But as soon as that is available, 
if there is a desire to have a deeper discussion on that, I am 
more than happy to do so.
    Mr. Bishop. Thank you, Mr. Harden.
    Mr. Aderholt.
    Mr. Aderholt. Thank you, Mr. Chairman.
    Again, thanks for being here. It is good to see you again.
    Let me turn to the Improper Payments Information Act. 
Although progress has been made, it is my understanding that it 
is now the eighth consecutive year that USDA has not complied 
with the improper payment requirements that are set forth by 
the act.
    My question is, is the Department making progress in 
correcting these payments or are you finding the same problem 
year after year in these programs?
    Ms. Fong. Well, and you probably noticed in our testimony, 
we reported that the Department made progress in fiscal year 
2018 over the prior years. They have reduced the number of 
overpayments, the payment IP rate went down, the number of lack 
of compliances went down as well.
    I do want to note that in the AFR for 2019, the Department 
reported that its IP rate actually increased, and the number of 
improper payments increased.
    We are in the middle of looking at 2019 right now. We 
should have audit results in May. So what that says to us is 
that if the Department's reporting is accurate, that improper 
payments continues to be a challenge, it is not going down. It 
seems to be going--there is a slight upward trend.
    We also see that in the SNAP improper payment rate, there 
is a slight upward trend in the last year, and we want to take 
a look at that as well.
    Mr. Aderholt. Do you have any proposed timeline as far as 
that you can at least let us know when there might be full 
compliance?
    Ms. Fong. I think perhaps the Department may be better 
equipped to answer that.
    But, Gil, you may have some insight.
    Mr. Harden. I mean, I will take that question back to the 
team and see if we can have some type of discussion. But that 
is something that is going to come from the Department.
    You know, as Phyllis pointed out, they have made progress 
year over year. They are down to only having four programs that 
are noncompliant, and it is really only noncompliance in two 
areas for all four, which is much better than years past when 
you had a wider improper payment problem.
    Mr. Aderholt. Okay. All right. Well, if you could take that 
back, that would be great.
    Also in your testimony you raised the issue about security 
of the information technology systems at USDA. Of course, 
cybersecurity is something that not only USDA has to take 
seriously but everyone has to take seriously. And I think all 
of us are concerned to read that, by OMB's criteria, USDA's 
cybersecurity is at an ineffective level.
    Do you feel the seriousness of this deficiency is 
appreciated?
    Ms. Fong. I do believe the Department understands the 
importance of the issue. We have seen them really focus their 
attention in the last few years to addressing the 
recommendations we have made. And the number of open 
recommendations has gone down, so there is a concerted effort 
to do this.
    This year's review of IT security I think will be a 
critical one. Last year the Department reported that it had put 
into place a number of policies to address the issues that we 
were finding. This is the year where we are actually going to 
be looking to see if those policies are effective. So our 2019 
review could provide some very interesting information.
    Mr. Aderholt. What potential consequences would you be most 
concerned because of the weaknesses there now?
    Ms. Fong. I think with cybersecurity, as Mr. Fortenberry 
mentioned, we would certainly--there is a risk that 
unauthorized users could hack into the Department's systems, 
could take advantage of the Department's information for 
nefarious purposes, and just starting there, and then moving on 
from there, proper payments.
    Mr. Harden. Other instances of IT security that we have 
looked at in the recent years deals with improper use. One of 
the big types of incidences that was noted there was malware, 
where you have software that is being put into place for not so 
good reasons or to do harmful purposes. And bringing those 
types of actions also to the Department so they are 
concentrated and focused on making sure they are knowledgeable 
of what the uses are, and then also referring those to the 
right people so that action can be taken against the people 
that committed those wrongs.
    Mr. Aderholt. If I could just ask one more quick question. 
I know my time is running out.
    Broadband providers that are structured as partnerships are 
prohibited from applying for the RUS ReConnect Program even if 
they are long-established providers and they have qualified to 
receive funding from the FCC's Connect America Fund and the 
State broadband programs. Can you talk about why this 
requirement is in place?
    Mr. Harden. I can't really talk about the requirement 
itself. I do know that we have been in discussions with the 
Department as they have been rolling out the new approach to 
broadband. I will take this question back as well as we start 
to formulate an approach as to how we will look at it.
    Mr. Aderholt. Thank you. Appreciate it. Thanks.
    Thank you, Mr. Chairman.
    Mr. Bishop. Mr. Pocan.
    Mr. Pocan. Thank you, Mr. Chairman.
    And thank you for being here today. Also thank you for 
acting on a request from Representative Fitzpatrick and myself 
about enforcement of the Animal Welfare Act. Looking forward to 
see what comes out of that.
    Let me start with a question around the Market Facilitation 
Program. I know you are doing an audit. So a recent New York 
Times report said that $67 million of the President's trade 
assistance program went to JBS USA, a subsidiary of the massive 
Brazilian meat-processing firm, via product purchases. In 
comparison, every dairy farmer in Wisconsin cumulatively got 
less than $43 million in trade assistance, so significantly 
less than one producer.
    Unfortunately, we are a State that is leading the country 
in farm bankruptcies. We lost 1 of every 10 dairy farmers last 
year alone. We have lost 1,800 family dairy farms in the last 3 
years, almost 2 a day last year alone.
    There was an article recently, I believe it was in the 
Wisconsin State Journal, that talked about the farmers got 
anywhere from $2 to $850,000, and 2,600 Wisconsin recipients 
got less than a thousand dollars. And when you asked one of the 
corn growers in specific, they said that what they got per 
bushel of corn--and we did some similar number-crunching on 
this--it was about a penny per bushel, when they are losing 45 
to 50 cents right now because of what is happening with the 
trade war currently and the situation with China.
    Having said all that, it has got a huge impact in my 
district. I want to get to two subjects, this is one of them. I 
am just curious what we can expect in the OIG report. Will you 
be looking at how they design and implemented the market 
implementation program, and will you be investigating how much 
money went to the agribusiness conglomerates like JBS?
    Ms. Fong. Let me just make a few basic comments, and then 
Gil will.
    We are just starting our work on all of these programs. We 
are going to start out with the basic issue of authority for 
the programs, and then we are going to get into the design and 
implementation, eligibility, and look at the producer 
questions. So----
    Mr. Harden. Yeah. And that will get into each of the three 
individual programs that are part of the trade mitigation 
packages.
    We are also working with our counterparts in our data 
sciences shop to get access to data so that we may have some 
insights as to which producers got which payments. We really 
haven't gotten far along to design the sample of producers that 
we are going to look at, but that is something that we will be 
on the ground looking at individual producers.
    Mr. Pocan. Will you look specifically at foreign producers 
versus dairy farmers and corn growers like mine?
    Mr. Harden. I will say we will take that into 
consideration. I don't see why we can't.
    Mr. Pocan. I think it would be very helpful, just because, 
again, when people are getting--the one quote from a farmer who 
has been in my district many times, if I can find it here, he 
basically said it is not going to make that big of a 
difference. They can pass a few bills, but it is not going to 
clear their debts.
    I have had farmers who come in every single year ready to 
pass on to the third generation a farm, who now are going to 
sell their farm because they can't get by. So I think they 
deserve some bigger answers. If we could do that in the 
inspector general report, I know it would be appreciated.
    Ms. Fong. Yeah, we should work with your staff because I 
think we are still crafting the scope and objectives of our 
reviews. And we know that there are a number of Members who are 
interested in other aspects of the program, including whether 
funds are going to underrepresented groups appropriately. So 
there are a number of interests involved.
    Mr. Pocan. We would love do that. We will take you up on 
that. How does that sound?
    Secondary, the swine slaughter modernization rule, 
Representative DeLauro and I, I know, had put in the request. 
We appreciate your taking a look at that.
    There was a pretty damning ``60 Minutes'' report recently 
on this, and even my 90-year-old mother, who often tells me how 
much she loves Rachel Maddow at night, saw this report and is 
afraid to eat pork. And I have had other people tell me that, 
based on what is in here.
    And they quoted the one scientist who was asked about the 
speed rules, and they asked her about the modernization process 
issues. I don't see modernization, I just see straight-up 
deregulation in an industry that you want regulated. And then 
it said they are doing almost 20 animals per minute, there is 
no limit, the person responded, and they are supposed to be 
inspecting on this line. She said, right. And it goes into 
talking about how the number of inspectors were also reduced by 
40 percent at the same time this is all happening.
    This is clearly a situation I think that is going to cause 
a lot more problems than anyone ever intended, because if 
people are afraid to eat pork for that very reason, it is going 
to have other outcomes that people aren't anticipating.
    So when they were supposed to give data on how they said 
this would make work line safer, at first they didn't give 
anything, then they gave some data, and the data clearly had 
some serious problems with what is in there.
    So I guess as you look at your report there, are you 
concerned about, first of all, them making unsubstantiated 
claims? And how much work has been conducted on this audit so 
far?
    Mr. Harden. On this particular inspection, we have moved 
through the questions that were asked. We do have findings and 
recommendations that we are going to make to the agency. 
Because we haven't delivered the report and the report is not 
public, I can't talk about that right now.
    But there are questions that we have had with them around 
the topics that you talked about in terms of the data that was 
made available, how much they talked to OSHA or how much they 
talked to OSHA and the National Institute for Occupational and 
Safety and Health and those questions.
    Mr. Pocan. What is the timeline, I guess, then?
    Mr. Harden. The timeline, currently we should have a draft 
report, if all goes well, in a week or so to them.
    Mr. Pocan. Okay, good.
    Mr. Harden. Usually we try to set up an exit with any 
agency after we give them the draft report. And a couple weeks 
after that, then we make whatever changes we need to for an 
official draft that they will have 30 days to respond to. So 
best estimate, maybe early April, but there is a lot of stuff 
that is fluid in there. But we can keep you apprised.
    Mr. Pocan. Thank you very much.
    Thank you, Mr. Chairman.
    Mr. Bishop. Thank you.
    At this time, without objection, with the courtesy of Mr. 
Moolenaar, I would like to recognize the gentlelady from 
California out of order, as she is able to go to another 
hearing that she has imminently. And so I would like for her to 
be able to ask her questions, and Mr. Moolenaar has kindly 
allowed for her to ask her questions out of turn.
    The gentlelady from California is recognized.
    Ms. Lee. Thank you very much, Mr. Moolenaar.
    Thank you, Mr. Chairman.
    And thank you all very much for being here.
    Appreciate you yielding.
    Let me just ask you a couple questions with the regard to 
the GAO reports on the Civil Rights Office. In 2008 and 2009 
the GAO and OIG issued I think it was two reports that the 
USDA's Civil Rights Office did not process work complaints in a 
timely manner and then released incomplete records on the 
number and types of complaints.
    Then again in I believe it was 2015 and 2017, the Federal 
investigators found that the Office of Civil Rights had 
seriously mismanaged and had compromised the civil rights of 
USDA employees.
    I am also aware that Naomi Earp, USDA's recently resigned 
deputy assistant secretary for civil rights, was only in the 
job for a little more than a year.
    And what is more, there is data clearly showing that--now, 
this is really interesting and shocking really--that out of the 
more than 300 civil rights complaints filed by employees in 
2019, the Department only determined wrongdoing in two cases. 
Clarify that for me, if that is inaccurate.
    Finally, the fact that in the budget request there is a cut 
to the Office of Civil Rights by $3.5 billion from fiscal year 
2020, that is very concerning if, in fact, we care about civil 
rights. I can't imagine this huge cut taking place.
    And then secondly, I am aware that SNAP fraud is relatively 
low, and I just wonder if you could tell us on average how much 
time and taxpayer money is spent investigating these alleged 
fraud cases and why.
    Thank you again.
    Ms. Fong. Let me just make a couple of comments, and then I 
think Pete may have some.
    In terms of civil rights oversight, we have a long history, 
GAO and our office, of doing work to oversee the complaint 
process, both by program participants as well as USDA 
employees. We are currently engaged in an audit of how 
effectively that office is handling complaints from people who 
participate in USDA programs.
    We also plan an audit in the next year or so--within this 
year--to look at employee complaint processing, how complaints 
filed by USDA employees are being handled by that office.
    So I think we will take into account what you have brought 
to our attention as we formulate our objectives on that, and we 
should have more to brief you on.
    Mr. Harden. And briefly, the work on program complaints 
that is underway right now looks at some of those very 
questions that you are asking: How fast did they process 
complaints? Was that reasonable? Did they have support for the 
decisions they made? Are their IT systems where they need to be 
in order to support the decisions that are made? We will look 
at similar type of documentation and support for decisions when 
we look at the employee side.
    Ms. Lee. Okay. I am glad you are looking at them. But these 
complaints are real. And out of 300 complaints, only 2 were 
found or determined that there was wrongdoing? That is accurate 
or not? Or you are still investigating this?
    Well, could you get back to us on that, please? Because 
this is----
    Ms. Fong. We will see what we can find out on that.
    Ms. Lee. Yeah, yeah, appreciate that. Because this is real, 
these are real lives, and civil rights is extremely important. 
And if there are that many civil rights complaints and only two 
were found--determined wrongdoing--then something structurally 
within your--within USDA is wrong. I can't imagine this taking 
place.
    So thank you very much.
    And on the SNAP investigations as it relates to fraud and 
how much money you are spending on that? Because we know and it 
is a fact that SNAP fraud is relatively low.
    Mr. Paradis. Yes, ma'am. Approximately 43 percent of our 
time in fiscal year 2019 for our investigative resources was 
allocated to the investigation of SNAP fraud.
    It is difficult to put a monetary assignment on that 
percentage of time based upon the fact that each investigation 
on its face is comprised of different facets. Some occur 
quicker, some conclude over a much longer period of time.
    Ms. Lee. Is it fraud versus error that you have found? 
Because 43 percent is quite a bit of time.
    Mr. Paradis. That is a number attributed to the 
investigative effort associated with SNAP fraud.
    Ms. Fong. Let me just add something here. In terms of where 
we spend our investigative resources for SNAP fraud, we tend to 
focus on retailers. Where we receive an allegation that a 
retailer, like a store, is engaged in trafficking, we will 
investigate those allegations.
    Our focus is not primarily on beneficiaries. If there are 
any concerns about beneficiary recipient fraud, usually State 
law enforcement will handle those kinds of cases.
    So to the extent that we are spending 43, 44 percent of our 
resources on fraud, it is really to go after the stores who are 
trafficking and taking away benefits from recipients who really 
should be able to use those benefits to feed their families. We 
want to go after people who are taking those benefits and using 
them for illegal purposes.
    Ms. Lee. Thank you very much.
    Thank you, Mr. Chairman. Thank you.
    Mr. Bishop. Mr. Moolenaar.
    Mr. Moolenaar. Thank you, Mr. Chairman.
    Nice to see you again, and thanks for being here today.
    In your testimony, Ms. Fong, you talked about OIG audit 
work identified more than $2.2 billion in questioned costs and 
funds that could be put to better use. And I remember last year 
talking with you about if the OIG had enforcement mechanisms, 
and you said it is persuasion, is really the enforcement 
mechanism.
    One of the questions I have is, the top three agencies that 
you found that contributed the majority to that figure and how 
is the work at persuasion going with those areas?
    Ms. Fong. Well, I think Gil has a lot to say on that, but 
let me just remark that this past year the $2.2 billion in 
audit results was a very unusual year for us. Usually we don't 
report that volume of dollars. And most of it is attributed to 
the audit we did of the EQIP program in NRCS. And we had to 
exercise quite a bit of persuasion to reach management decision 
on those recommendations.
    Mr. Harden. Quite a bit of persuasion on how we presented 
the information in the report as well, so that it was well 
received.
    The biggest portion last year, as Phyllis said, and it is 
kind of an anomaly, was the EQIP payment schedules review that 
we did. And why we took issue with so much money in that 
particular program for the scope years that we looked at is 
NRCS had put in place controls that, if they had used them, 
would allow them to look at the payment schedules and look and 
see if they are reasonable and reliable.
    They had not applied those controls to the 3 years, I think 
it was, that we have looked at, which is why we came to the 
conclusion we did.
    One of the things that we did want to point out, and it is 
very important to point out for NRCS', I think for anybody's 
point of view, we did not question the conservation practices 
themselves. We were not on the ground. We were just basically 
looking at how you were administering the payment schedules for 
the program.
    In most years there will be dollar amounts in various 
agencies. We recently issued a report on multi-family housing 
that had some concerns in terms of how that money was going out 
the door. We have had concerns with grants at NIFA. So it kind 
of covers the cross-section depending on what we look at.
    Mr. Moolenaar. I guess I also want to follow up in terms of 
the communication process with the agencies as well as 
Congress. I was kind of interested, you had done some work 
looking at disaster relief funding with respect to Puerto Rico, 
and it seems that you identified a number of areas that could 
be improved. You said: ``FNS generally agreed with most of our 
recommendations, but further action for the agency is needed to 
reach agreement on the remaining recommendation.''
    So in Congress we recently, in the House, passed some 
legislation on Puerto Rico. Do you feel that that was 
incorporated into that legislation, or do we still have work to 
do between kind of what we are doing here in Congress, what the 
administration is doing to implement some of your findings?
    Because I know this is real-time communication that really 
is needed, and I am just concerned that you put out something 
and we are doing something over here, and I don't know how much 
communication goes on.
    Do you have any thoughts on that?
    Ms. Fong. Actually, I think that is a really good example 
of a lot of successful dialogue, I believe. And we are not 
privy to all the conversations. But as you mentioned, we issued 
a report on the delivery of assistance in Puerto Rico, and we 
found a number of issues, and that was for the first tranche of 
assistance.
    In the meantime, Congress appropriated a second grant, 
which we are in the process of reviewing at this point. A 
report will come out very shortly. And I think what we will see 
is that there has been a continuum of effort in this area on 
the part of the Department and potentially Congress as well. 
And we are aware that there is a third potential appropriation. 
And I think it tells a good story overall.
    And the basic question being, what is the most effective 
way to deliver nutrition assistance to Puerto Rico? I think 
that is a very difficult issue. The Department is wrestling 
with it, and I think they are making progress. That is not to 
say that there aren't other views that you all might have.
    Mr. Moolenaar. Okay. Well, thank you. Thank you for the 
feedback on that.
    Thank you, Mr. Chairman.
    Mr. Bishop. At this time I would like to recognize the 
gentlelady from Connecticut, the former ranking, chair of this 
subcommittee, Ms. DeLauro.
    Ms. DeLauro. Thanks so much, Mr. Chairman.
    And welcome to all.
    Ms. Fong, it is great to see you again.
    I am concerned about the continued and substantial payments 
to U.S. subsidiaries of the corrupt Brazilian-owned and 
controlled meat packer JBS.
    Trade package, JBS has received a little over $100 million 
in payments. That money, I might add, was supposed to have been 
for struggling farmers, ranchers, who have been hurt by the 
administration's failed trade policies.
    Unlike farmers and ranchers, JBS also receives payments on 
an annual basis, and that is through USDA's Agricultural 
Marketing Service. In fact, U.S. taxpayers have subsidized JBS 
to the tune of tens of millions of dollars over the past 
several years. It is a problem, because according to the 
Federal Acquisition Regulation and related USDA policy, 
government contractors must have, and I quote, ``present 
responsibility.'' I am not going to go through the explanation 
of that, it is too detailed, but you know it. And accordingly 
the present responsibility can be impacted by fraud, bribery, 
other violations of Federal laws.
    JBS is currently under an investigation by the Department 
of Justice for potential violation of the Foreign Corrupt 
Practices Act. This is because the Batista brothers, the 
leading shareholders, have admitted to criminal acts, numerous 
criminal acts, consisting of the bribery of thousands of 
Brazilian government officials to obtain illicit loans from 
Brazil's national bank. The ill-gotten loans were then used by 
JBS to illegally enter and consolidate the meat packing 
industry in the United States.
    You talk to cattle producers, you find out what they think 
about JBS. You are not going to get a favorable answer.
    November of last year, I wrote to Secretary Perdue urging 
him to open up a suspension and debarment investigation into 
JBS to determine whether the company meets the legal 
requirement of present responsibility. Just very, very recently 
received a reply from the Secretary stating that he refuses to 
open such an investigation.
    And, Mr. Chairman, I would like to submit both my letter 
and his reply into the record.
    So no action. So I make an assumption that the Secretary 
condones the use of taxpayer dollars in order to subsidize a 
corrupt foreign-owned corporation engaged in illegal activity.
    So, Ms. Fong, I don't know what kinds of conversations that 
you have had with the Secretary on this issue, the criminal 
allegations, do you take them seriously by this Department. And 
I have two other questions, so I would like a quick answer.
    How seriously are you taking these allegations?
    Ms. Fong. We are aware of these allegations as reported by 
you and the media, and we are doing what we believe to be 
appropriate at this time.
    Ms. DeLauro. What are you doing?
    Ms. Fong. I think it would be useful if our staff talked 
with your staff.
    Ms. DeLauro. Happy to do it. Please do. And we have been 
talking to your staff over and over and over again.
    Let me just say that the Secretary said USDA suspension and 
debarment investigation into JBS would, quote, ``conflict with 
investigations by DOJ and SEC.'' Is that the case?
    Ms. Fong. I can't comment on their position.
    Ms. DeLauro. I am not asking you that, but is it a 
conflict?
    Ms. Fong. I don't know what the basis for his response is.
    Ms. DeLauro. Fine. Because you, by the Inspector General 
Act of 1978, amended in 2008, you have independent authority 
and responsibility to ensure that taxpayers' dollars do not 
continue to flow to a company that is engaged in criminal 
behavior. Are you going to conduct an investigation?
    Ms. Fong. We are also required by the IG Act to 
appropriately coordinate with the Department of Justice.
    Ms. DeLauro. Are you, with your independent authority, 
going to conduct an investigation?
    Ms. Fong. I can't comment on that.
    Ms. DeLauro. No comment. That means we don't know whether 
or not your authority is being challenged in any way.
    It is. You are independent. That is what makes the IG so 
critically important to all of us up here.
    I will make one final comment to you, because in your 
testimony you talk about worker safety and pride yourselves on 
dealing with worker safety. JBS, its subsidiaries, have engaged 
in a litany of practices leading to violations of labor, 
environmental, food safety laws.
    Investigation by The Washington Post, 2015 to 2018, JBS had 
the highest rate of serious worker injuries, those involving 
amputation, hospitalization, among all meat companies in the 
United States, and the second highest rate of serious injuries 
among all companies in the United States. A subsidiary that is 
getting over a hundred million dollars.
    Investigate. Use your authority.
    Thank you, Mr. Chairman.
    Mr. Bishop. I thank the gentlelady.
    I failed to make a comment to our witnesses as well as the 
members. If you could, since our hearing is being watched by 
the public across the country, if you could refrain from using 
acronyms so that people who are not necessarily familiar with 
those acronyms will know exactly which agencies you are 
referring to.
    At this time I would like to recognize Mr. Cuellar from 
Texas.
    Mr. Cuellar. Mr. Chairman, thank you so much.
    Good morning to you all.
    Looking at your management challenges on performance 
measures, we have added language in the appropriations asking 
the Department, both USDA and FDA, to comply with Title 31 of 
the United States Code, which means including their development 
of performance measures. That is, set their priority goals, 
their outcomes, and making sure that they have the performance 
outcome measures, output measures, efficiency measures, 
customer service measures. And this is the law, Title 31.
    I see your report saying that they need to do that. Can you 
tell us where they are and why they are taking a little bit of 
time to do what they are supposed to be doing under the law?
    Mr. Harden. I don't know that I can specifically talk about 
why they are not doing it in response to the language in the 
appropriations bill. It is something that I would want to go 
back and look at.
    As we develop the management challenges each year, it is 
one of those things where as we are doing work and looking at 
how agencies measure their performance, we have run into 
questions about how they are doing that. So it does have us 
look at how they do those individually complying with the 
requirements.
    We would need to go back and talk to them or maybe even do 
some additional work to see where they are in terms of getting 
more on par with what the requirements are overall.
    Mr. Cuellar. Well, if you look at the 50 States, I think 
most of the 50 States have been doing this since the 1990s, and 
the Federal Government is still behind, and I don't know why it 
is so hard to measure.
    If somebody spends a hundred dollars, don't we want to know 
how those hundred dollars have an impact on it? I mean, we just 
want to know what is the bang for the $100 that we are 
spending.
    What do we need to do to get you all to help us--and 
appreciate all the work that you are all doing--to get them to 
do not only the appropriation instructions, but basically Title 
31 of the United States Code? I mean, they are supposed to be 
doing all this.
    Ms. Fong. And you are absolutely right. This is just good 
basic performance management. And the Federal Government has 
had these requirements for a number of years.
    I can't bring up any particular examples right now, but in 
many of our reviews when we look at how the Department is 
delivering programs, one of the first things we look at is 
their strategic plan and their performance measures to see are 
they really accomplishing what they set out to accomplish as 
they define it.
    It is not easy to come up with some of these measures, 
output versus outcome, and we know everybody is struggling with 
that. And what that management challenge is designed to do, as 
we have worked in the Department, we have seen different 
examples where different agencies may need to have a better 
focus on those issues.
    I think we can provide you some additional information on 
examples of where we found work, whether it is good work or bad 
work, to give you a sense of that.
    Mr. Cuellar. Again, the same thing about how do we measure 
this. I mean, again, I go back to the States, whether it is 
Florida, Texas, name the State, they have gone through this, 
and they have gone through the how do you measure output, how 
do you measure activity--and sometimes people just measure 
activity--but how do you measure outcomes.
    I mean, after so many years--and some of this got sort of 
the 1990s under the Clinton administration, and then back in 
2010 we passed legislation to modernize the performance 
measures, but we still get the agencies to do what they are 
supposed to be doing.
    And it is not that hard. I mean, the States have done it. 
The States are the living laboratories that we have out there. 
I mean, I can probably pick any of the members here, those 
States have done it for many years.
    But the Federal Government still can't tell us, if they 
spend a dollar, they cannot tell us how they spent that dollar, 
how efficient or effective. Besides what Chairwoman DeLauro was 
talking about on some particular issues, but if you have 
measures it is a simple budgeting process.
    But I would love to--I know my time is up--but I would love 
to sit down with you all, if you want to send somebody to the 
office with our committee, love to sit down and get some of the 
thoughts and see how we can put a little teeth on Title 31. 
Thank you.
    Thank you, Mr. Chairman.
    Mr. Bishop. Thank you, Mr. Cuellar.
    Ms. Fong, since 2018, the administration has used funding 
and the authority of the Commodity Credit Corporation to make 
available about $25 billion for payments to farmers through the 
Market Facilitation Program. How does OIG plan to review 
payments that are made under the MFP program? And do you plan 
to review data or other information that was used in 
calculating the eligible commodity payment rates to the 
recipients?
    Of course, that had a great deal to do with the trade wars 
that were impacting our farmers tremendously, which has 
resulted in a gigantic number of bankruptcies in farm country, 
particularly in Wisconsin and Georgia, my home State.
    So can I get you to comment on that, please, ma'am?
    Ms. Fong. Let me just offer a few comments, and I know Gil 
has a lot more detail.
    We are working right now on looking at the Market 
Facilitation Program and the Department's authorities there. We 
have work going on. And then we are going to branch out into 
the eligibility issues.
    Let me turn it over.
    Mr. Harden. Back in 2019 fiscal year, we recognized when 
these programs came out that MFP was the biggest one that was 
coming out, and it was something that we would probably want to 
take a look at. So we planned work at that point in time to 
start looking at the MFP program.
    After we started that work, we heard questions and received 
questions about the trade aid package in total, and the 
authority USDA had for using the CCC funding was a central part 
of that question.
    So I had the team that was looking at MFP to stop and take 
a look at the authority questions for all three of the programs 
that are being done under trade aid.
    Mr. Fortenberry. Mr. Chairman? Mr. Chairman?
    Mr. Harden. We should be reporting out on that shortly, 
hopefully later this year, and then we will be looking in 
detail at the other programs.
    Mr. Bishop. Mr. Fortenberry, I yield to you.
    Mr. Fortenberry. I just would like to admonish you to watch 
the acronym speak.
    Mr. Harden. I am sorry.
    Mr. Fortenberry. It is very difficult. We know what you are 
talking about, but it is very difficult to follow when you are 
using that too rapidly and not defining what they mean. So just 
say the whole programmatic area.
    Mr. Harden. Okay.
    Mr. Fortenberry. Thank you.
    Mr. Harden. So we do have planned work for the Market 
Facilitation Program, the Ag Trade Promotion Program done by 
the Foreign Ag Service, as well as the Food Purchase and 
Distribution Program done by the Ag Marketing Service.
    Mr. Bishop. Thank you.
    According to the 2019 semi-annual reports, complaints 
coming through the OIG Hotline on participant fraud increased 
over 40 percent between 2018 and 2019, from about 11,400 to 
16,100.
    Do you have details on what programs are involved, what are 
the reasons for the big increase in the number of complaints, 
and how USDA is responding to the trend?
    Ms. Fong. Yes. We have been watching and obviously managing 
the hotline operation. The hotline for USDA is housed within 
our office, it is the OIG Hotline. And over the last few years 
we have noticed an incredible increase in the number of 
incoming complaints or contacts.
    And as we have been analyzing them--and you will notice in 
our semi-annual reports--I would say about 95 percent of them 
relate to questions about the Supplemental Nutrition Assistance 
Program, or SNAP.
    Many times they are contacts made by people who are 
concerned about their benefits being affected in some way. They 
will have questions. They want to know how to apply. They 
really are not complaints that are directed to us for OIG 
investigation per se. They are really looking for information.
    So as we have noticed this trend over the last few years, 
we are trying to figure out how to make sure that the people 
who contact us with these kinds of program questions are 
getting what they need. In the meantime, that we handle our 
workload in an appropriately responsible way. It is a 
management challenge for us.
    I don't know if, Pete, would you like to add any comments?
    Mr. Bishop. Does some of that also have to do with a lack 
of information and outreach on the part of the Department in 
terms of making clear what the eligibility for these programs 
are? And if that were done appropriately by the Department, 
would that lessen the need for these people to make these calls 
that you are talking about, about eligibility?
    Ms. Fong. Well, I think we don't know that. We attribute 
the increase to some action in one of the appropriations bills 
a number of years ago which directed FNS to suggest to the 
States that on the EBT cards, the Electronic Benefit Transfer 
cards--I am not sure if that is right--that the OIG Hotline 
number be included if people have issues to bring to our 
attention.
    And so we think people are looking at their cards. If they 
have a question or a problem or a concern, they are dialing us 
up. And my guess is that this may be an area where we can work 
together with the Food and Nutrition Service and with you all 
to see how we can best address those issues and concerns.
    Mr. Bishop. Thank you very much.
    At this time I am delighted to recognize Mr. Harris.
    Mr. Harris. Thank you very much. And thank you very much, 
Mr. Chairman.
    Just to follow up a little bit on the SNAP program, the 
budget, around $60 billion I guess, 57, 60, something like 
that, what is the estimate of the OIG of the amount of fraud in 
the program that is exchanging benefits for currency, things 
like this? Because I suspect that that goes on. What is the 
estimate of the extent of that? I mean, in your testimony you 
talk about one, but it is a drop in the bucket, I would 
imagine.
    Ms. Fong. Yeah. Just in general, we have not tried to put a 
number on the amount of fraud in the program because we are not 
sure of how we would go about estimating that in an appropriate 
way that is based on evidence.
    We do, as you know, report every year on our investigative 
activity, which finds that retailers do trafficking and many 
times we will get large judgments on that. So we have got the 
fraud issue there where we can give a number based on 
convictions and sentences.
    We also know that there are improper payments in the 
program which are not necessarily fraudulent. They could be 
overpayments, underpayments, administrative error kinds of 
payments.
    And as we were just talking about earlier today, the 
Department itself reported an improper payment rate for the 
Supplemental Nutrition Assistance Program of about 6.8 percent 
for 2019. So 6.8 percent of the appropriation, that would give 
you an idea of the numbers of erroneous payments being made.
    Mr. Harris. But I am particularly talking about exchanging 
benefits. Do any of the States look, has any State looked at 
it? Has anyone made an attempt to see when it is done?
    Because, look, we all want to direct it where it is 
necessary, but we all know that exchanging benefits occurs, and 
it is not that hard to do.
    Has anyone tried to figure out the extent of it, and then 
how we can get around it? I mean, has anybody thought, for 
instance, biometric proof or something, when you go to spend 
your benefit that it is you, it is not somebody else, it is not 
someone you sold it to, things like that?
    Ms. Coffey. So FNS has looked at a number of options. I 
think there have been suggestions about pictures placed on the 
cards, things of that nature.
    The one thing I would note is that if an individual is 
really determined to traffic their benefits, whether the 
picture is there, whether it is the biometric or not, they are 
going to be able to do it. So I don't know that that would 
necessarily be sort of the best answer.
    In terms of looking at an overall fraud rate, as the 
Inspector General mentioned, we, overall, have our criminal 
investigations, but there is a portion of fraud that occurs 
which do not rise to the level of criminal activity.
    FNS has the ability to take administrative action to 
disqualify retailers from the program if they determine that 
there is fraud present there, and we would not necessarily have 
the ability to track that particular number. That is not 
something historically that we have looked at. We really focus 
on the criminal matters and the criminal investigations within 
SNAP.
    Mr. Harris. But to exchange benefits, is that a criminal 
offense, for the recipient of SNAP funds to exchange benefits?
    Ms. Coffey. It is a criminal offense. However, it depends 
on the dollar amounts. And certain locations and jurisdictions 
we would not be able to bring a case for prosecution in those 
instances if it doesn't reach a certain dollar amount or 
threshold for the prosecutor's office.
    So we always do try to see that, if there is a way to get 
the bad actors out, we will share our information with FNS so 
that they can move forward to take administrative action to 
remove those folks from the program.
    Mr. Harris. Okay. But bottom line, we have no estimate on 
exchanging benefits, what the extent of that is? It is all 
anecdotal, that it occurs?
    Ms. Coffey. Not in totality, we don't.
    Mr. Harris. That is what I thought. Okay.
    Thank you very much, Mr. Chairman. Thank you.
    Mr. Bishop. Thank you, Mr. Harris.
    Ms. DeLauro.
    Ms. DeLauro. The OIG's swine slaughter audit would be 
available in April. I just want to remind you that the plants 
may be committing to this new system by March 20. So I would 
like to more than suggest we need to have that information 
before this rule, this goes into action without the benefit of 
the audit. So we would like to have that data before March 20. 
Thank you.
    Page 8 of your testimony, Inspector General, you speak in 
detail about your office oversight of the nutrition assistance 
that the subcommittee appropriated for Puerto Rico. That is 
following the devastation of Hurricanes Irma and Maria. Along 
with looking at USDA's Food and Nutrition Service's actions, 
you also calculated overpayments, underpayments, and made 
recommendations to the agency on how to improve.
    However, I am shocked by the delay, because there will be a 
new tranche of funding, and these payments are going to be made 
in trade aid, and we should know something about this package.
    You did not mention any oversight of the Department's $28 
billion in your testimony, the trade aid package. That bailout 
is more than 20 times more than the $1.27 billion in basic food 
assistance that we appropriated to Puerto Rico, yet it has 
received far less scrutiny. Why is that?
    I also want to say this. I guess Mr. Paradis said that 43 
percent of your time in 2019 was investigating the SNAP 
program. Why isn't there a comparable percentage of looking 
into a program which universally has been said is not directed, 
is not going to the struggling farmers and ranchers out there? 
And I said earlier, over $100 million is going to a foreign 
subsidiary that is being dealt with in terms of the Foreign 
Corrupt Practices Act and who has the most injuries of people 
that they employ.
    I think that we are a little out of whack in where we are 
focusing our attention in the Inspector General's Office. Has 
your office taken any active role in overseeing the three 
components of the trade aid package? Have you estimated 
overpayments, improper payments, or underpayments? Do we have 
any idea as to what the level of waste, fraud, and abuse is? 
And when is this audit going to be finished?
    Ms. Fong. We are definitely looking at the trade promotion 
packages, the Market Facilitation Program. We are very aware of 
the large dollars there. It is a priority for our office. We 
have ongoing work, as Gil has testified, the first piece of our 
work should be coming out in the next several months, and then 
we are designing the scope for our second and third pieces of 
work. So we have in the pipeline several audit reviews that 
will be coming out.
    Ms. DeLauro. But your delay in dealing with this means that 
this program is going to continue to move in the direction that 
it has been moving. And we have no information about waste, 
fraud, abuse, under, overpayments. We don't have any 
investigation of over $100 million that is going to this 
corporation. And yet we spent a heck of a lot of time dealing 
with $1.27 billion to food assistance aid to Puerto Rico and 
you spent 43 percent of your time in 2019 looking at the food 
stamp program.
    Do you think there is need to rebalance your efforts? And 
when is this audit coming forward? Not in the next several 
months before a new package of dollars goes out and they can 
employ the same waste, fraud, and abuse which is ongoing right 
now in this program and you are not doing anything about it. 
How quickly can we get an audit?
    Ms. Fong. Well, as we have testified, the first piece of 
our audit in this area, the first audit results, will be coming 
out in the next few months.
    Ms. DeLauro. When did the program go into effect?
    Mr. Harden. The program went into effect, I think, in 2018, 
and as part of our 2019 plan after it had come out, we made 
revisions to our plan so we made sure that we were looking at 
the Market Facilitation Program.
    After we started looking at the Market Facilitation Program 
there were multiple questions that we received on the authority 
of the Department to do this program, which is why it is 
important for us to report out on the authorities that is being 
done.
    Ms. DeLauro. Let me just say this. You have had 2018, all 
of 2019, we are looking at 2020 and the next several months 
when you all can't investigate waste, fraud in a $28 billion 
program, but, boy, did you go after 43 percent of your time on 
the SNAP program and much of your time on $1.27 billion in 
basic food aid to Puerto Rico. I rest my case.
    Thank you, Mr. Chairman.
    Mr. Bishop. Mr. Fortenberry.
    Mr. Fortenberry. Thank you, Mr. Chairman.
    I do think it is important that we follow through on 
looking at the Market Facilitation Program to ensure that it 
was implemented with integrity.
    It is important to note that it seems to be purposeful that 
the amount of time that you are spending auditing SNAP program 
aligns with the percent of it as a budget, as a whole.
    So let me go back to the Environmental Quality Incentive 
Program that you talked about earlier. There is a question 
about $2.1 billion in payments. This is an important program 
for farmers and ranchers, a very popular program. You talked 
about how the Natural Resources Conservation Service didn't 
basically have the right component prices or an outdated set of 
baselines that were not reliable, credible, or cost-effective. 
I didn't hear whether or not you said have they fixed this 
process.
    Mr. Harden. Yes. As we discussed the problems with the 
Natural Resources Conservation Service they agreed with our 
recommendations and have taken actions--or at least they have 
told us of the actions they plan to take--to correct the issues 
that we identified. So they are moving to correct these issues.
    Mr. Fortenberry. Okay. So that is some good news, right?
    Mr. Harden. Yes.
    Mr. Fortenberry. Okay. To the larger question, when we are 
talking about fraud or improper payments, how well do we 
recapture funds?
    Mr. Harden. In terms of the monetary recommendations that 
we have put forth before that have actually said collect the 
money back, I would have to go back and get some statistics 
from the Office of the Chief Financial Officer, which would be 
the entity that tracks that on final action of the 
implementation of the recommendations, but I can definitely get 
back to you on that.
    Mr. Fortenberry. Give me some broad estimate.
    Mr. Harden. Sir, I would be making a complete guess and I 
would prefer not to.
    Mr. Fortenberry. But you have some idea, more than I do, 
because I have asked the question, as to how effective this is. 
Obviously you are trying to get programmatic changes to stop 
behaviors that are inconsistent with programmatic integrity, 
but a part of that is recouping money lost.
    Mr. Harden. And to my knowledge, when agencies agree with 
us that they are going to recapture, recoup the money, they 
have a plan in place for doing that. I have not seen many 
requests come from agencies or from the chief financial 
officer's office, which would be the case if it did, to change 
that. So my presumption is they are going about recouping the 
money.
    Some of the recommendations date back a number of years, as 
the chairman pointed out in his opening statement, going back 
to the mid-1990s. We have had recent discussions with the 
Foreign Service Agency about where are we on how we are 
collecting some of those moneys that were questioned for.
    Mr. Fortenberry. Look, I am sure you are overwhelmed with 
work; however, I think this is a pretty important component. 
Yes, it is about changing patterns of behavior to ensure 
program integrity, but it is also about restitution. And I 
think moving forward, including that as a part of your findings 
would be an appropriate shift, if you will, of how you report 
back to us, because ultimately I think that is concrete, 
measurable action that your good recommendations have been 
implemented.
    Ms. Fong. Let me just offer a comment. You know, we talk 
about our dollar results being $2.2 billion. In the EQIP audit, 
for example, our recommendations may not always be, ``Agency, 
you need to go back and retrieve the money because it was an 
improper payment.'' It may be that, ``Agency, because you 
didn't use the right pricing, you paid more or less than you 
should have.''
    Mr. Fortenberry. I understand that. So you probably need--
    Ms. Fong. So there may not be a recoupment of cost.
    Mr. Fortenberry. But you probably then need to have two 
separate numbers, one in which programmatic adjustments that 
you made resulted in taxpayer savings of this amount, 
restitution, because of some fraud or action of the Department, 
is this amount. I think that would be beneficial to us and to 
you. I mean, what is your total budget?
    Ms. Fong. Oh, right now it is you 98 million.
    Mr. Fortenberry. And you want 100--I forgot the number you 
said
    Ms. Fong. 100.3.
    Mr. Fortenberry. That proves that your work is of good 
value, if you can quantify the outcomes in the way I just said.
    Ms. Fong. Okay.
    Mr. Fortenberry. Which is without question, please 
understand, it is without question that your work is of good 
value. But when you have a quantifiable like that, I think it 
is a simple way to say, ``Our work results in this.'' Okay?
    Which agencies succeed the best? Which agencies need help 
and funding?
    Ms. Fong. As I have been looking at the work we have done 
over the past year, many of our reports will point out that the 
agency in question did a good job on certain aspects of their 
program, but other aspects they really need to tighten up 
controls. And I think a nuanced answer to your question is that 
there are some success stories across USDA. I wouldn't lump any 
one or two agencies in a category of----
    Mr. Fortenberry. Well, they all have different missions. It 
is a hard question, I get that. But there have got to be 
outstanding examples of programmatic integrity, implementation 
process, outcome verifications that you can point to and say 
these are excellent.
    Ms. Fong. Well, I will say from a very high level, I think 
financial management at the Department is getting better. This 
past year we saw the National Resources Conservation Service 
obtain a clean opinion on its financial statements for the 
first time ever. It took 5 to 7 years of concentrated effort to 
get there. So that is definitely a success story for the 
National Resources Conservation Service.
    On the other hand, that agency was the one where we had 
this audit we have been talking about, the Environmental 
Quality Incentive Program, EQIP, as it is known, where we found 
issues to the tune of about $2 billion.
    So there is great success and also great opportunity, and 
that is a concrete example. I think Gil may have some others.
    Mr. Fortenberry. I think my time is up. I am sorry.
    But thank you, Mr. Chairman, for your indulgence.
    Mr. Bishop. Mr. Cuellar.
    Mr. Cuellar. Yes, sir. Just a quick question.
    The GAO December 2018 had a report on food insecurity: 
Better information could help eligible college students access 
Federal food assistance benefits if basically they could be--
they were either not aware of or just didn't know about their 
potential eligibility for SNAP.
    Any thoughts on that? And we can follow up later on this. 
Just, basically, how do we inform students at colleges, ``You 
are eligible''?
    Mr. Harden. We haven't done any specific work ourselves, so 
we are happy to engage in conversations if there are specific 
questions. I mean, we have a very good working relationship, I 
want to highlight, with GAO to where we are not looking at the 
same things at the same time so that we spread the oversight 
effort, if you will.
    I have seen that report, but I am not familiar with the 
details. But if there are specific questions, we can talk about 
them.
    Mr. Cuellar. Okay. Yeah, we will follow up. I think we are 
going to follow up on performance measures and on that. So 
appreciate it if we can follow up on this.
    Thank you, Mr. Chairman.
    Mr. Bishop. Thank you, Mr. Cuellar.
    Ms. Fong, the Healthy, Hunger-Free Kids Act of 2010 
mandated the nationwide implementation of electronic benefits 
transfer for WIC by October 1, 2020. The WIC program is 
administered by 90 State agencies, including territories or 
travel organizations.
    You released a report at the end of December 2019 that 
identified 25 State agencies that may not be able to meet this 
deadline. You mentioned that this may occur because these State 
agencies have and are experiencing various challenges and 
setbacks.
    Can you discuss the findings and recommendations of your 
report and specifically the reasons why some States face more 
challenges than others and tell us how the territories or the 
tribal organizations are progressing and whether they face 
different challenges than the States do?
    Mr. Harden. In response to the last question first, I don't 
know that I have detail on whether tribal organizations were 
different than States.
    Mr. Bishop. And the territories.
    Mr. Harden. And the territories. But I will go back and 
look at the audit report and talk to the team if there were 
specifics.
    In terms of what we reported in the report in terms of the 
State agency problems and setbacks or challenges and setbacks, 
some States had difficulties and delays in obtaining 
contractors to help them put in place their electronic benefit 
transfer systems or any other management information systems 
associated with the mandated timeframe.
    We also saw that State procurement departments did not 
always see this as a high priority for the States in terms of 
the procurements that needed to be done because this was a 
State responsibility to put this in place. And also for some of 
the smaller State agencies they had limited staff and resources 
to get things done.
    Now, as we brought this issue forward during field work we 
did talk to FNS, and FNS put different things in place to work 
with the States to give them better plans to help them along 
the way.
    And in response to our recommendation to develop and 
implement a plan to assist the States, FNS was very timely, in 
my thinking, in the actions that they were taking to work with 
the States and put a technical assistance plan in place, 
develop correspondence between regional administrators and 
State commissioners, develop different technical questions and 
answers to sell best practices for other States to use, and to 
have ongoing dialogue, teleconferences, with the different 
people at the Federal, State, and local level on what needed to 
happen.
    They planned to put all that in place by the end of 
January.
    Mr. Bishop. Thank you.
    Last August you issued an inspection report on USDA's 
proposal to reorganize and relocate the Economic Research 
Service and the National Institute of Food and Agriculture. The 
report included five recommendations, four of which you 
accepted the management decisions. The recommendation on which 
you and USDA disagreed has to do with obtaining congressional 
approval prior to using funds for the proposal.
    Can you give us the latest status update of this inspection 
report and what is the resolution of that open recommendation?
    Mr. Harden. We have reached management decision on that 
recommendation. It was reached on October 15 of last year.
    In response to their response in the report, we pointed out 
where we thought there was inconsistency in how the Department 
was applying the provision at that time and then prior. So 
where they were telling us that something was unconstitutional 
now, they were using in different discussions earlier where 
they did use--that they did need the authority.
    So our basic response to them, being as the response was 
coming from their general counsel, was that, please, clarify 
for us and clarify for the departmental officials at USDA if 
this has been a change in policy so that everybody is on the 
same page in terms of how we are going to implement this.
    What they provided to us was that they didn't feel like 
they needed to do additional communication because of training 
that they had already put in place that reflected their view on 
these requirements to affected people that deal with budget and 
procurement and general counsel's office and the chief 
financial officer's office as well.
    And they also pointed out that the people that attended 
these trainings or had this training would be the people that 
would be advising agency leadership on what the 
responsibilities were.
    So they gave us an answer to our question, which is how we 
reached agreement.
    Mr. Bishop. We will perhaps follow up on that.
    Mr. Fortenberry.
    Mr. Fortenberry. Thank you again, Mr. Chairman. Before we 
concluded, I appreciate your willingness to call this important 
hearing.
    And again, thank you all for your work.
    I do think it is important we drill down on problems. But 
we were talking about good examples of people who have either 
improved or who are maximizing their effectiveness with program 
integrity.
    You wanted to make a few comments, Mr. Harden, in that 
regard? Ms. Fong said you did.
    Mr. Harden. It is true that most of what we look at 
discloses weaknesses and different problems. We do try to point 
out positive things, as the Inspector General pointed out.
    In terms of specific examples, and maybe I can talk with 
your staff about the detail of the report, but we did see, I 
would say, having agencies focus on program administration and 
internal control is something that needs to be sitting at the 
table as I have had discussions with agency leadership in terms 
of program delivery as well. And program delivery is important, 
but also think about how we are controlling the operations and 
are we getting what we are supposed to be getting.
    One example of that is a review that we finished last year 
in crop insurance related to the Annual Forage Insurance Plan, 
as well as follow up on the Pasture, Rangeland, and Forage 
Insurance Plan that we had looked at in years prior.
    These are both 508(h) products from the Federal Crop 
Insurance Act, which we are currently looking at the process 
associated with that because of things we saw with these two 
insurance plans.
    One of the things that I feel the agencies could have done 
better with regard to this is that we had pointed out things 
with the Pasture, Rangeland, and Forage Plan a couple years ago 
that translated into improvements that could have been made to 
the Annual Forage Plan had the agency taken those ideas and 
applied them across the board.
    Some of those specifics dealt with the county-based values 
of the land involved in what is being insured. Here in the 
Annual Forage Plan, like we found in the Pasture, Rangeland, 
and Forage product, they were treating irrigated and 
nonirrigated land the same, and all of us know that irrigated 
land will be highly more productive, most likely, than 
nonirrigated land.
    The other factor that we pointed out with Pasture, Range, 
and Forage that could apply to Annual Forage was thinking about 
the soil's productivity in terms of what actual crop they were 
going to be growing on the land.
    So that is an example of something where if the agency 
could have taken information that we had already said and 
implemented corrective actions on another program.
    Mr. Fortenberry. Okay. I was kind of looking for a good 
example. But that is okay. You gave what you needed to say.
    Thank you, Mr. Chairman.
    Mr. Bishop. Let me just explore one other area. Obviously 
this is report on USDA management challenges every year, and 
one of the seven challenges in 2019 is the USDA, quote, ``needs 
to improve outreach efforts,'' which has been included in the 
reports since 2013.
    As you may know, ensuring that everyone who is eligible 
gets the same opportunity to receive government assistance is a 
major priority of mine, and the 2019 report indicates your 
office plans to look into outreach efforts for the Farmers 
Market and Local Food Promotion Program and for the Cooperative 
Interstate Shipment Program.
    Where do you see outreach is needed the most? Where does 
USDA need to do more to help new beginning and historically 
underserved producers get access to the government services 
that they so richly deserve?
    Ms. Fong. That challenge on improving USDA outreach to 
underserved populations, over the years we have done different 
kinds of projects to get to different aspects of that 
challenge. As you point out, we have looked at reaching out to 
underserved producers, new farmers, new ranchers.
    Currently, I believe we have an audit going on the Section 
2508 program--2501. You may remember a few years ago we did a 
series of reviews in that program which found that the 
Department had challenges in getting grants out in an equitable 
way. So we are going back now to revisit that program to see if 
there have been any improvements.
    We also, as you know, we have talked this morning about two 
reviews we are doing vis--vis the Office of the Assistant 
Secretary for Civil Rights and how that office manages its 
workload on complaints from program participants as well as 
employees. So we have got that going on.
    We have also recently issued a couple of reports dealing 
with tribal organizations and the Department's provision of 
food assistance, which I think was a very helpful report, as 
well as the substantially underutilized tribal assistance 
program. I think in terms of acronyms all the time.
    So we are definitely doing our best to hit all the 
different aspects of this challenge, and we welcome any 
thoughts anybody may have on that.
    Mr. Bishop. And the territories, in particular Puerto Rico 
and the Virgin Islands?
    Ms. Fong. We have, as we have talked about this morning, 
looked at the nutrition assistance disaster delivery programs 
in Puerto Rico.
    We also had initiated some work vis--vis the Virgin Islands 
program, and after we did some initial review and scoping 
decided that we really needed to put the emphasis on the Puerto 
Rico delivery because that was where we saw more challenge at 
the time. But we are definitely monitoring what is going on 
with the Virgin Islands.
    Mr. Bishop. Do you feel that we need to look at the 
structure of the delivery of the disaster and the structure of 
nutrition programs, period, for the territories? Because right 
now they are directed totally different from the States. The 
territories and, of course, the Virgin Islands and Pacific 
Islands, they are treated altogether differently, and when we 
have these major disasters it appears as if they end up being 
delayed unnecessarily in getting the results that they need to 
help their people.
    Do you think, can you help us with reports that would 
indicate what we could do to sort of equalize the response time 
and the delivery of services under the disaster programs for 
the territories, much the way that we have historically done 
them for the States?
    Mr. Harden. Mr. Chairman, with respect to the Puerto Rico 
Nutrition Assistance Program, that is the one territory that we 
have looked at from that aspect, so that was where I will focus 
what I am going to say.
    In the first round that we looked at that, we did have 
concerns with delays, as we reported, and the one 
recommendation that we are still working with FNS on is, is 
there a better way to approach this? What, if anything, are our 
other options?
    While negotiating that with, as the Inspector General 
talked to, I think, Mr. Moolenaar, there was language that came 
in the appropriations bill in terms of maybe how to go about 
looking at that. We also got a second request to talk about the 
timeliness of the 600 million and how it got there, and we are 
very close to issuing our report on that.
    But we are seeing improvements on that over time. And so we 
are trying to engage in discussions ourselves, with respect to 
the outstanding recommendation, is there a way, from all the 
things that we are seeing now, is there any other options that 
we ought to lay on the table to move it forward.
    Mr. Bishop. Well, thank you, Ms. Fong, Ms. Coffey, Mr. 
Harden, Mr. Paradis, for being here today. Along with what we 
have discussed today, we will be forwarding additional 
questions for the record, and we will appreciate your diligence 
in responding to us in a timely manner.
    Again, I thank you for your testimony. We look forward to 
working with you as you continue the fiscal year 2021 
appropriations process.
    With that, the subcommittee is adjourned.

                                      Wednesday, February 12, 2020.

            HEARING ON FCA'S FISCAL YEAR 2021 BUDGET REPORT

                                WITNESS

GLEN R. SMITH, CHAIRMAN AND CEO FARM CREDIT ADMINISTRATION
    Mr. Bishop. The Subcommittee will come to order.
    Good morning, and welcome to today's hearing.
    I am happy to welcome Glen Smith, a board chairman and CEO 
of the Farm Credit Administration and the FCA board member, 
Jeff Hall as we discuss the agency's roles, responsibilities, 
and the budget request for FY-2021. So, I thank you both for 
being here today.
    Last year, we held a hearing with FCA in the system that 
examined the state of the rural economy and the challenges and 
the opportunities that our farmers, our ranchers, our producers 
in our rural communities' face.
    Since then, there have been some positive developments, 
such as the signing of the phase one of the China Trade Deal, 
in which China has tentatively promised to buy more 
agricultural products from the U.S., and the passage of the 
U.S.-Mexico-Canada Agreement. This was good news for our 
producers, but the reality for many is more complicated, and 
2020 still holds many uncertainties for them.
    While the USDA's economic research service forecasted a 
rise in net farm income in 2019, due in most part to direct 
government payments, there are some alarming trends in the ag 
sector that must be examined and that we have to address. Last 
year, according to USDA, farm debt reached record levels at 
$416 billion. Farm bankruptcies are at their highest levels 
since 2011. Wisconsin and my home state of Georgia are at the 
top of that list.
    These trends appear to raise significant warning signs for 
the year ahead, and I would like to hear from both of you on 
your outlook for 2020.
    Looking at the budget, the request for FY-2021 is $81 
million, of which 87 percent is for personnel costs. A third of 
the examination staff and half of the non-examination staff 
will be eligible for retirement within the next five years. 
This represents hundreds of years of institutional knowledge 
leaving the agency, and it mirrors the wave of retirements and 
vacancies that we are seeing elsewhere in USDA in the Farm 
Service Agency.
    I am glad to see that your budget request identifies the 
human capital needs and the initiatives and the investments as 
priorities, and that the Farm Credit Administration is focusing 
on knowledge management.
    I am also glad that you are focusing on improving services 
to young, beginning, and small farmers. A recent ERS report 
looking at beginning farms and farmers noted that beginning 
farm households have less wealth and have more debt relative to 
their assets than established farms. Ensuring that new farmers 
have the resources, the support, and access to credit in order 
to sustain their business early on should be a priority for all 
of us, given that our farming population is both declining and 
aging.
    So, I look forward to hearing more about the Farm Credit 
Administration's outreach to this group of very important 
farmers.
    Again, I want to thank you Mr. Smith and Mr. Hall for being 
here today, and I look forward to today's discussion.
    And now, I would like to turn to our distinguished ranking 
member, Mr. Fortenberry, and ask if he has any opening remarks. 
And if so, I yield to him at this time.
    Mr. Fortenberry. Yes, Mr. Chairman. I have a few opening 
remarks. Thank you for yielding time, and thank you for calling 
this important hearing. Good morning, gentleman, and welcome.
    Chairman Smith, Chairman Hall, I am pleased to see that you 
are here before us again, and here is why. Around this very 
time of year last year, our farming community, ranching 
community, and the rural communities of both Eastern and 
Western Nebraska, and Western Iowa as well experienced 500-year 
flood event. It washed away the topsoil that will take 
generations to replenish. It left a massive trail of silt and 
debris across corn and soybean field. And then, of course, 
thousands of head of livestock were lost.
    But in the true Nebraska spirit, neighbor helping neighbor, 
our communities came together to recover and rebuild and become 
stronger than ever. So, I am proud of that.
    Our regional banks played an important role in this 
recovery, extending critical financial recourses to aid in this 
effort, and so did you. The Farm Credit Service of America and 
other financial institutions in the Farm Credit system 
supported our communities and allowed many farmers and 
communities to get back on their feet.
    I want to also publicly thank Chairman Bishop and, frankly, 
the entire Appropriations committee for their sympathy and 
understanding in working with us to really get our minds around 
the reality of what happened to us, and to be supportive and an 
extra resource. So, thank you, Mr. Chairman.
    And your appearance before us today is timely, because our 
farmers and ranchers and others in the ag community are facing 
a number of challenges from low-commodity prices and tight 
margins, to the externalities born of hard but absolutely 
necessary trade negotiations to have a reset, a reckoning so 
that America is treated fairly. We also face natural disasters, 
as we all know, and something that we don't talk enough about 
in farm communities, this ever-escalating cost of health care.
    So, your organization is critical in ensuring that the 
local farmer in my district, or the young man or woman 
interested in agriculture has the financial resources to start. 
To purchase seed, tractors, columbines, fertilizer, and land, 
and has ways to both store and transport their products.
    But today, I want to touch on three areas of interest. I am 
eager to get an update from you on the state of the farm and 
rural economy, as well as the health of the Farm Credit system. 
We need to know if there are any warning signs on the horizon, 
and to know if Congress needs to act in preparation for any 
threat coming to the farm economy.
    In recent weeks, I have seen headlines about an increase in 
the number of foreign bankruptcies Chairman Bishop noted. One 
prominent headline shouted that farm bankruptcies increased 20 
percent in 2019. Unpack this for us. Is this isolated to the 
dairy industry, or reflective of a broader trend? I recognize 
that we have had a number of good years, and an increase in 
bankruptcy from a very low level. It is still a problem, but it 
has to be put in context.
    Secondly, how does the Farm Credit system work in 
conjunction with USDA programs funded in our Appropriations? I 
think this is important. I would venture to guess that the 
public in general knows very little about USDA's loan 
portfolio.
    So, in this fiscal year alone, the USDA has loan 
authorizations exceeding $46 billion. So, there seems to be an 
embedded risk in the Farm Credit system absent these USDA 
loans. Is there something that needs to be done in this fiscal 
year of the appropriation process that reduces financial risk 
even further in light of the potential threats on the horizon 
that we hope you identify? I would like to look closely at the 
financial relationship between the USDA and the Farm Credit 
system as we begin to develop this year's appropriations bill.
    And lastly, I am interested to learn in potential 
initiatives that you have undertaken, such as rural broadband 
and other infrastructure as well as, again, as the Chairman 
mentioned, lending to young and beginning and small farmers, 
especially since your agency sets in place policies that would 
influence lending decision affecting the long-term viability of 
rural communities. It is important that we unpack this as well.
    So many people outside of our own agricultural community 
don't have the familiar with the Farm Credit system and how it 
plays a critical role in ensuring that America has per capita 
the lowest grocery prices in the world. That is called food 
security, and something we take for granted.
    Food security is the basis of stability in any society, and 
we have seen the disruptions that can occur in faraway places 
when these factors have to be borne by people who do not have 
the capacity to react to them. It unravels social dynamics very 
quickly, causes migration, land degradation, and on and on.
    So, again, food security is absolutely critical. So, 
without our farmers and ranchers, and our dependable access to 
the abundant and affordable credit, we may not have the 
situation that we have in America. This gift of an abundant, 
well-produced food source, again, that keeps our prices lower 
than anywhere else in the world.
    So, you provide a backstop to the Farm Credit system, your 
backstop is more important than ever.
    And so, I thank you for being here and look forward to your 
presentation.
    Thank you, Mr. Chairman. I yield back.
    Mr. Bishop. Thank you very much, Mr. Fortenberry.
    Mr. Smith, without objection, your entire written testimony 
will be included in the record, and I recognize you now for a 
brief opening statement. And then, we will proceed with 
questions.
    Mr. Smith. Very good. Thank you, Mr. Chairman, members of 
the subcommittee. My name is Glen R. Smith, board chairman and 
CEO of the Farm Credit Administration. Sitting to my left is my 
fellow board member, Jeffrey S. Hall, who is Chairman of the 
Farm Credit System Insurance Corporation.
    Our past Chairman, the late Dallas Tonsinger, last 
testified before this committee last April of 2019, and in 
behalf of his memory and our dedicated staff of the agency, we 
are pleased to provide this testimony here today.
    Before I give my remarks, I would like to thank this 
committee for your help with two issues in last year's bill. 
First, you raised our funding cap to address the unanticipated 
FIRS assessment after our Fiscal Year 2020 budget submission. 
The second issue involved a statutory limitation that could 
have reduced export sales of our domestic farm products. You 
and your staff worked with the authorizing committee and your 
Senate counterparts to resolve the issue. And for that, we are 
grateful.
    Our fiscal year 2021 proposed budget request of $81.01 
million is an increase of 4.35 percent over the fiscal year 
2020 revised budget. 86 percent of our budget is dedicated to 
compensation and benefits of our employees. The budget request 
anticipates increases in the agency's contributions for 
retirements and includes $610,000 in reimbursable funding. To 
maintain our talent pool of dedicated employees, we 
aggressively recruit every year on a rotation of 16 schools for 
entry-level positions, including HBCUs, but more importantly, 
retention is just as important as recruitment, and we strive to 
maintain a positive working environment in our agency.
    2019, FCA was recognized as the second-best place to work 
amongst small agencies in the federal government, and I am very 
proud to report that one of the subcategories of this high 
rating was our support of diversity, in which we ranked number 
one.
    Since I became chairman last year, we have been working on 
a number of important rulemakings. Some of them have focused on 
strengthening the system, while at least half of them have 
focused on streamlining regulations to make them clearer for 
system institutions to follow.
    Another priority of mine, as you mentioned, Mr. Chairman, 
is the mission to serve young, beginning, and small farmers and 
ranchers. Our initial efforts had been to improve the data 
reporting accuracy to get a good baseline, and meet with 
stakeholders, and explore best practices. Our goal was to 
further enhance the systems YBS mission and ensure that 
America's next generation of farmers and ranchers have access 
to the tools they need to succeed.
    U.S. farm sector continues to face challenging economic 
times. In 2019, farmers and ranchers encountered declining 
financial conditions amid large commodity supplies, weak 
prices, and of course, weather extremes. High operating costs 
for labor farm inputs and other expenses are still putting 
stress on farm cash flows. Farm subsidy payments held, most 
notably crop insurance and MFP payments, and were, in many 
cases, the difference between net operating loss or profit.
    Despite the challenges in the overall farm economy, I am 
pleased to report the system banks, as well as Farmer Mac are 
fundamentally safe and sound with strong levels of capital. As 
of September 2019, the system reported positive earnings that 
continue to support that capital growth. Overall portfolio 
credit quality does continue to decline, and the system 
institution, but the system institutions have strong risk-
bearing ability. Meanwhile, we are watching those trends very 
closely.
    Compared to a year ago, I do see some positive factors that 
should improve the egg outlook for 2020. A year ago, we had 
almost no trade agreements in place. This year, we have USMCA 
bilaterals with Japan and South Korea, and of course, phase one 
with China. It may take patience, but at least the groundwork 
has been laid for trade normalization and improved farm prices, 
and the fed's policy of lowering interest rates certainly 
improves margins in our happily, highly capitalized industry. 
So, I am cautiously optimistic for improvement in agriculture 
as we enter a new decade.
    As Congress intended over 100 years ago, the Farm Credit 
system with the Farm Credit Administration as its regulator is 
well positioned to meet the credit needs of the American farmer 
and rancher.
    Thank you, and I am pleased to take your questions.
    Mr. Bishop. Thank you, Mr. Smith. Before we begin the 
questions, as you pointed out, and as you indicated in your 
testimony, your appearance today and your testimony was in 
memory of Mr. Tonsinger. I would like to, with--I should ask 
the Committee to observe a moment of silence as we reflect on 
the service of Mr. Tonsinger.
    [Moment of silence]
    Thank you.
    Well, Mr. Smith and Mr. Hall, as I mentioned in my opening 
statement, and as you mentioned in your testimony, 2019 was a 
particularly difficult year for U.S. farmers and ranchers as 
they faced trade uncertainties, large-commodity suppliers and 
extreme weather.
    And yet despite these challenges, our farm income 
increased, largely due to the Government payments. This was 
certainly good news for the farmers for their bottom line in 
2019, but what are their prospects this year and what are the 
major warning signs we should be paying attention to?
    And does one of the trends, the rise in farm bankruptcies 
increasing farm debt? Are low-commodity prices or the high-
level of loans classified as less than acceptable?
    Does that worry you more than the other?
    Mr. Smith. Well it certainly does, Mr. Chairman. We watch 
those statistics very closely; in fact, on a quarterly basis we 
keep track of our institutions and their credit quality. And as 
you said, bankruptcies is a concern, but it starts with adverse 
loan quality which this last year, as of the 3rd quarter 2019, 
was up to 7.4 percent from 6.6 percent.
    The definition of adverse loan quality is usually 
deteriorating current ratios, deteriorating margins, 
deteriorating liquidity sign of, of possibly some problems 
coming down the road.
    The next category is non-performing loans. And at the end 
of the 3rd quarter, they were less than 1 percent at .92 
percent, but up from .83 percent from a year previous. That 
non-performing is just what it is, those payments have been 
late.
    The next category is our delinquent category. And that is 
at .3 percent with a significant less than 1 percent. Up 
slightly, our 10-year range has been .2 to .66 percent. So 
we're about midway in that range.
    Numbers themselves aren't alarming yet, but we're watching 
the trend closely because this does indicate a 4- to 5-year 
trend of decreasing loan quality. So that is certainly 
something we, we have been watching.
    We have seen a recent article by the American Farm Bureau 
on bankruptcy, estimated that bankruptcies were--nationwide 
were up 20 percent.
    Nationwide those numbers probably aren't as alarming as the 
local areas impacted by certain industries. Certain states like 
Wisconsin, and unfortunately, Mr. Chairman, your state leads 
the list on that. I believe the statistics was 57 bankruptcies 
last--in 2019, up an alarming 57 percent from the year before.
    And a lot of that, some of it was dairy. I think some of 
the profitability in the peanut industry and the forest 
industry, which I know is important in your state, was deeply 
impacted. Not only by the tariff scenario and exports, but also 
by the hurricanes and--devastating.
    Mr. Bishop. Excuse me.
    Mr. Smith. And I think we talked about that last, and there 
is no government payment, there is simply disaster assistance 
available for that.
    So in answer to your question, we are watching those trends 
very closely. From a national perspective it is--the numbers 
aren't alarming, but certain key areas like Wisconsin, Georgia, 
dairy; forestry bears, bears watching.
    The solution, and as Congressman Fortenberry pointed out, 
in those disaster areas where we have seen some significant 
problems, we have talked and suggested directly to the 
institutions that they persevere as long as they can with those 
borrowers.
    You mentioned a 500-year event. You don't recuperate from a 
5-year event in just one year. A lot of times it means 
amortizing that loan out on a longer basis.
    So wherever possible, we like to feel that we are sticking 
there with the American farmers and ranchers in good times and 
poor.
    Mr. Bishop. My time is about up, but can you give us a 
sense of current stress within the System's farm loan 
portfolio?
    Mr. Smith. Yes.
    Mr. Bishop. Are there certain commodities or certain 
regions that are more high-risk than others?
    Mr. Smith. Certainly dairy, as you identified, is a problem 
area, and that is nationwide, and that is something we are 
watching very closely. The forestry area was impacted 
profoundly by the trade issues and there was no Government 
programs available for that.
    Those are 2 industries, along with--in our--in my Midwest 
area, my home area, grain crops continue to see duress.
    Mr. Bishop. Thank you very much.
    Mr. Fortenberry.
    Mr. Fortenberry. Thank you, Mr. Chairman.
    In that regard, Mr. Smith, can you talk about the decline 
in land prices? Again, is this isolated to the areas that you 
spoke of because of regional considerations or is there a 
general trend downward?
    And then one of the challenges in your business, frankly, 
is if you have a declining level of capital, yet you have a 
performing loan.
    Mr. Smith. Yes.
    Mr. Fortenberry. How do you manage that in terms of your 
books?
    Mr. Smith. As far as land values, it correlates directly 
with enterprise risk through certain areas of the country. And 
most of the impact has been in our area of the corn belt and 
areas impacted, like dairy.
    Some areas of the Northeast, although as far as declines in 
land values, very surprising that land values have held in 
there that resilient.
    It does irritate me a little bit to hear that land values 
have stabilized because I always add for now.'' If negative 
circumstances were to continue, certainly land values are 
vulnerable. And we saw that back in the 1980s.
    Beginning in 1979, 1980, we had trade issues back then. We 
had some severe problems in Ag. We saw about a 15 to 20 percent 
loss in land values in the Midwest. I am most familiar with in 
the Midwest. And then we saw stabilization from about 1983 
through 1984. And then from there we saw--we went off the cliff 
as far as land values.
    We are not there yet. If you compare us to the 1980s, 
definitely we are not there yet. But as far as land values, 
there still is a certain element of fragility to it.
    Mr. Fortenberry. But you have the dynamics within--the 
financial management tools within your constructs.
    Mr. Smith. Yes.
    Mr. Fortenberry. On performing loans that might have actual 
lower capital values based upon the ups and downs of land----
    Mr. Smith. Yes.
    Mr. Fortenberry [continuing]. To actually work through that 
for the long-term.
    Mr. Smith. Yes, sir.
    Mr. Fortenberry. There have been instances where if you 
have got a performing loan, but a drop in the value of the 
capital asset, then you have got problems on the books. But it 
is an artificial problem.
    So do you have, again, the flexibility in the portfolio to 
weather that?
    Mr. Smith. We believe we have the strength in our 
portfolio. Number one, our strong capital position, which is 
something we did not have in the 1980s. And the other thing 
that we need to emphasize with the Farm Credit System: it is 
very diversified.
    Mr. Fortenberry. That is actually a good point. In the 
1980s you did not have that flexibility and it actually 
accelerated the problem.
    Mr. Smith. Right. Particularly in the corn belt area, yes.
    Mr. Fortenberry. Let me turn to beginning farmers and 
ranchers. And this is important. The reason is that a number of 
us, including Ms. Pingree, have worked on this issue and it--
production agriculture is the backbone of, again, in many ways, 
America's economy.
    One of the last things we produce on mass, we have got the 
values of stewardship by our farmers and ranchers; as well as, 
significant resource capacity in our country that positions us 
extraordinarily well to, again, help the world in this regard.
    However, there is only so much land.
    Mr. Smith. Yes.
    Mr. Fortenberry. Land is concentrated in fewer hands. But 
the--interesting, agriculture is growing. The University of 
Nebraska's Ag program is growing. And agriculture in terms of a 
siloed field, agronomy or animal science, is not the case 
anymore; it is environmental science, it is biology, it is 
international development. It is the whole ecosystem of well-
being; again, starting with food security. This is very 
attractive to young people.
    So while young people who may not be coming from a farm 
background or tradition may not ever have the capacity to own 
1,000 or 2 acres; none the less, expanding the agricultural 
family through specialty crop production, part-time Ag 
interest. Again, recreating the types of production that might 
be smaller-scale and more traditional forms of agriculture 
actually are exciting new opportunities.
    Does your perspective, or again, rules that govern you, 
allow you the entrepreneurial capacity to begin to move in that 
space more aggressively? Because this is expanding the 
agricultural family and I think that is very exciting.
    Mr. Smith. We believe it is, and it was one of the first 
things when I came to the Agency I researched and looked into 
our mission on young beginning in small farmers. And while we 
were involved in it and every association is required to have a 
program, I felt we could do more.
    And we--I began programs to do more. And it is not a fast 
process, but the recognition that the small and beginning 
farmers--and of course, I can say that from a first-hand basis 
because I was one--is very, very important to that.
    Mr. Bishop. Thank you.
    Ms. Pingree.
    Ms. Pingree. Thank you very much, Mr. Chair, and thank you 
for holding this hearing.
    And thank you and your team for taking over, and I 
appreciated having a chance to chat with you a little bit about 
this.
    I have one big question, but since my colleague just asked 
about this, I will just follow up on that. And I know I 
actually asked you the same question and really appreciated you 
giving it this sort of bipartisan slant. But also, you know, 
the difference between Nebraska and Maine is pretty significant 
in terms of how many farms, how big their farms are.
    But it is a reflection of how this is happening around the 
country and that there is a lot more interest in young people 
in all of the very things that were just talked about: value-
added products, dealing directly with restaurants. There is 
just a whole new market opening up, and certainly, that has 
been a concern in my state of the inability of Farm Credit, at 
times, to sort of see the value of getting into those loans.
    So I just want to commend you for doing that and say that I 
will certainly, you know, be talking to our farmers back at 
home to make sure they understand there could be more 
opportunities or there are more in the future.
    And the one thing, and we have all really agreed with the 
State of Georgia as they have gone through just this horrific 
process of trying to recover from a storm most people didn't 
even notice, frankly.
    But the reverse of that in Maine, we have only had 3 
Chapter 12 Bankruptcies in 2019, and I think a lot of that is 
because we are promoting much more of small- to medium-sized 
farmers who are, you know, actually really doing pretty well; 
even though on the books, they don't always show up as 
commodity crops or the kinds of things that are conventionally 
seen.
    So I think maybe I won't even force you to answer that, 
because I just want to get onto another topic. But I wanted to 
commend you and say, let's keep working together on that, and I 
am really grateful that there is interest across the Committee 
on it.
    Mr. Smith. Thank you.
    Ms. Pingree. I want to get in a question [cough]--excuse 
me--about hemp. I think it can sometimes be the bane of our 
existence, here in Congress, dealing with hemp and CBD, because 
there has been a lot of confusion around it.
    But there has been great interest since the farm bill. In 
Maine, it is growing at a rapid pace; it is grown in every 1 of 
our 16 counties, 2,000 acres in 2019. But there are these 
growing pains.
    We had one farm last year, the Sheepscot Farm in Maine, 
they were dropped by their insurance company. They were also 
dropped by their bank because they were growing hemp and there 
was this confusion. We are hoping that some of these 
regulations get straightened out and, you know, we can work 
more on that.
    But what have you been hearing from the banks in their 
willingness to lend at hemp growers? What steps are you taking 
since USDA published its interim final role, which was last 
October, to help hemp growers gain access to credit? There is, 
there is a real no-person's land out there and it scary for the 
farmers.
    Mr. Smith. Certainly. And any new enterprise, we greet it 
with excitement because it is always nice to see a new 
alternative to our cash crops. If I may, I will defer that 
question to my fellow board member. Jeff Hall is from Kentucky, 
which is one of the pilot states.
    Ms. Pingree. Oh.
    Mr. Smith. And I will let Jeff field that.
    Mr. Hall. You have hit the exact problem. There is so much 
of the infrastructure that has to be developed in order for 
producers to benefit from this potential crop. We have actually 
released guidance to the system; it is legal now as a result of 
the farm bill. But there is so many more questions. FDA has to 
get involved, transportation, all of those issues.
    Ms. Pingree. Mm-hmm.
    Mr. Hall. So it has gone from an issue of being legal to an 
issue of creditworthiness. And for farmers, the System is able 
to loan to producers in hemp. But by and large, those loans are 
basically security with other crops.
    So rather than just directly lending to hemp, most times, 
it is an operating loan for different enterprises.
    Ms. Pingree. Mm-hmm.
    Mr. Hall. So we will have to wait and see. But we are very 
cautious, but we are optimistic that things will develop in the 
infrastructure. We have--there is a multitude of possibilities 
on the use of hemp, but there is so many more questions yet 
that have to be answered.
    Ms. Pingree. Well I appreciate that your guidance is 
specific in about it being legal. I do understand that 
creditworthiness becomes an issue because there is so much flux 
in the market right now and because there isn't sufficient 
infrastructure. But more, just the confusion about if you make 
your investment, will you be able to sell your crop, or at the 
end of the year, won't it be viable.
    So some of things that we have heard in the past are banks 
or credit unions just getting nervous about legality and the 
uncertainty of that.
    Mr. Hall. Mm-hmm.
    Ms. Pingree. And so it is important for you to be issuing 
those kinds of documents to say to banks and credit unions, you 
know, there is--``You are okay. You are not going to jail. The 
regulators aren't coming in to get you.''
    But I think there has been a lot of confusion, and 
unfortunately, since we haven't been able to move the--a Safe-
Banking Act in the Senate, which does have provisions to make 
it really clear about hemp, that is just one more obstacle.
    But I feel for you in Kentucky. I know that it is a much 
more active state, but I appreciate your level of awareness and 
hopefully we can get this straightened out in the near future.
    Mr. Hall. Absolutely.
    Ms. Pingree. Thank you, Mr. Chair.
    Mr. Bishop. Thank you, Ms. Pingree.
    Mr. Moolenaar.
    Mr. Moolenaar. Thank you, Mr. Chairman, and thank you for 
having this hearing today.
    And I want to thank you both for being here and your 
testimony.
    I wanted to talk with you a little bit about the Farm 
Credit System and areas that I am interested in, relative to 
rural infrastructure.
    Mr. Smith. Mm-hmm.
    Mr. Moolenaar. It is something in my district, you know, I 
hear a lot about the needs of infrastructure--aging 
infrastructure. There is also the need for rural broadband, 
which I would kind of include in that area.
    I am wondering what limitations there are for the Farm 
Credit System to be involved partnering with rural 
infrastructure. What areas we might be able to expand 
opportunities, and any insights you have in that area.
    Mr. Smith. Okay, thank you. And that is an area that the 
system, I am proud to say, is, is actively involved in.
    Right now our Title 3 lending, one of our major banks has 
Title 3 lending authority. And historically, that has been in 
rural electrification, rural water, wastewater treatment 
systems and--but about 7 billion right now is currently--is 
committed to communication projects, which broadband would fall 
under that area.
    So certainly we have the authority there. And I believe my 
last hearing, Congresswoman Spanberger mentioned--I thought it 
was a great quote. She said she thought rural broadband would 
be the rural electrification of this century. And I definitely 
agree from that, coming directly from the farm in a rural area 
that connectivity is so important.
    They talk about the farm technology; it is not only just 
farm technology, but it is our schools, it is our hospitals, it 
is our Ag business, it is our small manufacturing companies 
that need to connect with the world. If we don't have that 
connectivity that puts us on a level playing field, quite 
frankly, we will lose it.
    I can look back at my wife sitting behind me, in the green, 
of almost 40 years. When we were beginning farmers, small and 
beginning farmers back in the 1980s, we literally ate and paid 
our light bill from her paycheck of working at the hospital. 
And that probably continued about 10 years before we finally 
got our footing in our Ag businesses and in our farming 
operations.
    And so it is critically important to maintain that rural 
infrastructure, and I am proud to say that Farm Credit System 
has an active part in that.
    Another avenue is what is called our mission-related 
investments where we can go into local communities on a case-
by-case basis and invest in facilities that may not be directly 
related to Ag, but certainly critical to the rural economy; and 
that is those hospitals and those senior care facilities and 
things that we desperately need.
    Rural America desperately needs capital. And that is one 
thing that we see our role of Farm Credit is linking that 
capital in those global markets to the sale of our securities, 
directly to that farm gate. So I am a very--pretty strong 
proponent of that.
    Mr. Moolenaar. Is there anything more we can do to 
communicate that in our districts, in our communities so that 
people on the ground would kind of understand those 
opportunities? Or do you feel like that information is well-
disseminated?
    Mr. Smith. Well, we have found that most of the 
institutions, it tends to be more localized. They maybe have 
the expertise and experience in different areas, so we are able 
to grant them that approval.
    So if we could educate, I think there is a huge potential 
for other areas and other institutions to do that.
    So, so yes, sir, I do believe there is a little bit of void 
as far as information on that.
    Mr. Moolenaar. Well any recommendations you or your team 
have in terms of how we can facilitate that communication. 
Because I know it is a huge priority in my district and in 
rural Michigan. So we would welcome your insights on that.
    Mr. Smith. Yes. Well thank you, and we are bumping pretty 
much up against our authority on that. And if, in your wisdom, 
you feel that we need to expand on that authority, we would--
obviously would help us in those areas.
    Mr. Moolenaar. Thank you very much.
    And thank you, Mr. Chairman.
    Mr. Bishop. Mr. Aderholt.
    Mr. Aderholt. Thank you, Mr. Chairman.
    You referenced in your comments, I believe, that the market 
facilitation program.
    Mr. Smith. Yes, sir.
    Mr. Aderholt. And how it has been able to steady the shift 
for many farmers over the last year.
    Mr. Smith. Yes.
    Mr. Aderholt. Especially the farmers that has really had a 
difficult time. Looking ahead, can you talk about the improved 
trade certainty that you--how you think will hopefully bring 
the incomes back up to the sustainable levels for--in the--over 
the next year and years to come?
    Mr. Smith. Yes.
    Mr. Aderholt. Yeah, just your thoughts on that.
    Mr. Smith. Well as I say, the groundwork has been laid. 
Hope is better than no hope, right? But the markets have taken 
the stance is ``Show me.'' And they need to see ships going 
overseas with our products. We need to see actual export 
numbers before they react it.
    For instance, soybean futures are roughly about 60 cents 
less than they were early January. So we haven't seen any, any 
profound movement yet. But it will take time. It will take 
patience. Trade agreements obviously don't happen overnight; 
and recapturing that trade.
    Well there seems to be a lot of discussion right now over 
2020 MFP. And the crops, we are months from even putting it in 
the ground, let alone, raising a crop, let alone storing that 
crop and marketing that crop that goes into 2021.
    So we have had the last payment now authorized for the 2019 
crop. And I guess the attitude needs to be, ``Let's see.'' 
``Let's see if this will work.''
    Mr. Aderholt. Let me--my colleague, Mr. Moolenaar, 
mentioned the rural aspect. And I also want to focus on that a 
little bit. Oh, and the corporation between the Farm Credit 
System and the community bankers and how they can effectively 
spread risk and enable new projects that previously were, quite 
honestly, were probably unfeasible to do.
    Can you outline some of the work that FCA completed in the 
past year to encourage rural investments? For important 
infrastructure; I know we talked about broadband was mentioned, 
but also rural hospitals, that aspect as well.
    Mr. Smith. Okay, certainly. As far as the rural hospitals 
in our mission-related investments, one of the criteria as far 
as buying those bonds and participating, is to make sure that 
local institutions are offered the opportunity to partner with 
that.
    And that is very important. We are not trying to take the 
business. What we found is that criteria, a new hospital in 
rural America, a 20, $25 million price tag is often beyond the 
scope of local banks; and yet, it isn't enough to attract the 
big players in the financial industry.
    So we feel the Farm Credit System has a very valuable 
tranche there they can fill with that----
    Mr. Aderholt. A niche there, for that particular----
    Mr. Smith. Yeah, we feel there is a niche, right. And--but 
it is important, at the same time, that we offer participation. 
And as I say, it is a criteria for the investment and it has 
to--the institution has to demonstrate that they have contacted 
those local institutions and offered participation.
    Mr. Aderholt. You might not know anything offhand, but if 
you can think of anything that we can do to expand that, in our 
kinds of--to these kind of investments in rural America, like 
broadband, rural hospitals and all that would be certainly 
important for us to know. And I think that's all I have right 
now.
    Thank you, Mr. Chairman.
    Mr. Bishop. Thank you, Mr. Aderholt.
    Mr. Harris.
    Mr. Harris. Thank you very much, Mr. Chairman. Let me just 
follow up a little bit. I want to thank the gentlelady from 
Maine for mentioning the possible problems with hemp as a crop.
    And one of the issues I know is that if the THC level is 
too high, an entire crop could have to be destroyed. And my 
understanding is that is not covered under crop insurance plans 
and things. So that would be a total loss for the farmer if 
that happened to occur.
    Mr. Smith. I will answer the question initially because I 
know the crop insurance covers crop loss. But what I read 
doesn't differentiate whether that loss is necessitated by 
being over .3 percent THC or from natural disaster or weather. 
And I assume it is maybe from natural and doesn't include the 
necessity to destroy it.
    If I might, this is an area that my fellow board members 
worked extensively with. May I defer the question to him, 
Congressman?
    Mr. Harris. Sure. Oh, absolutely.
    Mr. Hall. No, I think you're exactly right. If it is above 
a certain level of THC, the crop has to be destroyed by DEA. 
And as a result, the farmer would have no income from the sale 
of that crop, and there's really no crop insurance coverage for 
that.
    Mr. Harris. So do the farm credit agencies--because you had 
suggested that in fact the loans are not made solely for the 
hemp crop. It's usually a broader base of protection for the 
farmer in terms of loss. But are there protections in place for 
the credit agencies that limit the amount of exposure that a 
farmer can have to a total crop loss from that portion of their 
portfolio that is in hemp? Or could a member agency just say, 
``Well, no. If this farmer just wants to grow hemp, we're fine 
with that too,'' because that would seem an unacceptable risk 
to me.
    Mr. Hall. Well, it's a risk that the individual 
associations would make or banks, commercial banks, would have 
to determine themselves. We don't have any particular guidance 
related to that.
    Mr. Harris. But as overseers of the system, why wouldn't 
you have guidance on that?
    Mr. Smith. In our guidelines we clearly point out those 
risks. We highlight those risks of losing a whole crop.
    Mr. Harris. Okay, thank you very much. And my colleague 
here mentioned the importance of trade and the--you know, the 
interaction of the globalism of the agriculture basically and 
how trade interacts with it.
    In my district I know that, well, you know, poultry is big 
in my district. Could you discuss what--because a lot of time 
is spent on soybean and grains, but the importance of 
international trade for livestock and dairy. And my 
understanding is the USMCA actually made significant advances 
in terms of our ability to have dairy farmers to participate in 
trade. Could you elaborate on the importance again of livestock 
and dairy?
    Mr. Smith. I would be happy to and protein products in 
particular including poultry probably have some of the best 
potential of income gain the next year. If you look at the 
bilateral with Japan, you've seen our beef markets have stepped 
up into a nice area due to those increased exports to Japan in 
just the last year. So there is clear proof that we get back to 
some trade normalization, we're going to see some benefits.
    China, the goal is 77.1 billion import of ag products over 
the next two years versus 20 billion a year prior to the 
tariffs will hurt--help all sectors ranging from timber 
products to poultry. But given the disaster that they've had in 
that country with the African swine fever and that chronic 
shortage of protein that they derive primarily from pork, and 
there's some huge potential. And if you look at the export 
numbers, they have been improving all over the world on poultry 
in particular.
    Mr. Harris. I'm aware of that. And just finally, again, 
there was a lot of talk about--and some of the discussion in 
your testimony about trade uncertainties and all. And it is 
clear there were trade uncertainties with regards to soy, 
important product in my district.
    But my understanding, and since the financial results are 
so good for the last year with regards to the farm credit 
agencies, my understanding from my farmers it that the 
president has kept true to his promise to try to make whole 
those farmers who are affected by the trade uncertainties as we 
were going through the negotiations with China. Is that your 
overview of what happened, in fact, that most farmers, in fact, 
were able to succeed despite the trade uncertainties because 
the backstop that the USDA provided?
    Mr. Smith. It was certainly an important element of that, 
yes. But with any ag policy broad stroke there is always some 
areas that are going to fall short. And unfortunately, you 
know, I mentioned timber exports and forest products was not 
covered by any MFP. And there's a prolifera of other products 
that weren't covered. Broad stroke, yes, it was a tremendous 
help to shore up those cash flows, to shore up those margins, 
include improved liquidity. But that didn't include everybody.
    Mr. Harris. Thank you very much. Thank you, Mr. Chairman.
    Mr. Bishop. Thank you, Mr. Harris. In recent years we've 
seen the rise of a number of farmers turning toward alternative 
lenders to secure more credit. This highlights the economic 
reality for many farmers and underscores the desperation that 
they feel in order to stay in business.
    Although loans from alternative lenders may be easier to 
secure than the more traditional loans, they are riskier. They 
often come with higher interest rates and not as heavily 
regulated.
    As the more traditional sources of credit decide to take on 
less risk during these uncertain times, what is the farm credit 
system going to help our farmers and keep them profitable? And 
what advice would you give to a farmer that takes on debt from 
an alternative lender?
    Mr. Smith. An alternative lender, and you said it, Mr. 
Chairman, is a sign of desperate times. They're running out of 
options, and they're looking at last options to stay in 
business. You can call it nontraditional, alternative lenders. 
We've heard them referred to as payday lenders because of the 
interest rates that has been charged on them, which generally 
tend to be quite a bit larger than prevailing rates.
    So I think the best thing that the system can do and the 
system institutions can do, particular in times of duress, is 
to encourage that those institutions work with those troubled 
borrowers as much as they can in seeking alternatives. There's, 
I know when I traveled up in the Northeast, particularly 
Vermont, and visited some dairy operations, a lot of those 
operations with the prompting of their local loan officer had 
diversified in other enterprises other than dairy. 
Diversification sometimes means one of the spouses taking an 
off-farm job. But the reality is the dairy wasn't providing 
enough income to support that family.
    So you can't underestimate that relationship between that 
loan officer and that borrower on looking at alternatives, 
maybe restructuring for term to get them through those tough 
times so they don't have to rely on interest rates that might 
be reminiscent of the 1980s. I'm not aware of any specific 
interest rates that have been quoted, but I hear they're high 
because those are desperate measures.
    Mr. Bishop. Well, I'm given to understand that with the 
trade mitigation payments that the administration has made over 
the last year, that a large amount of that money has gone to 
alternative lenders for repayment of their loans, which has put 
some stress on the--some added stress on the farmers.
    Let me go back to the young beginning of small farmers. In 
the 2018 Farm Credit Administration notes the need to improve 
service to young beginning of small producers. And to that 
extent, the Farm Credit Administration issued an advance notice 
of public rule making to collect information from the public 
regarding revisions to the YBS regulations.
    Can you provide any updates on what you've learned and when 
we can expect a final rule?
    Mr. Smith. We just come out of the comment period on that 
rule and in the process of sorting through those, the purpose 
of that is to get public input, input from the institutions on 
the rule. But I would expect we'll probably be rounding up a 
final rule about mid to late spring on that.
    And that rule was directed at getting the information 
correct. We found that maybe we needed to update our 
information collection techniques. Jeff and I initiated a new 
office within FCA: Office of Data Analytics and Economics. And 
we're really excited at the potential that office holds, and 
it's helping us to sort through and make sure we get good 
updated information on young and beginning and small farmers.
    How do we evaluate this program if we don't have a good 
baseline? And we found that there was maybe some deficiencies, 
and we're working hard to improve that. That's the first step.
    Mr. Bishop. The annual report notes that today there are 
high capital demands of agriculture and new entrants require 
affordable and dependable credit. Do the new farmers know the 
resources that are available? And what do you need from 
Congress to reach more farmers?
    Mr. Smith. It certainly depends on the size of the 
operation, and we've emphasized a lot on small operations. I 
don't think it's realistic for a beginning farmer with no other 
resources to go out and borrow and buy $10,000 an acre land or 
have a million dollar line of machinery. So I think that's why 
the YBS program is so important that we address the needs of 
those small and maybe part-time farmers first.
    It entails a higher degree of loan officer participation. 
It may not be efficiency lending, but as the regulator we hope 
to exert influence to encourage the lenders to look at those 
type of loans.
    Mr. Bishop. Thank you. Mr. Fortenberry.
    Mr. Fortenberry. Mr. Chairman, you anticipated some of my 
questions as well. So let's continue on that because again, we 
have a well-established system of farm credit in the United 
States, and we can go through the traditional questioning 
around vulnerabilities in portfolio and all that. But with the 
emerging opportunity of again, broadening the agricultural 
family around new innovative but smaller ways of enhancing 
economies and connecting the rural to the urban.
    Your terms are a bit vague, and that's not necessarily 
pejorative. But can you identify in terms of the farm credit 
system the amount of portfolio that's going to these 
considerations of underwriting young and beginning farmers? Or 
what is your goal in that regard without pegging, you know, 
without demanding that you put a set-aside, if you will, of a 
certain amount? I don't want to do that necessarily. You're 
talking in the right terms of conditioning the credit culture, 
the financial system toward these emerging--because what tends 
to happen in government is we lock in around a set of needs and 
variables and then it gets institutionalized, and we do the 
same thing over and over again.
    What we don't want to do is not allow for the flexibility 
with--not in any way making a portfolio any riskier, but not 
allowing the development of the flexibility to enter into this 
new space, which is exciting. It's entrepreneurial. It's the 
next way of agricultural development. It's good for the 
economy. And again, it's a field of growing interest that's 
broader than what we've traditionally done, but that's okay.
    So how are you specifically--give some specific examples of 
what you're doing now. Let's move from the abstract to the 
reality. And then how do you envision the tactics of moving 
toward that goal? I get it. You're being intentionally vague. 
This is not a judgment on that because this isn't fully 
developed yet. But what we're doing is we're pushing you----
    Mr. Smith. Right.
    Mr. Fortenberry [continuing]. To develop this quicker 
because again, I think it is consistent with your mission.
    Mr. Smith. Right.
    Mr. Fortenberry. And it is consistent with what we perceive 
as policymakers as this demand of our--of the people we 
represent. And it's good public policy.
    Mr. Smith. Yes. No, I appreciate you narrowing down on that 
on specific examples. And as I said, the first step was to get 
the information correct, which is what we did with the NPRM.
    I've been doing a significant amount of traveling before I 
became chairman. The first year and a half, I think I've been 
in twenty different states. Seen a multitude of diversity in 
operations, which I think is important for a board member, 
number one, to understand this whole, huge breadth of----
    Mr. Fortenberry. Let me interrupt for just a second. And 
it's not just new emerging opportunities for people who now 
want to move in the ag field. It's also existing options within 
production agriculture for diversification.
    Mr. Smith. Yes, yes, certainly. Certainly. Particularly as 
you move in areas of stress where you need to look at 
alternatives. So as far as me personally, I've been gathering 
information----
    Mr. Fortenberry. Let's put a timeline and goal on that so 
we're not having the same conversation next year, which 
obviously isn't your intention. But let's lay down some markers 
right now----
    Mr. Smith. Yes, sir.
    Mr. Fortenberry [continuing]. As to what we're going to do 
when without holding you necessarily in terms of a law to this. 
But let's lay down some objectives.
    Mr. Smith. You're talking my language, Congressman, and 
let's set some goals on it. One goal we have immediately in 
front of us, and that through my travels, the states, and all 
that, I've noticed a high correlation of successful YBS 
programs is a high level of cooperation between FSA and the 
system institutions and the loan officers. High correlation 
there. I'd say above ninety percent. And that's from travels, 
listening, and learning first, okay?
    So as far as a specific then, we are organizing right now. 
I met with Undersecretary Bill Northy here a week ago, and we 
are working towards bringing a workshop here in D.C., and 
bringing FSA, bringing the farm credit banking institutions, 
and other federal agencies together on how we can share this 
information.
    Mr. Fortenberry. I have a better idea for you. Why don't 
you do that at the University of Nebraska? Why don't you give 
us a try first? We have the Center for Agricultural 
Entrepreneurship. I'm going to tell you a quick story about the 
Brueger brothers. These guys could be a reality TV show.
    Mr. Smith. Okay.
    Mr. Fortenberry. They live in a small town right outside of 
my congressional district. Traditional production ag grain 
farm.
    Mr. Smith. Yes.
    Mr. Fortenberry. They want to do something innovative and 
interesting to themselves but continue the long family 
tradition of the farm. So they're starting to grow hops. They 
bought the bar in the downtown area. They've revitalized that. 
They're going to have their own brand. Amazing, amazing, 
exciting things. And it repeats itself over and over and over 
again across Nebraska with people who are in their, oh, maybe 
twenties to forties, generally. Although there are some people 
beyond that as well doing exciting things.
    Mr. Smith. Yes.
    Mr. Fortenberry. So we have the Center for Agricultural 
Entrepreneurship. Come do it with us. Give us a try. We'll be 
your focus group, so to speak.
    Mr. Smith. Sure, we are open to invitations. And there's 
even a few of those success stories over across the river in 
Iowa.
    Mr. Fortenberry. Well, I know you're from Iowa, and you had 
to slip that in. But we'll leave it at that. My time is 
expired.
    Mr. Smith. But I would appreciate the invitation.
    Mr. Fortenberry. Thank you.
    Mr. Bishop. Thank you, Mr. Fortenberry. Mr. Smith, you had 
testimony notes that a key factor driving the fiscal year 2021 
budget request is the need to hire and to train qualified 
individuals to replace the many employees who have begun to 
retire. Attrition and subsequently backfilling are challenges 
most agencies face, but it is particularly acute at FCA.
    The examiner commissioning program takes three to five 
years to complete I understand. Can you discuss the 
commissioning process, and given that approximately a third of 
the examination staff are eligible to retire within the next 
five years, what impacts will this have on the examinations of 
the FCS banks and associations? And do you anticipate a 
decrease in the frequency of examinations?
    Mr. Smith. So the commission, our examination commission 
staff, is what we call our boots on the ground. That's sixty 
percent of our workforce and that's the heart of Farm Credit 
Administration. So it is extremely important.
    I mentioned that we recruit actively at rotation of sixteen 
universities, and usually our class, we look at around fifteen 
to sixteen, depending on the retirements and the attrition. Our 
average attrition is about nine percent, for our examiners, 
eight percent over all agency. So every year, we have to have 
that active recruiting class. But even though forty-one percent 
of our workforce is eligible, of the exam workforce is eligible 
for retirement in the next five years our HR director pointing 
out that most of our staff stay an average of eight years after 
retirement. And that's a reflection----
    Mr. Bishop. After eligibility?
    Mr. Smith. After eligibility, yes, sir, after eligibility. 
So that is a good example of a positive working environment. 
But those newly commissioned examiners, it is so important to 
offer them chances to move up and leadership within the 
organization. And of course, we have four field offices in 
addition to McLean that offer hierarchies of leadership within 
the organization.
    So that's important that we create our leaders within. We 
had a turnover on our senior management staff last summer, and 
we had replacements, due to retirements, of four staff members. 
Correction: one of those was a new data office analytic 
director. But all of those were brought in within the agency. 
We created our own. So it is very important to create those 
different generational levels of succession and maintain that 
positive work environment.
    Mr. Bishop. Tell me about your diversity and about your 
recruitment efforts. And you mentioned earlier in your 
testimony about recruitment at HBCUs.
    Mr. Smith. Yes.
    Mr. Bishop. I think we included in our appropriations bill 
some scholarships to deal with that and to interest people in 
careers in agriculture. Can you talk about that and how you are 
utilizing that program or how you intend to utilize it?
    Mr. Smith. Yeah. And that is something that we look to with 
a diversified workforce and recognition of that diversity. We 
hired a fulltime EEO director four years ago. And not only is 
she--part of her responsibilities is for equal employment 
opportunities but also support for diversity, active programs 
that recognize our minority employees which I think is 
important again in retention. Once we get our employees within 
the fold, we need to keep them. And going back and not to brag 
but placing number one in diversity and our ranking of number 
two in federal agencies we think is a pretty good, a testament, 
to our success in those areas.
    Mr. Bishop. Thank you very much, Mr. Smith and Mr. Hall. We 
appreciate very much your being here today, and I appreciate 
your testimony and your assessment of the year ahead and look 
forward to working with you to meet the challenges. They're 
significant to be sure, but we remain hopeful. With that, the 
Subcommittee is adjourned.

                                       Thursday, February 27, 2020.

           FOOD AND DRUG ADMINISTRATION--STATUS OF OPERATIONS

                                WITNESS

SUZANNE MURRIN, DEPUTY INSPECTOR FOR EVALUATION AND INSPECTIONS, OFFICE 
    OF INSPECTOR GENERAL, DEPARTMENT OF HEALTH AND HUMAN SERVICES
    Mr. Bishop. The Subcommittee will come to order.
    Good morning. Welcome, everyone, to the subcommittee's 
hearing on health and human services' Office of Inspector 
General's efforts related to the food and drug administration. 
This is the first time since 2009 that the subcommittee has had 
a hearing with the HHS IG. So, thank you to our witness, Ms. 
Murrin, for appearing before us.
    Eliminating fraud, waste, and abuse and correcting 
mismanagement is one of the most important roles of our 
committee, and I am deeply interested in the work that you do. 
Your office is at the forefront of these efforts as they relate 
to FDA. The subcommittee shares your interest in ensuring that 
the programs of FDA are operating at the highest levels of 
efficiency, responding to your recommendations, and protecting 
the public health, safety, and welfare of the American people.
    This morning, I am interested in understanding what your 
office views as the biggest obstacles that are facing FDA today 
and down the road. As the largest inspector general office in 
the federal government, the majority of your work addresses 
other parts of the Department of Health and Human Services. 
Since 2015, this subcommittee has provided your office with 
additional appropriations to specifically address FDA 
oversight.
    I would like to use today's hearings to better understand 
how these funds have helped you to achieve your mission and 
what else we can do. So, today, I would like to hear more about 
the work you have done to date, your plans to conduct adequate 
oversight of FDA programs, and the challenges that you face in 
ensuring that agreed upon recommendations are implemented, and 
complaints are appropriately addressed.
    I look forward to discussing that with you, as well as 
other important issues, and I want to say again that we 
appreciate you and all of the work that inspector general staff 
does, and for all that you do.
    So, let me at this time ask distinguished Ranking Member 
Mr. Fortenberry if he has any opening remarks, and if so, I 
would certainly like to recognize him at this time.
    Mr. Fortenberry. I do, Mr. Chairman. Thank you so much for 
the recognition and let me thank you as well publicly for your 
leadership and identifying this important gap, if you will, in 
our own oversight challenges and responsibilities. So, this is 
an important hearing, and I really appreciate your willingness 
to call it.
    Ms. Murrin, welcome to the Agricultural Appropriations 
Subcommittee. Your agency has a daunting task. We all realize 
that in overseeing the spending and performance of agencies so 
large that they can be bigger than some countries around the 
globe. So, and it is one trillion worth of spending that you 
have responsibility over, and as the chairman identified, part 
of that responsibility is over the Food and Drug 
Administration.
    So, let me start with one of our most basic needs: drug 
safety. The people back home expect safe and effective drugs, 
vaccines, and medical devices, and as you note in your written 
statement, roughly 40 percent of finished drugs and 80 percent 
of active drug ingredients are made in more than 150 countries. 
Mr. Chairman, I am going to just read the sentence one more 
time. Roughly 40 percent of finished drugs and 80 percent of 
active drug ingredients are made in more than 150 countries.
    Do you think we can trace all that? Most Americans would be 
shocked to know that most drugs or drug ingredients are not 
produced here, and as your audits have noted, FDA conducts 
limited overseas inspections. So, a GAO report, Government 
Accountability Office report from a few months ago highlighted 
the deficiencies in this foreign drug inspection process and 
said, for instance, ``The officials estimated that the agency 
generally gives 12 weeks of notice to establishments that 
investigators are coming when investigators are travelling from 
the United States.''
    So, Chinese companies have 12 weeks' notice to clean up 
their act, and we give domestic manufacturers no time at all? 
This make sense? We need to know why the drug industry has 
moved drug production out of the United States. That is a 
fundamental question. And second, why we can't make 
pharmaceuticals in our own country? This is all the more urgent 
given the outbreak of the Coronavirus. This has accentuated the 
need, the urgent need for this nation to produce critical drugs 
and medical supplies right here.
    I also want to talk about another basic FDA function. That 
is food safety. While the committee in general can have 
opposing views on certain things, one thing we agree on is the 
government's role in ensuring that our food is safe. So, we 
rely upon your agency and the GAO to evaluate and critique and 
make recommendations on how to fix what the FDA might not be 
doing correctly to reduce or eliminate food-related illness.
    So, I see that your agency has only conducted two food-
related audits since 2015. You can come back to that when we 
question. That is the information I see, and I am hopeful in 
your agency will do more in the future to answer fundamental 
questions about our food supply.
    So, your office spends roughly four percent of its budget 
on FDA related work through the 1.5 million appropriated by 
this subcommittee, yet the FDA is responsible for oversight of 
20 percent of all consumer spending in the United States. Do 
you see the gap?
    So, here is something we can celebrate. I am in full 
agreement with you that you need more resources for this 
important work.
    So, with that, Mr. Chairman, I will stop and yield back my 
time, and again, I appreciate your willingness to engage in 
this form of oversight.
    Mr. Bishop. Thank you, Mr. Fortenberry.
    Before Ms. Murrin begins, a reminder to members that as is 
customary with the subcommittee, our members will be recognized 
by seniority for those that were here when I gaveled the 
hearing to order, and then, the order of arrival following 
that. I will alternate majority and minority members, and we 
will adhere to the five-minute rule.
    Ms. Murrin, without objection, your entire written 
testimony will be included in the record. 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. The floor is yours, Ms. Murrin.
    Ms. Murrin. Thank you, Chairman Bishop, Ranking Member 
Fortenberry, and distinguished members of the subcommittee. 
Thank you for inviting me here today to discuss OIG's oversight 
of the Food and Drug Administration. We are grateful for the 
support this subcommittee has provided to OIG, which has 
allowed us to enhance our oversight of FDA's vital programs.
    Our oversight has prioritized safety. We have recommended 
numerous actions FDA can take to make the food, drugs, and 
devices that Americans rely on safer. While our oversight has 
resulted in important progress in each of these areas, much 
more remains to be done. We are grateful to the subcommittee 
for this opportunity to bring public attention to these safety 
issues.
    In food safety, our most pressing recommendations focus on 
food facility inspections and food recalls. It is imperative 
that FDA take appropriate action against all facilities with 
significant inspection violations and reinspect these 
facilities in a timely manner to ensure the violations have 
been corrected. OIG found that FDA took no regulatory action in 
response to 22 percent of the significant inspection violations 
we reviewed, and that when FDA did take action, it most 
commonly relied on the facilities to make voluntary 
corrections.
    Finally, in almost half of all cases, FDA did not conduct a 
timely follow-up inspection to confirm the problem was 
corrected. Significant inspection violations can include 
finding rodents, Salmonella, or Wisteria in food production 
areas. These are serious threats to the food supply that need 
to be addressed.
    With respect to food recalls, FDA took swift action to 
address many of the concerns we raised to ensure prompt and 
effective recalls. However, FDA has yet to establish 
performance metrics, like capturing the time between 
identification of a potential hazard and the initiation of a 
recall.
    Without this, FDA cannot effectively identify and respond 
to firms that fail to initiate a timely voluntary recall, nor 
initiate a mandatory recall. This is especially important, 
given that in our selected sample of 30 food recalls, the 
median time between when FDA became aware of a potential 
problem and when a firm issued a voluntary recall was 29 days. 
The average was 57 days.
    OIG has also identified vulnerabilities with FDA's 
oversight of the manufacture and distribution of prescription 
drugs. In response to our work, FDA resolved all 289 
outstanding preapproval inspections of generic drug 
manufacturers, most of which were for foreign manufacturers. 
Our ongoing work on the safety of foreign drug manufacturing 
assess FDA's foreign drug manufacturer inspection process.
    Tracing drugs from the manufacturer through the supply 
chain to the consumer is also an area of concern for the OIG 
because each time a drug changes hands, it creates 
opportunities for counterfeiting, tampering, or diversion. OIG 
found that drug tracing information can be used to trace the 
legal ownership, but not the physical movement of drugs through 
the supply chain. However, both types of information are needed 
to support FDA in identifying and resolving drug safety and 
security issues.
    In terms of devices, the OIG has ongoing concerns about 
FDA's oversight of network devices, such as hospital room 
infusion pumps and pacemakers. Without appropriate security 
controls, these devices can be susceptible to cybersecurity 
threats, such as ransomware and unauthorized remote access.
    In response to OIG's work, FDA made immediate changes to 
its pre- and post-market processes. However, OIG recommends 
further improvements, including that FDA establish procedures 
for securely sharing information about cybersecurity threats 
with key stakeholders. OIG will continue to provide FDA 
oversight in the areas of food, drug, and medical device 
safety. In addition, ongoing reviews expand our oversight to 
include curtailing youth tobacco use, combatting the opioid 
crisis, and fostering drug competition.
    Thank you again for the opportunity to be here today and 
share OIG's findings and recommendations on FDA. I welcome any 
questions you may have.
    Mr. Bishop. Thank you very much, Ms. Murrin. As you eluded 
and as Mr. Fortenberry eluded, according to the latest data 
from GAO and FDA, more than 60 percent of drug manufacturers 
for the U.S. market are located overseas, and 80 percent of 
active pharmaceutical ingredients are manufactured overseas in 
more than 150 countries. The degree to which we were allowing 
drug products that are made overseas raises significant 
challenges for FDA, and it is, of course, the subject of your 
audit, as you referenced.
    Can you walk us through some of the problems that you have 
found in the foreign drug inspections process, and do you 
believe that the FDA currently has the capacity to effectively 
ensure the safety of imported drugs and active pharmaceutical 
ingredients, and what else do you think needs to be done in the 
event that you believe that we need to do more, which seems 
obvious with the limited resources that you have?
    Ms. Murrin. Thank you very much for your question.
    The OIG is currently conducting a study of foreign facility 
inspections for drug manufacturers. When I have the results of 
that, I will have updated information, and we will reach out to 
you and provide you with a detailed briefing.
    Mr. Bishop. Okay. Since 2015, the subcommittee has provided 
you with $1.5 million with the direction that it be transferred 
to specifically focus on oversight issues related to FDA, and 
it is clear that HHS OIG covers a large portfolio with limited 
resources, and the hope was that the FDA oversight issues could 
receive additional consideration with those funds.
    How have these funds allowed your office to focus more on 
FDA, and what activities have you been able to support that 
otherwise might not have been done, and can you quantify what 
additional resources would allow you to do? For example, what 
would an increase of $500,000 permit you to do, that you can't 
do now?
    Ms. Murrin. Thank you.
    Mr. Bishop. Or a million dollars?
    Ms. Murrin. Or a million or two. What I do--where I should 
start by saying the OIG is extremely grateful for the funding 
that this committee has provided and for the focus that the 
subcommittee has provided.
    You've both given us the funds these last five years and 
asked that we prepare a strategic plan. That process, our 
sharing that with you, has really helped us to focus our 
resources. The one and a half million that you've been able to 
give us each year has taken us up to $3.7 million each year 
that we have been able to devote to FDA, also which amounts to 
16 staff years.
    So it has had a tremendous impact on the amount of 
resources that we have available. There are two main projects 
that I'd like to mention that may very well have not happened 
without this.
    One is about food. We did an audit of the food recall 
system that had--that found such problems that we had to issue 
an alert rather than wait for the audit to come out.
    And FDA fixed a number of the problems before it came out. 
We discovered that most of the recalls are voluntary, and if 
FDA and the manufacturer agree, there isn't a problem, right? 
But if the FDA and the manufacturer do not readily agree that a 
recall ought to happen, it can take a very long time to 
resolve.
    FDA has made some improvements in that area. We'd like to 
see them take more advantage of some of the FSMA requirements. 
We would not have known that there were these problems, and FDA 
has stepped out to really work, to really work on this. They've 
set up an FDA-wide senior team to work on it. They've taken 
many actions. We do have some outstanding recommendations.
    In addition to that, we wanted to look at food also from 
the inspection side. And I talked a little bit about that in my 
opening statement to say that we did that report in--we did a 
report in 2010. They found exactly the same thing. It found 
that most of the--that a significant portion of the time when a 
significant violation is found, FDA does not take action, okay? 
And that they--in half the cases, don't go back to 
independently verify that the problem has been fixed.
    We made recommendations that if there was a significant 
violation an action had to be taken, and if there was a 
significant violation there had to be a follow-up both in 2010 
and again in 2017.
    The money that you provided enabled us to go back to prove 
that these problems still existed on the ground and to 
emphasize that. And I am delighted to have this opportunity to 
discuss those.
    Mr. Bishop. Thank you. Mr. Fortenberry.
    Mr. Fortenberry. Thank you, Mr. Chairman. Let me just 
continue with the same line of questioning, okay. Why are there 
surprise inspections of drug manufacturing here whereas in some 
foreign countries, they're given 12 weeks' notice. Is that 
fair?
    Ms. Murrin. As an oversight entity, we're looking at how 
the agency can function better. I do not--I really can't 
comment on that policy based on our work.
    Mr. Fortenberry. Why not? Where did the policy come from?
    Ms. Murrin. It would have come from FDA. I am not familiar 
with how it was developed.
    Mr. Fortenberry. I'd like you to look into that, please.
    Ms. Murrin. I would be delighted to do that.
    Mr. Fortenberry. I'd like you to develop an understanding 
as to why this unfair duality exists regarding domestic drug 
manufacturers versus drugs that are manufactured in certain 
foreign countries. I want to know why that exists, how it was 
developed, what rationale there is for that, what justification 
potentially, and if it needs to change, come back to us and 
tell us it needs to change.
    Ms. Murrin. We will do that.
    Mr. Fortenberry. Apparently, it's grossly unfair.
    Ms. Murrin. Yes.
    Mr. Fortenberry. An unlevel playing field tilted toward 
multinational corporations who have moved their manufacturing 
overseas probably to take advantage of lax labor standards and 
environmental standards for profiteering purposes.
    And I want to know if that's embedded somewhere because of 
the fault of Congress or the fault of implementing agencies.
    Ms. Murrin. We will look into that and respond to you with 
that information.
    Mr. Fortenberry. This is very important particularly given 
the raging coronavirus around the world and all of us suddenly 
discovering how much of our supply lines are related to----
    Ms. Murrin. Yes.
    Mr. Fortenberry [continuing]. The area that is the source 
of the infection.
    Ms. Murrin. Yes, and this is one of the reasons why we're 
very glad to be out in the fields on our foreign drug 
inspection report.
    Mr. Fortenberry. So are our drugs safe?
    Ms. Murrin. As an OIG we're always going to be able to find 
ways that things can be better, and we have identified certain 
weaknesses and we've love to see them--and we are working with 
FDA to see those fixed.
    Mr. Fortenberry [continuing]. Extrapolating from that, what 
percent of our drugs are not safe? See, we can't----
    Ms. Murrin. Yeah, I don't----
    Mr. Fortenberry [continuing]. Just keep talking in the 
abstract, that we're looking for ways to fix this and we've 
identified a problem. It's not fully your problem. I 
understand.
    Ms. Murrin. Right.
    Mr. Fortenberry. But what recourse do I have? This, 
frankly, is one of the most important hearings going on in the 
United States Congress right now. It really is. And it falls to 
this agency of yours and other people of good will throughout 
the Executive Branch to come together right now and get in 
front of this question so that there's a permanent 
restructuring so that we're not left vulnerable again like we 
are right now. I need your help in this regard.
    Ms. Murrin. We will be very happy to work with you on that.
    Mr. Fortenberry. But give me some more specifics. I'm 
sorry, it's an awkward question but I've got to keep forcing 
you out of the abstract to the specific. Tell us how large this 
problem is. Quantify it in some way, not just we've identified 
these gaps.
    And I get it, you need to speak in that language. You need 
to be careful.
    Ms. Murrin. Right.
    Mr. Fortenberry. But you have to understand I have to push 
as well.
    Ms. Murrin. No, and I do appreciate that. Sir, I'd be 
worried that I would say a number that is----
    Mr. Fortenberry. I understand. That's a fair answer. But 
you know the challenge?
    Ms. Murrin. I do know the challenge. And we shared the 
concerns and really appreciate the concerns that you are 
raising, and we'll be working as hard as we can to address 
these issues and provide you with information.
    Mr. Fortenberry. Okay. And this is the moment.
    Ms. Murrin. Yes.
    Mr. Fortenberry. Given the world's consciousness and our 
government's attentiveness to this gap right now is starting to 
be reported. It creates a moment of opportunity rather than a 
moment of blame. So let's seize the opportunity to actually dig 
deeper and find out why there's an unlevel playing field 
potentially between the incentives to drug manufacturers to 
stay in this country versus go overseas and the vulnerabilities 
that that creates for us.
    I need the specific answers to that. I need you to help me.
    Ms. Murrin. We will be happy to work on that and get back 
to you, sir.
    Mr. Fortenberry. Mr. Chairman, is this fair?
    Mr. Bishop. It is fair.
    Mr. Fortenberry. Secondly, it's the same question. Is our 
food safe?
    Ms. Murrin. And I would give you the same answer.
    Mr. Fortenberry. I know you have to, but this is the broad 
architectural question.
    Ms. Murrin. Right.
    Mr. Fortenberry. And then if we move yes, but here are a 
few gaps, great. Or no, we've got to get to work, fine. 
Clearly, we're somewhere in between.
    Ms. Murrin. I would put us more in the yes, but.
    Mr. Fortenberry. Okay.
    Ms. Murrin. Certainly than in the no.
    Mr. Fortenberry. All right. That's fair. Thank you, Mr. 
Chairman.
    Mr. Bishop. Thank you very much, Mr. Fortenberry. Dr. 
Harris.
    Dr. Harris. Thank you. And now thank you very much for 
doing the work that I think is important because the FDA is 
very important, but you know, making sure that the FDA is 
fulfilling what I think most Americans expect from the FDA is 
important as well.
    So let me just walk through some of the things you 
mentioned in your written testimony here. First of all, one of 
your identified risks associated with medical device safety and 
security is the FDA needs to further mitigate risk of 
cybersecurity threats.
    Now, I just don't think of the FDA as kind of a 
cybersecurity agency. In what you found do you think they have 
the experienced personnel that could do this? Because these 
devices are complicated. They are all over the place. They are 
a lot of them. I imagine there are a lot of ways cybersecurity 
could be compromised. Do they have the expertise in the agency 
to do this?
    Ms. Murrin. Actually, sir, we would say that this is an 
area where FDA is very much ahead of the curve. FDA is seen as 
a leader in the area of cybersecurity and in the security of 
medical devices. And while thankfully, there has never been an 
instance of those being compromised, FDA is devoting resources 
to making sure that they are out ahead of it to prevent it 
before it happens.
    Dr. Harris. Good. So you think they will be able to deal 
with that with the resources they have?
    Ms. Murrin. I would certainly suggest that you ask them 
that question, sir.
    Dr. Harris. Okay.
    Ms. Murrin. But we definitely in our reviews have found 
them working in the right direction.
    Dr. Harris. Okay. With regards to--and then you also in 
part of your testimony, you expanded your oversight to include 
curtailing youth tobacco use, combatting the opioid crisis, 
fostering drug competition.
    Now, you do say youth tobacco use, and you know the current 
concern is with vaping, not tobacco products, but you can vape 
other products. Are you looking at whether the FDA actually has 
the ability, or any government agency has the ability, but you 
are particularly concerned with the FDA, to actually regulate 
vaping of non-tobacco products?
    You see what I mean? I mean, they clearly--they can--they 
have jurisdiction over tobacco products or nicotine.
    Ms. Murrin. Right.
    Dr. Harris. But if you're vaping marijuana and there's no 
tobacco in it, no nicotine in it, it is unclear to me that--I 
mean, do they have the ability under the current law to 
regulate a device that delivers something that is either a non-
pharmaceutical or something that is a--the device itself, it's 
delivering an illegal drug which would be marijuana?
    Ms. Murrin. Not being a lawyer, sir, I would hesitate to 
answer. I certainly understand your concern. I would be happy 
to have our counsel's office prepare an answer. I believe that 
the answer is no. Right now the authority is in tobacco in the 
forms that it is delivered.
    Dr. Harris. Yeah, that's what I imagine. But if you get 
back to me on that, I appreciate that.
    In terms of combatting the opioid crisis, one thing that 
the FDA could do I think is to somehow make Naloxone more 
available than it is. It is already--it is available, but you 
know, there are controversies, you know, co-prescribing, is the 
FDA doing all it can do to promote co-prescribing. So is that 
one of the things you looked at, the FDA's role in making sure 
Naloxone gets delivered to where it could be used to save 
lives?
    Ms. Murrin. We have not looked at that aspect with FDA. The 
OIG has identified four, in our whole HHS portfolio, four 
overarching priority areas. One of those is the opioid crisis. 
And we have a body of work on the availability of Naloxone.
    We have a body of work on the availability of drug assisted 
treatment across the United States. And so we have been very 
active in that area.
    Dr. Harris. Okay. I mean, and again specifically, I hope 
you do look at that.
    Ms. Murrin. But in terms of FDA----
    Dr. Harris. Terms of what the FDA's role in Naloxone is.
    Ms. Murrin. Yeah.
    Dr. Harris. Now one last topic is because you look at the 
safety of things that are being made available to Americans, 
and I am going to ask you about CBD, okay? Because CBD is a, 
you know, Epidiolex is an FDA approved drug. I think that gives 
the FDA the ability to regulate CBD in the marketplace.
    It is clearly not being regulated enthusiastically or 
broadly, and we get more and more reports of people who make 
health claims, and sometimes they are not specific. You know, 
I'm going to get this, but you're going to feel better if you 
take it, or something like that. But the product doesn't even 
have a lot of CBD in it or maybe none at all. So you know, it 
is a purity issue.
    Do you find that this is an area where the FDA has not used 
its regulatory authority as it perhaps should and is there 
politics involved in this or what because there are a lot 
people who are taking this thinking that it is going to make 
them feel better or has some medical qualities. But these 
products are sometimes not pure.
    Ms. Murrin. I have to acknowledge, sir, that our oversight 
of FDA has not extended to that topic and that, you know, we 
could add that to our list of potential topics, but I do not 
have information that I can share with you now.
    Dr. Harris. Thank you very much. I yield back, Mr. 
Chairman.
    Mr. Bishop. Mr. Aderholt.
    Mr. Aderholt. Thank you, Mr. Chairman. It is encouraging to 
learn that back in the year--I mean, or August 2019 report on 
HHS's response to the Ebola outbreak that despite other 
failures that FDA and HHS did collaborate effectively to begin 
the trial and production of vaccine and drug treatments.
    I know that the current party regarding COVID-19 is 
containment and vaccines. However, I want to ask you about 
important or, actually, how important is the rapid production 
of antibodies and especially for people that are suffering from 
the virus.
    Ms. Murrin. Sir, I would suggest that you would get a much 
better informed answer for that from FDA than I would be able 
to provide you today.
    Mr. Aderholt. Okay. So as far as, so you couldn't really 
speak to FDA as far as necessarily about their--if they have--
do you know if they have looked into the possibility of private 
sector providers might be able to provide infusion-ready 
antibody drugs?
    Ms. Murrin. I do not know the answer to that at this point, 
sir, no.
    Mr. Aderholt. Okay.
    Ms. Murrin. OIG is currently developed its oversight plan 
for looking at the coronavirus. There were meetings on it 
yesterday and again today, and I will be sure to make sure that 
that suggestion goes into those discussions.
    Mr. Aderholt. Okay. Well, a lot of times in this 
Subcommittee, the issue of cybersecurity is raised, and if the 
protection of sensitive data is important, then the 
safeguarding of medical devices including the ones that are 
implanted are absolutely vital. Has FDA become more proactive 
in this field following your recommendations now particularly 
in the post-market setting?
    Ms. Murrin. Yes. FDA has made progress in this area. We 
continue to believe that more progress could be made. They are 
moving from a passive reporting system to an active--looking--
an active look for data and I think that they will find that 
that is much more useful to them, so yes, I do believe that 
they are making progress.
    Mr. Aderholt. Do you believe there is any particular areas 
where a rush to connectivity should be slowed down or cautioned 
in any way?
    Ms. Murrin. I think everything that FDA does should be done 
with caution, sir.
    Mr. Aderholt. Mm-hmm.
    Ms. Murrin. I don't think that--as I said, fortunately, we 
have never had a real world experience of this, and I think it 
is very important that we continue to take this as a top area 
of concern, but I think that we should continue to move at the 
cautious pace we have been.
    Mr. Aderholt. Is there any particular sectors of the 
healthcare industry that are acting irresponsible with 
cybersecurity from your viewpoint?
    Ms. Murrin. In terms of medical devices, sir? No I----
    Mr. Aderholt. Or anything, you know.
    Ms. Murrin. No.
    Mr. Aderholt. Okay. I want to ask you about the actions you 
have taken to improve and protect food supply and reduce 
preventable foodborne illnesses. You stated that the FDA has 
agreed with several of your recollections to address food 
supply vulnerabilities. How quickly is FDA acting on these 
recollections?
    Ms. Murrin. It varies widely, sir, on a number of issues. 
For instance, when we issued the early alert on the audit 
report that came out on food recalls, most of those 
recommendations were implanted even before the full audit 
report was issued, okay?
    And then again, however, you can see on inspections where 
we--while there have been some of our recommendations that we 
have made to them have been implemented, there are 
recommendations that we have had about how to improve food 
inspections, how to deal consistently with significant 
violations that have not been dealt with in 10 years.
    Mr. Aderholt. Mm-hmm.
    Ms. Murrin. And we very much appreciated this opportunity 
to bring that to the Subcommittee. I believe that we have 
provided the Subcommittee with this list of all of our open 
recommendations with FDA.
    Mr. Aderholt. Okay.
    Ms. Murrin. And we would be happy to provide any additional 
information on any of those.
    Mr. Aderholt. Okay. What steps do you plan to be taking in 
the upcoming year to better guard against food production lines 
or better guard food production lines themselves? Is there any 
particular steps that you could mention that come to mind or 
whatever, or any kind of additional structural changes that you 
believe need to take place?
    Ms. Murrin. Well, as we have been talking about, the follow 
up on significant violations. I think that is exceedingly 
important. There also continue to be issues about food safety 
that I would have--why don't I--may I respond to that later, 
sir, and give you a full list?
    Mr. Aderholt. Yeah, if you could get back with us on that, 
that would be----
    Ms. Murrin. Yes.
    Mr. Aderholt. But if you could, it would be helpful to get 
back with us. Thank you.
    Ms. Murrin. Thank you.
    Mr. Bishop. Mr. Cuellar.
    Mr. Cuellar. Mr. Chairman, thank you so much. Good morning.
    Ms. Murrin. Good morning.
    Mr. Cuellar. Sorry I am late. I had two other committee 
hearings at the same time.
    I want to say that, you know, I want to talk about the 
coronavirus. And on February 20th, I joined some of my House 
colleagues a letter to the President, asking him that if there 
is any vaccine or treatment developed by U.S. taxpayer dollars 
that it would be accessible, affordable, and available. I just 
want to see how we can work with the FDA in your position.
    Suggestions: to make sure that as we come with that that 
the rural communities be guaranteed access as, you know, we 
sometimes have a tendency of going to the big urban areas, but 
as somebody that represents a lot of rural areas just like a 
lot of our members how do we make sure that it is not only the 
large health departments in large cities in urban area cities 
get that, but also the rural areas. Any suggestions or thoughts 
on this?
    Ms. Murrin. Well, yes, as a matter of fact. Something that 
the Office of Inspector General could contribute to this 
conversation is that we have in other areas looked at the 
availability, for instance, I believe I mentioned medication-
assisted treatment, where that is available in the United 
States versus where the need is, and we could identify the 
availability in rural areas versus city areas, and that is but 
one type of area where we have looked at the distribution of 
available resources as compared to where the problem is.
    Mr. Cuellar. Did you all come up with any recommendations 
in that area that you looked at?
    Ms. Murrin. Yes, we did, sir, and unfortunately, I did not 
prepare to discuss that report today.
    Mr. Cuellar. That is right.
    Ms. Murrin. But I would be happy to get back to you about 
that.
    Mr. Cuellar. If you don't mind.
    Ms. Murrin. Yes.
    Mr. Cuellar. And then to finish your thought? Sorry.
    Ms. Murrin. No, but that OIG could take a look at 
distribution on issues like a vaccine just to see where it was 
going and where it was available and how that compared to urban 
and rural settings.
    Mr. Cuellar. And I certainly feel that your office can 
certainly look at that distribution. I am just concerned 
sometimes we have a tendency of forgetting the rural areas.
    Ms. Murrin. Yes.
    Mr. Cuellar. We have got to make sure we don't. But anyway, 
thank you for the job that you all do. Thank you, Mr. Chairman.
    Mr. Bishop. Thank you, Mr. Cuellar.
    Ms. Murrin, your office released a report last August that 
raised concerns about FDA's resolution of longstanding OIG 
recommendations and your report said that FDA has since tackled 
the backlog and now have fewer outstanding issues. Could you 
tell us whether or not you feel that FDA is now on a good path 
to address future recommendations on a timely basis? Is there 
anything you think the Subcommittee could do to ensure FDA's 
continued follow-up to your recommendations more promptly?
    Ms. Murrin. Yes, thank you very much for that question. I 
would certainly say that FDA has on a better path. What that 
report found was that in 2015 and 2016 FDA had actually not 
provided any information in terms of its actions on any of our 
audit recommendations.
    Since that time, there has been improvement. In the last 
five years, OIG has issued 70 recommendations from either our 
audits or our evaluations. 31 of those recommendations have 
been implemented. 39 of them remain unimplemented or not 
completely implemented. Then there is another 11 that we had 
recommended before that that still remain unimplemented. So 
that is a total of 50 unimplemented recommendations.
    I do believe that hearings like this where we are able to 
talk about what we particularly see as the most important 
issues and the most important outstanding recommendations can 
raise the priority for an agency and inspire progress.
    Mr. Bishop. Thank you. We would certainly welcome any 
suggestions on your part for what we can do. You released an 
audit of the FDA food safety recalls in September of 2017.
    Ms. Murrin. Yes.
    Mr. Bishop. Which was another depressing report to read. 
You found that the FDA could not always ensure that firms 
initiated the recalls promptly, and some customers became ill, 
and others were at risk of illness, and some cases of death.
    You found that the FDA relies primarily on voluntary 
recalls which makes the timeliness largely dependent on the 
firm's willingness to take action, and you found that the 
recalls were not always initiated promptly because FDA does not 
have adequate procedures to ensure that firms take prompt and 
effective action in initiating voluntary food recalls, and you 
found that FDA didn't always evaluate the health hazards in a 
timely manner.
    What is the FDA doing to better respond to your 
recommendations about strengthening their recall program and 
what challenges remain?
    Ms. Murrin. Thank you very much for that question. This is 
an area where we have seen great progress on the part of FDA. 
FDA has implemented our recommendations as regards in improving 
their procedures. They have set process timelines for when they 
will have made decisions about a recall. They have improved 
their regulations in that area.
    What they have not done, sir, that we would really very 
much like to see them do is they haven't put into their 
database information that would allow them to track the time 
from when they first learn about a problem to when the recall 
actually happens, and that is the most critical piece of 
information, and we think that they have to be able both to 
plan for success and to test their success.
    Mr. Bishop. Thank you very much. Your 2017 report on the 
domestic food safety inspections is also hard reading. You said 
that FDA wasted inspectors' time going to the sources who are 
out of business or not operating, that they found serious 
violations--when they found serious violations that they didn't 
always take action immediately to remedy the problem, that they 
failed to conduct timely follow-up inspections; in half of the 
cases, they took no action within a year in 17 percent of cases 
and it never did a follow-up inspection. So what is your review 
of what FDA promised to do address your filings, and do you 
plan to go back and check what they did, and can you walk us 
through audits that you expect to release this fiscal year?
    Ms. Murrin. Yes. On this topic, we just did the follow-up 
because we had done a 2010 report on inspections that had found 
these problems and that had made a series of recommendations.
    We went back out in 2017 and came back even more strongly 
advocating for our recommendations that we have been talking 
about here today that if there is a significant violation found 
there needs to be a follow-up action, there needs to be 
regulatory action on the part of FDA, official action, and then 
there needs to be a follow-up review.
    Also, we have been recommending a civil monetary penalty, 
that is actually our oldest outstanding recommendation, that if 
FDA had the ability to do that, that that might help motivate 
facilities to fix problems quickly.
    Mr. Bishop. You are the OIG. Do you feel that they have the 
authority, or do we need to give them authority from Congress? 
Do they have existing authority to ensure the end of that 
oversight in terms of health, safety, and welfare?
    Ms. Murrin. Sir, they have the existing authority certainly 
to follow through on every single violation, and to do the 
follow-up review to make sure that action has happened.
    Mr. Bishop. Does that include----
    Ms. Murrin. The civil monetary penalty, they do not have, 
and that would take a legislative change.
    Mr. Bishop. Thank you very much. Mr. Fortenberry.
    Mr. Fortenberry. Ms. Murrin, you said that this hearing is 
very important to you----
    Ms. Murrin. Yes.
    Mr. Fortenberry [continuing]. In terms of setting 
priorities. I'm going to go back to the first question, and I 
asked you two questions. One is given the huge amount of 
dependence we have on overseas supplies of drugs and drug 
ingredients, the mechanism by which we ensure that those drugs 
are safe is deficient. That is what I hear you saying.
    Ms. Murrin. I said that we are currently studying.
    Mr. Fortenberry. That is the first question. How is that to 
be improved? The second question is why the imbalance? What are 
the incentives in our system that have compelled these 
corporations to move those product productions overseas?
    And you said, ``We are going to get back to you on that.'' 
So how is that going to happen? I met your fine staff here, and 
there's a lot of notes being taken. So give me how you are 
going to do that and what timeline.
    Ms. Murrin. We will respond to you within two weeks with 
our plan of action.
    Mr. Fortenberry. Okay, great. And I want to--I don't want 
to put the Chairman on the spot, but I think we are in 
alignment in this regard. Is that fair, Mr. Chairman?
    Mr. Bishop. That is.
    Mr. Fortenberry. That we can say that this is a priority of 
the committee?
    Ms. Murrin. Yes.
    Mr. Fortenberry. Thank you. So that's important to me. I 
want to turn though to--it is important to all, not me. It is 
important. We have a moment here. I can't emphasize it enough. 
There is clarity around just how big a problem this is because 
of the coronavirus outbreak. We've known it is a problem for a 
long time, yet we are passive in light of it until there is 
some emergency.
    We're in the emergency room. 911. Help us answer this 
question now.
    Ms. Murrin. Yes, sir. We very much would like to take 
advantage of opportunities to solve problems.
    Mr. Fortenberry. Thank you. Let me ask you another question 
diverting topics for a moment. I want to talk about the disease 
called ALS, sometimes known as Lou Gehrig's disease.
    It's that plus many other degenerative diseases, there is 
no cure. However, in the case of ALS there is a treatment 
showing some promise on the horizon. Last year I introduced a 
bill called ALS Placebo No More. We all agreed, or many of us 
agreed, on a bill called Right to Try a little while back. We 
thought we'd solved the problem for the sickest Americans who 
are willing to go into experimental treatment assuming that 
full liability themselves. But it doesn't solve a problem for 
everyone.
    So since your agency does extensive audit work over the 
National Institutes of Health and the Food and Drug 
Administration, would you be willing to work on an assessment 
of how these two agencies can improve their work on clinical 
trials?
    Ms. Murrin. If funding is available within the priorities 
that are set, we would be delighted to do that.
    Mr. Fortenberry. Okay. So you have resource constraints. 
This isn't a question you've looked at before I assume?
    Ms. Murrin. That is correct.
    Mr. Fortenberry. Well, here is a deeper, related question. 
If you could provide a review across FDA centers to determine 
whether drug treatments within clinical trials are continued 
for patients showing benefits, that would be most helpful.
    That would also be consistent with the spirit of the Right 
to Try law that we passed earlier which has some inhibiting 
factors built into it, sadly. Gave a lot of us a head fake 
unfortunately and gave false hope to many people.
    A degenerative disease like ALS where there is a treatment 
on the horizon and a clinical trial, it basically excluded 
certain people for non-good scientific reason. There is a 
problem here. We have raised this with the FDA. There is some 
admission that, yeah, we need to change the procedures here.
    If there could be work across NIH and FDA to ensure that 
these two agencies can work together to improve the clinical 
trial process, it would bring hope in a manner that is 
consistent. We can't promise anything. But it would bring hope 
to our structural approach to how we move drugs onto the market 
quicker or give people exceptional opportunities when they 
basically have no other option.
    A little bit beyond your purview, I get this, and you did a 
fine job of segueing to help me by giving me more funds. I 
heard what you said, okay? But again, this is important because 
there is suffering. There are certain structural opportunities 
for change, if you well, let's put it that way, that we think 
could alleviate the suffering and bring treatment options to 
people quicker.
    Ms. Murrin. Thank you. Mr. Fortenberry, every year the OIG 
shares with this subcommittee its strategic plan for FDA, and 
we actually also produce a strategic plan for NIH. We would be 
happy to share those particular--the FDA one and----
    Mr. Fortenberry. I'm skimming the surface here. We can 
actually provide you some of the insights we have gained, some 
research in this regard to help you prioritize.
    Ms. Murrin. That's exactly what I was hoping to say that we 
could use the process of producing that document to make sure 
we're----
    Mr. Fortenberry. This is really important for a lot of 
people suffering. So thank you very much.
    Ms. Murrin. Yes, thank you.
    Mr. Bishop. Mr. Aderholt.
    Mr. Aderholt. I want to ask a little bit about oversight in 
dealing with tobacco use and opioid. Can you update us on the 
FDA's retail compliance inspections and the availability of 
tobacco products to youth and children?
    Ms. Murrin. I am going to be in an excellent position to be 
able to do that, sir, in some amount of time. We have actually 
just begun a review of FDA's retail inspections that is going 
to look at where those are happening. It will look at all the 
different retail establishments of any type that are providing 
any type of tobacco product.
    And we will be able to give you better information about 
the sort of areas where those are happening, if there are any 
areas where, you know, they clustered around schools, are they 
not going around schools. We will have infinitely better 
information to provide you with that in a year.
    Mr. Aderholt. When? In a year?
    Ms. Murrin. Yes, I would think--we may have some of it 
early.
    Mr. Aderholt. Initial information?
    Ms. Murrin. Initial information earlier than that. But that 
is an area of profound concern to us and that is our very next 
study that we have actually just started.
    Mr. Aderholt. Have you assessed or taken action on online 
sales?
    Ms. Murrin. That will be part of this consideration. These 
FDA inspections happen both for any type of retail situation, 
so that would include an online store.
    Mr. Aderholt. That would--okay. I think it is important 
that we don't let mismanagement of opioids result in the 
unavailability to patients that really need pain control 
especially on a short-term basis, oh, after they've had some 
kind of medical procedure.
    What would be your opinion of a voluntary or mandatory rule 
about which prescribers can only prescribe, say six, opioid 
pills to a patient and that any refill has to be signed off by 
a prescribing doctor?
    Ms. Murrin. A level of medical knowledge would be needed to 
speak at that specifically, and I don't think that that would 
be appropriate for me.
    Mr. Aderholt. When you have to say six, yeah.
    Ms. Murrin. Yeah.
    Mr. Aderholt. What about some limited amount?
    Ms. Murrin. I believe that that happens now.
    Mr. Aderholt. Do you know how that works?
    Ms. Murrin. Not through our studies. I do not have that 
information here. But we have done a full range of work on 
opioids and we would be very happy to arrange for a briefing on 
everything that we've done.
    Mr. Aderholt. Have you identified any areas where FDA did 
not properly hold manufacturers accountable for mitigating the 
risks of opioid use and abuse?
    Ms. Murrin. We are about I think within the next month to 
six weeks about to issue a report that will touch on that 
subject. It will look at how FDA has used--and I'm sorry I 
don't remember what REMS stands for--one of its programs for 
monitoring drugs and their impact out in the real world and how 
they've been using that or not using that in terms of the 
opioid crisis. But we expect that report to come out final in 
another month.
    Mr. Aderholt. On a somewhat related issue, tomorrow the 
House is going to consider a piece of legislation that is going 
to prohibit remote retail sales of tobacco products. What is 
your opinion as to how reasonable it is to make it illegal for 
adults to purchase tobacco online when alcohol can be purchased 
that way?
    Ms. Murrin. I would say that that's a policy call that the 
OIG would not have a position on.
    Mr. Aderholt. Okay. Thank you, Mr. Chairman.
    Mr. Bishop. Thank you, Mr. Aderholt. Ms. Murrin, I think we 
have about exhausted our questions for you today and we want to 
thank you very much for being here. Along with what we have 
discussed, we will also forward you some additional questions 
for the record, and we'll appreciate your diligence in getting 
your responses to us by the deadline set by the committee. And 
of course, Mr. Fortenberry has indicated a request that you 
promised to get us within two weeks, and we look forward to 
receiving that.
    Thank you so very much for your testimony. We look forward 
to working with you as you continue the fiscal year 2020/21 
appropriations process. With that, the committee is adjourned.

                                            Tuesday, March 3, 2020.

                              MEMBERS' DAY

    Mr. Bishop. The subcommittee will come to order. Good 
morning. And today, we would like to welcome our colleagues on 
both sides of the aisle to give testimony before the 
subcommittee on the agencies that are under our jurisdiction. 
This is a tremendous opportunity for us to listen to a diverse 
group of members from across the country to share their views 
on a wide spectrum of issues related to our bill.
    We look forward to hearing your thoughts today on the 
appropriations process and learning more about the programs and 
the issues that affect your district and your constituents. 
Your input is invaluable as we draft the funding legislation 
for the upcoming fiscal year for USDA and FDA and Commodity 
Futures Trading Commission as well as the Farm Credit 
Administration.
    Before we begin, I would like to remind everyone that we 
have several members testifying today, so we would like to 
strictly adhere to the five-minute rule so that we can remain 
on schedule. I would like to thank every member who has taken 
time out of their schedules to speak to us today or to submit a 
written request or written testimony, and we appreciate your 
interest in the work of the subcommittee. And at this time, I 
would like to recognize the ranking member, Mr. Fortenberry, 
for any opening remarks that he would like to make.
    Mr. Fortenberry. Thank you, Mr. Chairman, and thank you for 
calling this important hearing. It is an important reminder 
that we represent Americans. And in order to do our job well, 
we need to hear--those of us who have been put in these 
extraordinary positions of leadership over various aspects of 
the government, we need to hear directly from the 
representatives of the people.
    Particularly in the ag sector, we do a tremendous amount of 
good creating the stabilization policies that allow America to 
have the lowest grocery prices in the world and that protect 
people with food insecurity. So this is a very, very important 
space. So I will look forward to hearing our members--from our 
members today how we can potentially improve, become more 
effective or change if necessary. So thank you, Mr. Chairman, 
for calling the hearing.
    Mr. Bishop. Thank you. With that, we will like to welcome 
our members. First on the agenda is Mr. Scott Perry from 
Pennsylvania.
    The floor is yours, Mr. Perry.
                              ----------                              --
--------

                                            Tuesday, March 3, 2020.

                                WITNESS

HON. SCOTT PERRY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF 
    PENNSYLVANIA
    Mr. Perry. Well, thank you very kindly, sir. Gentlemen, 
staff, I appreciate the opportunity to present my views and 
priorities for the fiscal year 2021 Agricultural Appropriations 
Bill. The USDA Sugar Program disproportionately harms the 
employment opportunity and wages available to constituents 
across the district I represent while imposing higher consumer 
costs on all Americans.
    To alleviate this harm, I request the subcommittee prohibit 
USDA from using funds for the following purposes: providing 
price support loans for raw cane sugar or refined beet sugar, 
establishing an overall allotment quantity for sugar and 
purchasing sugar for the purpose of the Feedstock Flexibility 
Program. Collectively, these programs would remove three of the 
four pillars of the U.S. Sugar Program, greatly reducing the 
negative economic impacts of this program--bless you--and 
improving the freedom of all Americans.
    The current U.S. Sugar Program represents an anti-free 
market scheme that imposes a massive hidden tax on both 
American businesses and consumers for the benefit of a small 
concentrated group of special interests. These Soviet-style 
policies impose significant, unnecessary costs on the domestic 
food manufacturing industry and the consumer.
    In aggregate, the results of the U.S. Sugar Program are 
devastating to the economy. According to the American 
Enterprise Institute, these policies have imposed a 2.4 to $4 
billion worth of losses to consumers and sugar users across the 
nation. Domestic sugar-using industries, like those in the 
district I represent, are particularly sensitive to these 
market distortions, as the cost of their main input is more 
than double the global price of sugar.
    These industries provide jobs to more than 600,000 
Americans, including 40,000 Pennsylvanians. Unfortunately, the 
exorbitantly high cost of sugar creates a disincentive for 
these companies to continue to manufacture here in America, 
resulting in three food manufacturing jobs lost for every 
single one sugar-producing job saved. As a result of these 
programs' impacts, the Sugar Program resulted in the loss of 
123,000 jobs over the past two decades.
    Moreover, the government imposed high operating cost of 
this--of these industries prevent the creation of 17,000 to 
20,000 new jobs each year. It should not be controversial to 
end this socialist program that imposes significant harm on the 
workers and consumers of our country alike. It is un-American 
and unjust to take tax dollars from the constituents I 
represent and then spend them attacking our very own economy. 
And for this I thank you for your consideration and stand for 
your questions.
    Mr. Bishop. Thank you very much, Mr. Perry. I have no 
questions.
    Do you have any questions?
    Thank you very much for your testimony.
    At this point, we are happy to represent Representative 
Jenniffer Gonzalez-Colon from the Commonwealth of Puerto Rico.
                              ----------                              --
--------

                                            Tuesday, March 3, 2020.

                                WITNESS

HON. JENNIFFER GONZALEZ-COLON, A DELEGATE IN CONGRESS FROM THE 
    TERRITORY OF PUERTO RICO
    Miss Gonzalez-Colon. Thank you, Mr. Chairman, and thank 
you, Ranking Member, for allowing me to come here today to 
speak about--on behalf of the people of Puerto Rico. Today I 
will only focus on one of the main priorities. And that is on 
increasing the funding for the Nutritional Assistance Program 
for Puerto Rico. As you are aware, Puerto Rico does not 
participate in the National Supplemental Nutrition Assistance 
Program or SNAP. Instead, Puerto Rico has a Nutritional 
Assistance Program or NAP, which is capped-block-grant funded 
every year.
    This automatically put us in a disadvantage because we do 
not have a program that can expand or contract depending on 
need or demand. Consequently, I have constituents that live 
below poverty levels but cannot benefit from the program 
because of the strict income restrictions that need to be put 
in place to meet funding gaps.
    During my tenure as representative in Puerto Rico in 
Congress, the island has two--had--has had two consecutive 
hurricanes, Irma and Maria, which caused widespread 
destruction. Additionally, the southwestern region of the 
island has been--experience ongoing seismic activity since 
December 2019. These three disasters did not create the 
challenges with NAP. However, they exacerbated these challenge 
and have highlighted how unsuitable and restrictive the program 
island--the program is and confirm the need to strengthen the 
program through a robust funding. The Administration request 
for fiscal year 2021 is $1.9 billion. Although I do appreciate 
this increase from the enacted level for the Fiscal Year 2020, 
we need additional assistance to properly serve NAP 
beneficiaries and meet the goal of increasing security in the 
island for over 1.3 million participants.
    Therefore, I will be requesting an increase in the block 
grant for Fiscal Year 2021 that is needed for the island. This 
will help us increase benefit levels which are drastically 
below the national average under SNAP and improve program 
participation to help my constituents access the nutritional 
assistance they need and deserve.
    SNAP beneficiaries in the United States, continental United 
States, Guam, and the U.S. Virgin Islands receive close to 50 
percent more in benefits per household than their counterparts 
in NAP. To give you just an example about this, a household of 
one in the neighboring U.S. Virgin Islands receive 
approximately $250 per month. In Puerto Rico, a household of 
one is eligible for a maximum of approximately $112 per month.
    Similarly, a household of two in the continental United 
States is eligible for approximately $357 per month. A 
household of the same size in Puerto Rico is eligible just for 
a maximum of $216 per month. Increasing the block grant will 
increase our ability to mitigate the disparity until we reach 
the ultimate goal of transitioning to SNAP. And that was 
something--a study that was approved during the last Congress. 
I want to thank you and thank all the members of the committee 
and the subcommittee for their hard work and have--they have 
provided to Puerto Rico through the Supplemental Disaster 
Appropriation for NAP.
    Still, I would like to stress that not addressing the 
immediate underlying program, which is significantly--
significant funding deficiencies at the base program level will 
continue to be an obstacle to achieve nutrition security for 
the people of Puerto Rico. That is the reason I came here 
today. With that, I yield back.
    Mr. Bishop. Thank you very much, Representative Gonzalez-
Colon. You should know that the subcommittee is very, very 
concerned about the disparities that exist with the nutrition 
programs for Puerto Rico. And we are really trying to develop a 
path toward regularizing or at least making the relief 
available and the programs available to Puerto Rico the same as 
the programs for the other territories and the states.
    It is going to be a task, but I think it is the right thing 
for us to do. I haven't discussed it with Mr. Fortenberry, but 
I feel very strongly, and there are other members of the full 
committee that feel equally as strong that we must do something 
to equalize the disparities that Puerto Rico residents and 
citizens face.
    Puerto Rico citizens are just that. They are citizens, and 
they should not be discriminated against with regard to the 
resources that are available to every other American. And we 
need to get on the path to making that happen. And so I 
appreciate your testimony. We appreciate the urgency of the 
moment for the immediate problems with the tremors as well as 
with the responses to the previous natural disasters that have 
occurred. But we look forward to working with you and others to 
try to--to make sure that we can resolve this disparity.
    Miss Gonzalez-Colon. Thank you, Chairman. I just want to 
add something. One of the main differences is, as we are part 
of the NAP program and not the SNAP, every time there is a 
disaster, we need to come here to Congress to achieve the 
difference. If we were in the SNAP program, we will never be 
here.
    Mr. Bishop. I understand, and I agree with you 100 percent. 
And of course hopefully we can get the other members of 
Congress and the other body across the hall to join us and the 
Administration in trying to right this long-term wrong.
    Mr. Fortenberry.
    Mr. Fortenberry. Thank you, Mr. Chairman. We actually like 
you being here. I do wish it was under less adverse 
circumstances because the island has been traumatized by 
natural disasters. And I would say, for my colleagues, Miss 
Gonzalez-Colon has done a tremendous job of informing the 
Congress, representing the people of Puerto Rico, gently yet 
persuasively trying to make various cases as to how to better 
integrate Puerto Rico into given programs and also, on the 
other side of the ledger, speaking to the reality of how much 
Puerto Rico contributes to the well-being of the overall United 
States through, obviously, economics but also military service 
and a variety of other impacts that, again, demand full and 
fair consideration of these questions that you raise. So I want 
to thank you for your leadership.
    Miss Gonzalez-Colon. Thank you, sir.
    Mr. Bishop. The subcommittee will stand in recess 
momentarily as we await the arrival of Mr. Hagedorn. He is 
minutes away.
    [Recess.]
    Mr. Bishop. The committee will now come to order. We 
welcome Mr. Hagedorn.
    The Reporter. Can we turn on, please, Mr. Chairman?
    Mr. Bishop. I understand we----
    The Reporter. Mr. Chairman?
    Mr. Bishop. If there is anything----
    The Reporter. Microphone.
    Mr. Bishop [continuing]. You would like to share with the 
committee pertaining----
    The Reporter. Microphone, please.
    Mr. Bishop [continuing]. To 2021 appropriations process?
                              ----------                              --
--------

                                            Tuesday, March 3, 2020.

                                WITNESS

HON. JIM HAGEDORN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF 
    MINNESOTA
    Mr. Hagedorn. Mr. Chairman, Ranking Member, thank you for 
the opportunity. Pleasure to be with you. I represent the First 
District of Minnesota, some of the finest farmers and 
agribusinesses in all the country. And, you know, pretty much 
what we do with our sustainable ag practices, livestock farming 
and business--you know, rural business lending, it is--it 
sustains our rural way of life. And so we are here today to 
advocate on about four things.
    The first is I would like to ask the committee to consider 
a modest increase of $3 million for the USDA's Center for 
Veterinary Biologics. Now, the CVB is the regulatory body for 
veterinary biologic manufacturers that contributes over $500 
billion worth of economic output. And in response to the 2015 
bird flu outbreak which cost poultry industry $1.6 billion, you 
know, the CBD--CVB--boy, I am having a tough time with that--
has shown the ability to do more with less.
    And when you think of what is going on now with the African 
swine fever and the potential that that has to come in and harm 
our not just pork industry but our corn farmers, our soybean 
farmers, packers, everybody down the line, we need all hands on 
deck. And this is certainly an area where for just, you know, a 
few million dollars more, I think we can beef that up and 
protect our food supply and our farmers. Second is in the 
alfalfa industry. I would like to encourage you to consider the 
Administration's $5 million request to be granted for alfalfa 
seed and alfalfa forage systems research program which improves 
yields, water conservation and other research into the 
potential advance for alfalfa seed and alfalfa forage industry.
    Alfalfa contributes more than $9 billion, if you can 
believe it, per year to the nation's farm economy. It is an 
economic engine in rural communities. And as we look to feed, 
fuel, and clothe the growing world, investments and improved 
soil health, water usage and biodiversity are key to a 
profitable and sustainable agriculture industry.
    Next is the Oat Research Program, and I would like you to 
consider the $2.5 million increase for the Agricultural 
Research Service in oat plant breeding and disease resistance. 
Oats are an essential and heart-healthy grain for both human 
consumption and animal feed and also valuable and in a number 
of areas. So I want to move to the last point, which is a key 
one for our district. And that has to do with the hundred 
million dollars that the Administration is proposing for--to 
promote domestic ethanol and biodiesel infrastructure and 
consumption.
    Now, recently, we have been working together in bipartisan 
fashion in the Agriculture Committee and elsewhere to end what 
is known as the small refinery waivers which have undermined 
the ethanol program especially. And the President of the United 
States himself has come out and said that his policy is to 
blend 15 billion gallons of ethanol and 2.4 billion gallons of 
biodiesel. And, you know, there was a regulation that came out 
of EPA. We are a little uncomfortable with it.
    Many of us, again, in bipartisan fashion, have sent letters 
down to EPA and said, ``We are going to hold your feet to the 
fire to make sure that this program, the Renewable Fuel 
Standard, is administered the way Congress intended and the way 
the President has directed.'' And so what we are talking about 
here is $100 million to promote that at the gas station. So 
this program will encourage gas stations to invest in biodiesel 
and ethanol infrastructure by sharing costs related to and 
offering sales incentives for the installation of fuel pumps, 
equipment, and infrastructure. And I look forward to working 
with you and all our fellow members in Congress to make sure 
that that is fully funded.
    So with that, I really appreciate the subcommittee's time 
and your consideration of these measures. They will go a long 
way into making sure that we protect the food supply, our 
agribusinesses, our farmers and our way of life in not just 
Southern Minnesota but all across the United States. So with 
that, I will yield back my time unless you have any questions.
    Mr. Bishop. Thank you very much, Mr. Hagedorn. I don't have 
any questions. I appreciate your taking the time to come and 
sharing with us. You have some very valid concerns, and we 
certainly will do our best to try to assist in any way that we 
can subject to the limitations of our available resources.
    Mr. Hagedorn. Well, again, thank you for your time. 
Appreciate your consideration.
    Mr. Bishop. Mr. Fortenberry.
    Mr. Fortenberry. Yeah, just right quick, Mr. Chairman, I 
appreciate the gentleman raising the issue of the small 
refinery waiver dynamic. I have been a part of that effort to 
try to make sure that our perspective on this is properly 
socialized. It is a bipartisan effort to make sure that, again, 
ethanol and other biofuels as well, but particularly ethanol, 
are fully integrated into our fuel system.
    We forget where all of this came from. In an earlier energy 
package, there was a pollutant additive to gasoline. Ethanol 
was on the verge of a breakout moment. There were some public 
policies put in place that allowed it for environmental 
considerations to be integrated into our primary fuel source in 
the country for transportation. In addition to that, of course 
ethanol creates another type of market for our farmers. And 
those of us who have an alignment of both inputs and outputs 
use the byproducts from it to actually put it back into the 
food stream through cattle production. So this is a real winner 
for America, but we don't often tell that story. So I 
appreciate you raising the issue. It is about sound 
environment, new markets for our food products and a 
regeneration of natural resource itself. So that is very 
important. Secondly, I did want to ask you a quick question. Is 
the Alfalfa Program a consortium of universities? Do you know 
is it embedded in a particular place?
    Mr. Hagedorn. I am not that familiar with your question. I 
am sorry. We will get back to you on that.
    Mr. Fortenberry. That is fine. We will----
    Mr. Hagedorn. Follow up.
    Mr. Fortenberry. We will find out. Thank you.
    Mr. Hagedorn. Follow up. Thank you.
    Mr. Bishop. Thank you very much. With that, the 
subcommittee will stand in recess subject to call of the chair.
    [Recess.]
    Mr. Bishop. The subcommittee will now come to order, and we 
would like to welcome Dr. Schrier. We would appreciate anything 
you would like to share with us pertaining to our 2021 
appropriations process, and the floor is yours, Ms. Schrier.

                              ----------                              


                                            Tuesday, March 3, 2020.

                                WITNESS

HON. KIMBERLY SCHRIER, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF 
    WASHINGTON
    Ms. Schrier. Thank you, Chairman Bishop, and thank you, 
Ranking Member Fortenberry. I am here today to discuss a few 
issues of great importance to me regarding agriculture and 
specifically funding to study the impacts on the link between 
atmospheric CO2 and nutritional values of crops, WIC, 
agricultural research, maintaining a fix to the specialty crop 
research initiative, School Kitchen Equipment Grants, and 
ensuring school lunch transparency about nutrition. I do not 
have time to go into all of these. So I will pick a couple. The 
first is about----
    Mr. Bishop. We will definitely put your testimony in the 
record, your full testimony.
    Ms. Schrier. Thank you.
    Mr. Bishop. And we appreciate your interest and your 
involvement.
    Ms. Schrier. So the first is about atmospheric carbon 
dioxide and nutritional value. In the coming weeks, I will be 
introducing legislation to dedicate research funding to study 
the link between CO2 and food crops. The concentration of 
carbon dioxide in the atmosphere has been increasing steeply. 
And one of the most significant impacts of rising carbon 
dioxide in the atmosphere is on food security.
    The interactions between rising CO2 and food crops will 
have societal and economic consequences, including especially 
consequences for vulnerable and low-income populations. To 
date, most of the research on this topic has studied the impact 
on plant yields. However, preliminary studies indicate other 
serious potential consequences such as declines in key 
nutrients, protein, and minerals. When plants, including crops 
like wheat and rice, absorb more carbon dioxide, they increase 
the synthesis of carbohydrate and decrease concentrations of 
protein and nutrients like iron and zinc, which are critical to 
human health.
    As a pediatrician, I understand that people with iron 
deficiency can face a range of symptoms, including iron 
deficiency anemia. Zinc deficiency, which impacts about a 
billion people worldwide already, is associated with rashes, GI 
symptoms, and failure to thrive. And folate is critical for 
pregnant women especially because their babies, if they don't 
get enough folate, can be born with neural tube defects.
    And so as CO2 concentrations rise, globally, this will have 
a tremendous impact on human health. My bill creates a pilot 
grant program under NIFA that will fund research to study the 
impact of CO2 in the atmosphere on nutritional value of food 
and then the implications for human and animal health.
    I would also like to briefly touch on SCRI, the Specialty 
Crop Research Initiative. This funds research to address the 
critical needs of the specialty crop industry. It supports a 
lot of the crops of the 300 crops in Washington State. Past 
funding projects have supported efforts to combat fungicide 
resistance in wine grapes, precision irrigation for fruit 
growers, and pest prevention in onions and other crops. And I 
have worked hard to make sure that specialty crop researchers 
have access to the resources they need and was happy that there 
was a fix included in the 2020 Omnibus Appropriations Act.
    And until we have a permanent fix, I would just ask that 
that language restoring the waiver authority be included in 
annual appropriations. Next, cherries and research funding for 
little cherry disease. In Washington State, apples and cherries 
are among our top 14 exports. Protecting and strengthening the 
tree fruit industry is vital to our economy. And this past 
cherry season, it became apparent that Pacific Northwest cherry 
growers are facing a substantial threat from something called 
little cherry disease, a condition caused by three viruses that 
can either be transmitted from insects or through root systems.
    And so once it is detected, the only option is to remove 
the tree entirely. And it can, of course, spread through 
orchards. Little cherry disease has reached epidemic 
proportions in Washington State, and growers are scrambling to 
obtain new tools to improve detection and control the spread. 
So several of the requests noted in this letter are for 
research positions or grant programs that could provide 
valuable resources to leverage industry efforts related to LCD. 
And I encourage the committee to increase ARS salaries, make 
sure we have abundant resources for research, and I will submit 
the remainder of my concerns by paper. Thank you so much to the 
committee for the opportunity to testify today on a few issues 
that are critically important to the state of Washington. Thank 
you so much.
    Mr. Bishop. Thank you very much, Dr. Schrier. Your concern 
are very well taken, and I think the--as--coming from a state 
that has a significant number of specialty crops and the need 
for research is very much there. I just wish we had more 
resources to apply to ag research because ag research is the 
reason why we are able to produce the highest quality, the 
safest, and most abundant and most economical food and fiber 
anywhere in the world.
    So I appreciate that very much, and I think the WIC 
program, the SNAP program, the Equipment Lunch Grants, and the 
school lunch transparency, all of those are issues that are 
vitally important to the subcommittee and to the full 
Appropriations Committee.
    And I thank you for bringing to our attention, and we will 
do our very best to try to see that your requests are honored.
    Ms. Schrier. Thank you for your consideration. Have a good 
day.
    Mr. Bishop. Mr. Fortenberry.
    Mr. Fortenberry. Don't leave, Doctor. I have something to 
say. Thank you for your testimony. I think--in the specifics 
that you provided, I think the overall vision that you are 
talking about is what I call an ecosystem of well-being. Food 
is tied to health, agriculture, and diversification of 
agriculture and healthy food is inextricably tied to community 
well-being.
    The small cherry disease was something that I am not 
familiar with. We don't have an abundance of cherry production 
in Nebraska. But, again, as I said earlier, hearing from 
members helps appropriately socialize us as to the very--
various distinctions that people have around the country in 
terms of their capacity and specialization. So hearing about 
that one particularly is helpful. So thank you very much.
    Ms. Schrier. Thank you. Yeah. The cost later for a lot of 
spina bifida could be high so thank you very much.
    Mr. Fortenberry. Yeah.
    Mr. Bishop. The subcommittee will stand in recess subject 
to the call of the chair as we wait for Mr. Davis. We have been 
running ahead of schedule today. We have had several members 
who were not able to attend because of today being a primary 
day in their respective states and so some of the members had 
to cancel their appearances. And so we have moved ahead of 
schedule.
    But we await the arrival of Mr. Davis and stand in recess.
    [Recess.]
    Mr. Bishop.
    The subcommittee is now called to order. We are happy to 
welcome Mr. Rodney Davis from Illinois to let us hear from him 
with respect to our 2021 Appropriations Bill.
    Mr. Davis, you are recognized for five minutes for whatever 
comments you care to make, and we will certainly take your 
testimony and make it a part of the record.
                              ----------                              --
--------

                                            Tuesday, March 3, 2020.

                                WITNESS

HON. RODNEY DAVIS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF 
    ILLINOIS
    Mr. Davis. Well, Mr. Chairman, Mr. Ranking Member, thank 
you both for allowing me the opportunity to testify. I 
apologize for a little delinquency in getting here. I seem to 
have had a bleeding finger that would not stop. So I got that 
taken care of, and I am a little bit late, but I really 
appreciate the opportunity to testify before both of you today. 
I am here to speak in support of increased funding for 
agricultural research for the National Institute of Food and 
Agriculture's Agriculture and Food Research Initiatives, NIFA's 
AFRI program.
    AFRI provides grants to research institutions of all types, 
including land-grant universities, public non-land grant 
universities, private colleges and universities, private 
research foundations and industry for the purpose of research 
education and extension programs. The goal of these grants is 
to help increase food production, enhance food production, 
safety and nutrition, mitigate the impacts of changing 
climates, improve rural economies, and train our next-
generation workforce.
    I have been a relentless advocate for this program 
alongside one of my good friends, Jimmy Panetta. Together, we 
worked to establish the Agriculture Research Caucus to raise 
awareness and garner support for research, development, and 
innovation in agriculture. We represent vastly different 
agricultural districts, but be both recognize that research for 
the specialty crops he represents and the row crops that I 
represent bolsters our ag economy, and that is a benefit to all 
of us.
    The committee and the House as a whole has consistently 
signaled strong bipartisan support for agriculture research. 
Last year, we successfully increased appropriations by $45 
million over fiscal year 2019 levels to 460 million for NIFA's 
AFRI program in our House-passed Fiscal Year 2020 bill. The 
enacted level for AFRI was 425 million for Fiscal Year 2020, a 
$10 million increase over the previous year.
    Additionally, the 2018 Farm Bill established an important 
pilot program called the Agriculture Advanced Research and 
Development Authority, AGARDA, designed to solicit solutions to 
the challenges we face in ag through high-risk, high-reward 
research. This program is designed to target research areas 
that industry might not be able to address because of 
uncertainty or cost and bring to market solutions--bring to 
market some solutions that will increase production, 
sustainability, and competitiveness.
    The return on investment and agricultural research is 20 to 
60 percent. However, it accounts for just 2 percent of our 
federal research dollars. This important research improves the 
quality of our daily lives, and we must invest more to prepare 
and innovate for the future and stay competitive in food and 
agriculture globally.
    I respectfully request that the committee continue to 
prioritize and advocate for increased funding for NIFA's AFRI 
program in a final spending package and provide initial funding 
for the new and innovative approach to ag research, AGARDA. 
Thank you for your continued work, both to the chair and to the 
ranking member and to your Ag Approps team to support ag 
research. And I yield back the balance of my time.
    Mr. Bishop. Thank you very much, Mr. Davis. Let me assure 
you that the subcommittee agrees with you, the value of 
agriculture research. I continue to say that American 
agriculture is the best in the industrialized world, that we do 
continue to produce the highest quality, the safest, and most 
abundant and the most economical food and fiber anywhere in the 
industrialized world. And it is because of our superior 
research.
    We had some misgivings about the reorganization of NIFA and 
ERS earlier in this Congress. But we continue to push for 
adequate funding for research and, of course, you are here 
advocating for that, and we fully support that. Our only 
challenge is being able to have the available resources 
allotted to our subcommittee in our allocation to be able to 
provide the necessary funding to achieve these objectives. So 
thank you very much for your request. Thank you for your 
testimony, and we certainly will do everything that we can to 
try to make sure that agriculture research is adequately 
funding to meet the needs of our country to keep our 
agriculture competitive globally.
    Mr. Fortenberry. Chairman, can I make a comment?
    Mr. Bishop. You may. Recognize Mr. Fortenberry.
    Mr. Fortenberry. Thank you, Mr. Chairman. I appreciate your 
comments as well as Representative Davis. I just left State and 
Foreign Operations. I am not the ranking member there, but I 
sit on the committee. And Mark Green, the administrator, United 
States Agency for International Development, is there. And the 
first question I asked started with a comment saying food 
security is foundational to stability and human flourishing.
    And because we have been so extraordinarily successful in 
the United States due to basically three factors, the 
stewardship of our farmers and ranchers, credible resource 
capacity, as well as public policies that have underwritten 
stabilization, partly through research, partly through support 
programs as well as addressing those who have food insecurity 
problems has led, as the chairman said, to us being so 
extraordinarily productive, having the lowest food prices in 
the world and basically we look at our trade imbalances.
    It would be so much worse if we didn't have agriculture 
with a huge contribution to exports. In addition to that, we 
export expertise. We export technology. We export the human 
capacity, the charity, if you will, to help other people 
struggling to build out their own systems for, again, human 
flourishing. So you rightly point out the role that research 
plays as, again, a foundational part of this piece. And we 
overlook it because we have been so good at it. So I want to 
thank you for coming today.
    Mr. Davis. Thank you, Mr. Ranking Member. If you don't mind 
me, you know, kind of responding to what you said, I am glad 
the discussion in State and Foreign Ops was on food security 
because, as we know, the stable governing bodies in developing 
nations all will have a stable and great access to a food and 
fiber supply that Chairman Bishop talked about.
    And the key to that process and us allowing to develop 
better foreign relations with developing nations is to export 
the ag research that we are able to invest in here in this 
country. And I look forward to working with you both. I thank 
you both for your consideration and also your leadership on 
this issue. Both of you have been leaders when it comes to ag 
research. And I look forward to working as a part of your team 
this year throughout the appropriations process.
    Mr. Bishop. Thank you very much, Mr. Davis. And at this 
time, I would like to thank all of the members again for 
testifying before our subcommittee today. We appreciate their 
coming out and taking time to talk to us about their projects 
and programs and the issues that are important to their 
constituents. The input will be vital as we move forward in the 
2021 appropriations process. At this time, I will recognize Mr. 
Fortenberry for any comments that he would like to make before 
we close.
    Mr. Fortenberry. No, Mr. Chairman, I think this was a 
productive conversation today. Appreciate your leadership.
    Mr. Bishop. Thank you very much, Mr. Fortenberry. For 
members who were not able to attend the hearing to testify in 
person, if you wish to submit written testimony, please do so 
by the end of the day today. The entire testimony will be 
included in the record. With that, the subcommittee is 
adjourned.

                                           Tuesday, March 10, 2020.

                UNITED STATES DEPARTMENT OF AGRICULTURE

                                WITNESS

HON. SONNY PERDUE, SECRETARY, UNITED STATES DEPARTMENT OF AGRICULTURE
    Mr. Bishop. The subcommittee will come to order.
    Good morning, and welcome to today's hearing on the 
Department of Agriculture's fiscal year 2021 budget.
    I am pleased to introduce our witness, Secretary Perdue. 
The Secretary and I have a decade-long relationship, and we 
share deep passions of our farming and our ranchers and our 
rural communities. And it has been a pleasure to work 
collaboratively with him over the last 3 years.
    I also wanted to welcome Dr. Rob Johansson, USDA's Chief 
Economist, and Ms. Erica Navarro, the Budget Officer, to the 
hearing.
    Thank you for coming today.
    Over the past few years, natural disasters, trade 
uncertainty, and increasing levels of farm debt and 
bankruptcies have led to increasing stress and anxiety in the 
agriculture community. And I want to thank the Secretary and 
all of USDA's employees who have helped our farmers navigate 
these very, very difficult and tough times.
    Despite the likelihood that these challenges will continue 
for some time, however, the administration has put forth a 
budget that appears to be grossly inadequate, as it has every 
year during its time in office.
    This year USDA's budget request is $16.4 billion, which is 
a reduction of three and a half billion dollars, or 18 percent, 
in discretionary funding from the final fiscal year 2020 bill.
    I continue to believe that many proposals in the budget are 
bad for our farmers, bad for our rural communities, bad for our 
vulnerable populations, and quite honestly, should be dead on 
arrival.
    Any budget has a statement of values and priorities, and it 
has been clear for three years now that the administration 
wants to dismantle some critical programs. Fortunately, the 
Constitution gives Congress the power of the purse.
    As in years past, we will not entertain the elimination of 
programs such as Food for Peace, McGovern-Dole, the Commodity 
Supplemental Food Program, some of EBT, and nearly all of the 
Rural Housing Loan and Grant Programs.
    We will also not entertain many of the proposed policy 
changes, especially those which restrict SNAP benefits or 
overhaul crop insurance in our conservation programs.
    I was disappointed but not entirely surprised to see the 
department is once again proposing a Harvest Box idea under 
which SNAP recipients would get part of their benefits this 
year as a box of food rather than through SNAP monetary 
benefits. Sadly, this mirrors actions on the administrative 
side.
    When met with resistance during the 2018 farm bill debate 
on the Able-bodied Adults Without Dependents, broad-based 
categorical eligibility, and the standard utility and allowance 
proposals, the administration moved forward with executive 
rulemaking.
    I worry that these rules disproportionately impact working 
families with children trying to climb out of poverty.
    The U.S. Census Bureau reported that in 2017, SNAP lifted 
3.4 million people, including one and a half million children 
out of poverty. The economy is still not working for everyone, 
and the administration should not make it worse by decimating 
one of the most effective safety net programs.
    Now, Mr. Secretary, yesterday, ahead of your testimony, I 
know it was late, and I trust that you may have seen it. 
Congresswoman Rosa DeLauro and I sent a letter to you on the 
Department of Agriculture programs and urged you to take some 
decisive actions to ensure program access.
    As you are very well aware, under the exigencies of the 
coronavirus, COVID-19, States and localities are beginning to 
employ social distancing strategies as a means of containing 
the virus. For some this has meant temporary school closures, 
and that jeopardizes access to school meals for students, 
including the nearly 22 million children who rely on free and 
reduced school lunches.
    And while we applaud USDA's recent efforts to accommodate 
the schools in California and in Washington State, we believe 
that more can be done, such as waiving the congregate meal 
requirement for schools outside of area eligibility.
    And we feel like the Department of Agriculture should 
immediately start working with the Department of Education, if 
you have not already, to provide States with the resources and 
the guidance to develop plans that will detail how students 
will receive access to child nutrition programs before a school 
shuts down.
    Furthermore, with regard to SNAP, we would like to urge you 
to immediately suspend any department rulemaking that would 
reduce benefits or affect program eligibility. Enacting changes 
at this time would really exacerbate the current economic 
anxiety, and it would unnecessarily increase the burden on the 
very people who need and will need this assistance.
    I believe that as considerations of a broader economic 
stimulus package progress, and there is discussion about that, 
that we need to consider expanding the SNAP benefit, which we 
believe will be a vital anti-recession tool just as it was 
included in the temporary benefit boost when we did the 
American Recovery and Reinvestment Act in 2009.
    We look forward to hearing your comments on that, and of 
course, in the very near future getting some specifics as to 
how the department will work through these programs.
    I am disappointed to see that rural broadband funding was 
cut in your budget by $350 million. It is a program with 
bipartisan and bicameral support. As chairman, I have made 
rural development a priority.
    We know that access to adequate broadband in a key 
ingredient for success, and yet too many communities feel left 
behind, unable to connect their businesses, their families, and 
their schools to the modern world.
    In the coming weeks, several of the mission areas, 
including the farm production and conservation, rural 
development and food nutrition service are coming to testify 
about their specific requests. We will dive deeper into their 
specific requests, and I pledge to do my very best to work with 
you and our Ranking Member Fortenberry and our subcommittee to 
develop a bill that addresses the needs of all of those who 
depend on the USDA.
    Mr. Secretary, I want to thank you for being with us today, 
and I look forward to today's discussion, and I certainly want 
to let you know that this subcommittee and this Congress wants 
you and the department and all of us to do right and feed 
everybody.
    With that, I would like to note that our distinguished 
ranking member, Mr. Fortenberry, is unable to join us this 
morning. He contacted me yesterday and felt that it was 
appropriate for him to remain home for the time being, and he 
assured me that he would be well represented, and just like 
Hallmark, he cared enough to send the best. [Laughter.]
    Mr. Bishop. And at this time I would like to ask Mr. 
Aderholt, the former chairman of this subcommittee, for his 
opening remarks.
    Mr. Aderholt. Thank you, Mr. Chairman.
    And it is good to be here. I regret Ranking Member 
Fortenberry is not feeling well, but we wish him the best.
    I am sorry I was a little bit late. I was actually in a 
briefing with former, and all of our friend, former FDA 
Commissioner Gottlieb who was giving a briefing on the topic of 
the day, the coronavirus, and so I was trying to get a little 
bit of an update from him. So I apologize for coming in late.
    But I am glad to be here this morning and glad to be here 
with the Secretary, Ms. Navarro, and with Dr. Johansson. Thank 
you all for being here and thank you for the job that you are 
all doing at USDA.
    You all know firsthand how important agriculture is to my 
State of Alabama where one in five jobs is related to 
agriculture or forestry, and agriculture is not only a part of 
our past and our present, but it will be very much part of our 
future. And I can say that for all Americans.
    Before we dive into the budget request, I want to commend 
you, Secretary Perdue, for your leadership and achievements 
over the past 3 years. I was just thinking it is hard to 
believe it has been 3 years that you have been on the job.
    I remember when you first started on the job, and it is 
amazing how time quickly flies, but due to your department's 
efforts across the vast responsibilities that you have at USDA 
and all of your employees have, you have touched the lives of 
hundreds of millions of people in the U.S. and abroad in one 
way or the other.
    In particular, I want to express my appreciation for what 
you and your staff have done and we will continue to do on 
building infrastructure in rural economies across this Nation.
    You, of course, traveled to the district that I represent 
last year, and I appreciate you taking time out of your 
schedule to travel to Northwest Alabama.
    But your staff traveled to the district I represent at just 
the end of last year and awarded a loan and a grant as part of 
a first round of the Reconnect Program, and this funding will 
support actually 8,000 rural households. It will support 57 
farms, 44 businesses, 17 educational facilities, 14 critical 
community facilities, and three healthcare facilities in rural 
Alabama.
    As USDA rolls out the second and the third round of this 
loan and grant program totaling $1.7 billion, the department 
will help to close the digital divide between the rural and 
non-rural communities across the country.
    I hope that we can continue to build upon this progress we 
have made today with high-speed broadband infrastructure, as 
well as other infrastructure needs, such as the installment or 
repairing of drinking water and wastewater systems in our rural 
communities.
    On the matter of school nutrition, I do want to express my 
appreciation for your providing the flexibility. Just this 
morning I was meeting with one of my constituents, who is a 
school nutrition worker, and I asked her in particular about 
the flexibility, and she was very pleased with that, and that 
is coming from the grassroots, from someone who is in that on a 
day-by-day basis.
    So your most recent actions are consistent with the 
language that we have included in the appropriation bills and 
reports, and as you likely know, the local school districts are 
on the front lines, as I mentioned to the lady I spoke to this 
morning, and they are making sure that our children get the 
healthy, get the wholesome meals they need, and that they reach 
out to many of us and ask for that flexibility.
    And I am glad that we can work together and try to provide 
some flexibility because it is working, according to the people 
who are on the ground.
    As it relates to the President's budget submission, I want 
to continue my support for the funding request that will 
provide greater customer service to farmers and ranchers that 
are actually in the field, whether that be technology 
information needs or requests for staff support and recovery 
jump teams to assist producers affected by disasters.
    However, I do want to voice my concern over the major 
changes that are proposed to crop insurance and other safety 
net programs. Farmers continue to experience very challenging 
times in this day and age with decreasing crop prices and a 
number of natural disasters.
    So your support for American farmers and ranchers is 
greatly appreciated. We look forward to working with you on 
this subcommittee as we try to look at a number of key funding 
decisions that are necessary to make sure that we have the 
strongest farm economy in the entire world.
    So I thank you. It is good to be back here today and to 
have you here before our committee, as well as you, Dr. 
Johansson and Ms. Navarro. Thanks for being here.
    And I yield back.
    Mr. Bishop. Thank you very much, Mr. Aderholt.
    Secretary Perdue, without objection your entire written 
testimony will be included in the record, and I will recognize 
you now for your statement, and then we will proceed with 
questions.
    Secretary Perdue. Thank you, Chairman Bishop and 
Congressman Aderholt.
    If Congressman Aderholt thinks 3 years travels fast, what 
does he think about 3 decades when our relationship began, 
Chairman, in the Georgia State senate? So 30 years passes 
pretty quickly as well.
    But it is good to see you in this position, and we 
appreciate your service.
    And I did receive your letter. It is not in my prepared 
remarks, but I look forward to addressing those issues in the 
question and answer period of time over the waivers that we 
have authority to do and a need that we may need some help in 
that regard.
    You know, it may come as a surprise to the committee, but I 
actually sort of enjoy these kinds of hearings because as a 
true believer in the three branches of government, I think this 
is the way representative government should work.
    You all have constituents that contact you all, and they 
expect answers, and we are the implementers of a policy you 
create through laws and bills, and it is appropriate for us to 
be held accountable for how we are doing our job.
    So I look forward to the questions actually. I will confess 
now though having been a governor and created budgets for the 
general assembly, you do know that the executive branch 
sometimes eliminates things that they know that the legislative 
branch, the keepers of the purse, will fulfill.
    And so I have been guilty of that myself, and I thought you 
were going to brag on us this year because I thought OMB and we 
had gotten a lot closer this year than we have in the last 
couple of years in that regard, but I know that there are some 
things of interest that we all will talk about today.
    But I think we in the farm community are glad to have 2019 
in the books, behind us in the rear view mirror. It was a tough 
year. We all know that, but I want to tell you that the safety 
nets that you all create generally through the farm bill and 
the ad hoc disaster programs have benefitted farmers and 
ranchers all across this country in a wonderful way, and they 
are very grateful for that in that way.
    I think, again, just those standing disaster programs 
provided $690 million in assistance, and then you all provided 
another 4.5 for ad hoc disaster and WHIP-plus for 2018 and 2019 
losses.
    And then we had the Crop Insurance Indemnity Program, which 
brought us almost over $9 billion, and then the President, at 
his direction, on top of the $12 billion from 2018 in trade 
assistance, it was $16 billion in farmers unfairly harmed by 
the retaliatory tariffs in the way as well.
    But in spite of that, as you all know, you know. You are in 
a farming district, Chairman, and you know that farmers are 
resilient, and even in spite of 2019 and hurricanes and all of 
those things, they are optimists, and I am grateful to them.
    We have got a great story in agriculture to tell. They are 
the most resilient people that I have ever met, but as I said, 
we are glad 2019 is in the books, and it is going to give us 
2020, which is here, a new decade, and a new reason for more 
optimism.
    And we are optimistic. In our Ag. Outlook Forum, we talked 
about technologies and the things, an ag. innovation agenda 
that we look forward to. We do believe that new trade deals and 
strong consumer demand in the United States abroad are a signal 
for brighter days ahead once we get past this outbreak of 
coronavirus.
    Speaking of trade, obviously the phase one agreement with 
China, the USMCA, Japan, the new deal with South Korea, in 
addition to many other specific commodity wins, and what 
Ambassador Lighthizer calls singles, smaller deals in other 
countries, all will benefit, I think, from a demand perspective 
going forward.
    I think obviously the year round E15 for domestic 
production of conventional ethanol will help as well, and then 
last week you may be aware that we, as part of President 
Trump's key promise to promote biofuels, we announced again the 
Higher Blends Infrastructure Incentive Program. It is $100 
million in grants to retailers to help provide more access to 
consumers.
    We believe when consumers have access, they are going to 
make a smart choice with higher octane, better air quality, and 
lower price fuel.
    So you mentioned rural development. That is an important 
part. We have been working across the sector in rural 
development, increased rural prosperity. I think, again, as was 
mentioned by Congressman Aderholt, these reconnect programs 
have been well received, as you know in Georgia and many other 
States.
    We go and I think we had applications from 38 States in the 
first round. We utilized that appropriations you gave us in a 
leveraged kind of way to increase more than just the $600 
million investment through 200 in grants, 200 in loan grant, 
and 200 in loans out there.
    We optimized that 600 million into more than that from an 
investment standpoint in the broadband, which is absolutely 
truly transformative. When you go to homes and farmsteads with 
kids trying to do their homework and not even cell service to 
fiber to the home, it is just unbelievable the transformation 
that can take place in that family.
    You talk about rural people and kids leaving the farm. This 
is going to help bright young people stay on the farm whether 
they are farming or jobs they can work for with connectivity in 
those farms. It will help to stop the brain drain in that way.
    It was by our count on the appropriations that you gave us 
in the first round, it is going to change the lives of 431,000 
rural Americans, and we have got a lot more to go. But we are 
beginning to tell the success story of American agriculture as 
well because we think it is a good one.
    The miracle of American agriculture over the last 75, 100 
years has been amazing in feeding this country and the world to 
a large degree for several generations.
    I visited with Ms. Pingree earlier this morning about the 
ag. innovation agenda and her interest in some of those issues 
that will align with what we are talking about, best aligning 
our programs and research to provide farmers the tools they 
need to innovate and be successful in that way.
    So the kind of specific goals, we talked about a 
scoreboard. We are going to measure these sorts of things to 
increase production by reducing environment footprint, 
production by 40 percent by cutting the footprint in half by 
2050.
    Those are good reach goals, but we think we can get there 
based on the technology that is available to us.
    So as you know, our colleague and another member that we 
have three decades' experience was very instrumental in our 
HBCU 1890 scholarship, and we are delighted to have those 
moving along, and that is going to provide scholarships at HBCU 
universities out here and really prepare kids for a great 
education in these schools that will do better.
    So this is one of the reasons we are excited about the 
future in that regard. So while it has been an anxious but 
productive year among that Nation's farmers, ranchers, and 
producers, I am obviously here today to present the 
administration's budget for the department, and we are proud of 
the new loan program, $79 million to fully support $8.9 billion 
demand for farm loans.
    You mentioned there is more demand here. Working capital is 
down over a period of years, and with these loans it is 
estimated 35,000 farmers and ranchers will be helped. And I 
think that supports that foundational principle of access to 
wholesome and healthy foods.
    The good news also, it includes funding to fully support 
over 8,700 food safety inspection personnel who will ensure the 
safety of meat and poultry and egg products at over 6,400 
processing, slaughter, and import establishments there.
    Two hundred million dollars to reduce trade barriers that 
disadvantage ag. exports, open new markets; $100 million for 
grants and incentives to promote domestic ethanol and 
biodiesel, as we indicated; and we did put $250 million in 
there for a fourth round of Reconnect.
    I hope what we have demonstrated already that as we 
continue to use the $1.1 billion that you all have done in two 
tranches, applications are opening now. They will close March 
16th, and we believe we will be oversubscribed again with these 
rounds as well, and we are going to get those out as quickly as 
possible.
    We have got the foundation of the applications set up, and 
I think some of the flexibilities you all gave us in the census 
of where this underserved definition was will help us in going 
forward in that way.
    Also the rural development will support billions of dollars 
for rural electric improvements, water, wastewater 
improvements, community facility loans, rural housing loans, 
and business and industry.
    So in the face of the growing debt, I think the President 
has done his best to offer a fiscally responsible budget that 
does not try to kick this can down the road, but we need to get 
a handle on it, and we have got a budget that we can work with 
while we are executing fiscal constraint.
    Again, Mr. Chairman, along with your help, we are going to 
continue to do our level best to do right and feed everyone, 
and I want to thank you for the opportunity to being here 
today, and I look forward to your questions in an honest and 
transparent way.
    Mr. Bishop. Thank you very much, Mr. Secretary.
    And let me take this opportunity to thank you and all of 
the employees at USDA for the way that you have implemented the 
disaster relief package that the Congress passed, $3 billion 
for impacted communities that were affected by the natural 
disasters over the last couple of years, as well as the block 
grants.
    And in behalf of all of the impacted communities in Georgia 
and the impacted States and territories, I just want to extend 
my heartfelt gratitude for your efforts in that regard.
    Now I would kind of like to get to the issue of the day, 
which is the coronavirus, COVID-19. Let me just read for you 
briefly a statement that went out from the Food Research and 
Action Center to its membership regarding the COVID-19 
challenges.
    And I quote, ``The COVID-19 virus that threatens negative 
impacts on public health and the American economy presents 
particular challenges for low income people. Social distancing 
strategies reduce the chances of human-to-human contact. They 
could entail families stockpiling food and other supplies, sick 
workers without paid leave directed to stay home, and schools 
closing for periods of time. Administrators and legislators 
should consider, one, adopting disaster SNAP and disaster 
provisions of other Federal nutrition programs to provide 
nutrition resources for low income consumers who lack resources 
to stockpile food and to make up for disrupted school meal 
service; and, two, suspending implementation of rules changes 
that weaken SNAP benefits and enrollment; and, three, 
increasing SNAP benefit amounts to bolster the programs' 
countercyclical impacts.''
    Now, obviously, we are all concerned about the ongoing 
coronavirus outbreak. Given how broadly USDA touches all 
Americans' lives, we want to make sure that you are prepared to 
respond to the outbreak and that you have adequate funding and 
legislative authority to take whatever steps that you deem 
necessary.
    Can you let us know what USDA has been doing in response to 
the outbreak and whether you anticipate any need for additional 
funds or authorities?
    And amid the outbreak, I am glad that USDA approved the 
waivers from Washington and California to ensure that children 
can still receive school meals even if the school is closed. 
But it does seem that school closures will continue to tick up.
    Have any other States submitted similar waivers?
    And are you considering issuing a nationwide waiver?
    Secretary Perdue. That is a good question, Mr. Chairman. I 
want to tell you this is a time we all need to pull together 
and put any kind of bipartisanship aside and do what we need to 
do for our people. And I think that is your goal and that is my 
goal as well at USDA.
    We did issue waivers both to the two States that you 
mentioned, as well as Alaska, but even more than that, what we 
told people, statutorily our legal counsel tells us that we 
have to be asked in that way.
    What we have done because we have to be asked is we have 
sent the message to all of the States that they can 
preemptively assume a positive response once they ask and once 
the waiver request comes in.
    Certainly when schools close it does not make sense to have 
to go to the waiver or the congregate feeding areas because 
that is the purpose of closing schools. So we are waiving the 
congregate feeding activity certainly in those low-income 
areas.
    We do not believe we have the legal and statutory authority 
to do that in all areas of non-low income, and that is 
something we need to look at together. We are pretty sure we do 
not have to do that.
    While we would love to do that, you know three years from 
now there would be an OIG report saying we violated the law, 
and you know how that goes.
    So we are trying to do everything we can statutorily to do 
that. Back in the H1N1, you may remember. You were here. You 
may remember that you all authorized kind of P-SNAP, which was 
a pandemic SNAP. It was authorized for one year. I am not sure 
it was ever really funded or utilized, but that may be 
something you may want to consider as well that we look at here 
now.
    Mr. Bishop. Let us look at that together.
    In my opening statement I noted how worried I am of the 
SNAP rules----
    Secretary Perdue. Right.
    Mr. Bishop [continuing]. Disproportionately impacting the 
working poor, and the Able-bodied Adults Without Dependents 
Rule is set to go into effect in three weeks, and it will take 
SNAP away from 700,000 people.
    If those folks have to self-quarantine for 2 weeks, they 
will not meet the requirement of the 20 hours per week work, 
and they will be required to produce documents to be excused. 
That will be creating some pretty challenging administrative 
burdens.
    So to go forward with the rule administratively, it seems 
like, especially at this time when we are talking about 
economic stimulus and relief, it seems particularly cruel.
    Do you think it is a good idea to implement and to issue 
the final SNAP rules during this outbreak when so many people, 
especially the working poor, will need assistance?
    Secretary Perdue. Mr. Chairman, I think I have got some 
good news for that situation as well. There are longstanding 
SNAP regulations that call for good cause, and States have the 
discretion to determine good cause.
    Obviously, if your job says you cannot come to work or you 
are sick in that way, that good cause would eliminate the need 
for work requirements under this rule. So that will be under 
the discretion of the States to determine that good cause.
    It is already there, and we would not have to do anything 
different that way, other than those folks that are impacted by 
the coronavirus either through their jobs, their own health, 
would be fulfilling those work requirements.
    Mr. Bishop. Thank you, Mr. Secretary.
    My time has expired. So I will at this time be happy to 
recognize Mr. Moolenaar for such questions as he might have.
    Mr. Moolenaar. Thank you, Mr. Chairman.
    And, Mr. Secretary, good to see you again, and thank you 
for coming to Michigan recently. We appreciated your visit and 
the work you are doing on some of the trade agreements and how 
that is opening up new markets for agriculture products.
    I wondered if we could just take a step back a minute. I 
know you are kind of focused on the upcoming budget, but if you 
had to look at sort of the bigger picture funding needs for 
agriculture right in the short term as well as kind of the 
long-term priorities, are there things that are right at the 
top of your mind?
    Secretary Perdue. As I mentioned earlier in my opening 
remarks, I feel like you all have done a great job with the 
farm bill, additional loan eligibility, loan volume, and loan 
sizes there for farmers.
    Many farmers that have never had to come to USDA, we see 
them now. You all have appropriated that. The farm safety net 
that you all created I thought demonstrated this year in 2019, 
with a lot of weather challenges, that it works, both crop 
insurance, both indemnities, both ad hoc disaster program, as 
well as the other safety nets in NRCS and FSA.
    So I think from that perspective, one of the things we 
talked about is the Reconnect Program. I think that is a 
transformative type of thing in rural communities. We hope we 
have implemented that in a way that really would trust you all 
to allow us to continue and do even more as we go forward.
    In combining, I know that the President's budget has more 
money in FCC. We think in these rural areas the difference that 
we are making is incredible.
    So I think from that perspective, obviously, farmers have 
been mentioning another MFP payment. I am telling them that the 
MFP was not a price support payment. It was a trade retaliation 
issue, and if trade picks up, and right now China is doing 
those things that seem to be getting prepared, but coronavirus 
has those actual trade disruptions.
    So if we see trade getting back and we do not see prices 
improving, that is an indication we have got a supply-demand 
equivalence issue.
    Mr. Moolenaar. Okay. Thank you.
    Just along the lines of trade, and you mentioned China and 
the phase one agreement there, and of course, we were excited 
about, you know, pork, soybeans, specialty crops like tart 
cherries, opportunities perhaps there, but for the coronavirus.
    I wanted to specifically, and you and I talked briefly 
about the tart cherry situation with Turkey, and we appreciate 
you have been doing some help for our cherry growers, but is 
there more that can be done to assist in this area?
    Secretary Perdue. I think, again, your tart cherry people 
have been good customers of the Section 32 Program, as you may 
know, over a number of years, and we are continuing to purchase 
tart cherries to pass along to food banks and other poor that 
need it in that way.
    Most of the challenge right now, I think, is coming from 
the Turkey imports, and there has been some investigation of 
whether that could really rise to the level of an anti-dumping 
situation that way.
    Congress makes that determination. I think the industry 
would have to bring those allegations, and it would be 
investigated whether we could bring an action against Turkey 
for dumping over less than the cost, in that regard.
    That seems to be where most of the pressure is on the tart 
cherry growers.
    Mr. Moolenaar. And then the chairman had talked with you 
about coronavirus. One of the questions people have about the 
safety of our food supply, do we have any information to 
believe that the coronavirus can survive in our food supply or 
at least as it relates to meat and poultry plants?
    Secretary Perdue. I appreciate that question. Absolutely 
not. There is no evidence that it is a food-borne transmissible 
illness, such as Salmonella or E. coli, those sorts of things. 
It really depends just on safe hygiene. You do not want to be 
eating with someone that sneezes on your chicken and you eat 
it, but nonetheless, it is not a food-borne illness as we would 
think of.
    Mr. Moolenaar. Okay. And then when Chairman Glen Smith of 
the Farm Credit Administration appeared before this 
subcommittee last month, he noted that the farm credit system 
evaluates whether the lending institutions are serving all 
eligible borrowers, including young, beginning, and small 
farmers.
    What do you see as some of the greatest hurdles for a young 
or beginning farmer, and what can we do to assist?
    Secretary Perdue. I think there are two things you have 
already done. I think the CRP Program that was in the farm 
bill, this last one, helps young farmers.
    There have been a lot of complaints about the riches of the 
program. People were using it as a retirement, taking land out 
of production where it was not available to young farmers.
    What you all did there helps in that regard, and also the 
loan guaranty program that you do there, helping us to work 
with the farm credit system community banks in a guaranty 
basis. They provide the boots on the ground, traditional 
banking underwriting from knowing that customers, and the USDA 
through your appropriations provides the funding on a 90-10 
basis.
    And that is a great program. We expect to see more of those 
guaranteed loans moving forward. It is a great public-private 
partnership that works using the resources you appropriate and 
leveraging that amount through the private sector and them 
doing the underwriting.
    Mr. Moolenaar. Thank you, Mr. Secretary.
    Mr. Chairman, I yield back. Thank you.
    Mr. Bishop. Thank you, Mr. Moolenaar.
    At this time I am pleased to recognize the gentlelady, Ms. 
Pingree.
    Ms. Pingree. Thank you very much, Mr. Chair.
    And thank you, Mr. Secretary. I feel very privileged. I 
have been able to see you at the Agriculture Committee, meet 
with you in my office, and see you again here. It is kind of 
like All Secretary Perdue all the time. It is great.
    And I love the opportunity to talk about these issues with 
you. So thank you and to your team for being with us today.
    The first thing I would ask the chair, Representative 
McCollum was not able to be in the committee today, and she 
asked me to submit this question for the record.
    Mr. Bishop. Without objection, it is submitted.
    Ms. Pingree. I did not think you would object.
    So just a little bit more. You have given us a lot of 
background on the coronavirus and school meals, and obviously 
you are hearing a lot about that because it is a big area of 
concern.
    And I can tell that the department has been thinking that 
through. So I just want to follow up on a couple of questions.
    I guess what you were saying earlier was on the waiver, you 
cannot sort of pre-agree to take in all the waivers. You have 
just said to people generally, ``We are likely to approve it. 
Submit your request to us.''
    Secretary Perdue. Yes. The way we understand the statute, 
we have to be asked. What we are saying there is if you ask, we 
are going to say yes on the waiver to congregate feeding. So 
that is the opportunity there.
    We are essentially saying we just have to fulfill the 
statute by being asked, but the answer is yes.
    Ms. Pingree. And how many requests? I know you said there 
were three that you granted, which is great. Thank you for 
working on those, but how many requests do you have in right 
now?
    Secretary Perdue. I think we have some from Utah. They are 
kind of coming in as they go, and this, again, is a waiver for 
when schools are closed. The waiver is actually for a 
requirement when typically you have to have congregate feeding, 
which defeats the purpose of social distancing and the 
coronavirus. That is what we are actually waiving.
    So we have done California, Washington, Alaska, and I think 
we have some requests in from Utah now. There may be more this 
morning. I have not checked.
    Ms. Pingree. Yes. I think Maine has either requested or is 
requesting, although we have been fortunate and have not had as 
much of a challenge yet.
    Secretary Perdue. Right, right.
    Ms. Pingree. I mean, one question I had was if there is a 
presidential declaration of an emergency, do you still have to 
go through the waiver request?
    Secretary Perdue. We do.
    Ms. Pingree. You do. And I guess another concern that you 
addressed briefly was on the districts that do not qualify 50 
percent of free and reduced lunch. So you may have a district 
that overall is, you know, not meeting the target, but has 
pockets of schools.
    Secretary Perdue. That is right.
    Ms. Pingree. Do you need some authority from us? What were 
you saying on that?
    Secretary Perdue. Well, it would be helpful to have blanket 
authority, but what we are doing, like the summer feeding 
program, there is an open. In the low-income area, there is an 
open where everybody can come, and there are also closed 
systems where the groups know the students who are eligible to 
do that, and they come.
    Take, for instance, in a non-low income, you have got some 
low-income students there. So they are eligible. They just have 
to come and identify themselves, and they have to be able to be 
fed as well.
    In a low-income area, an open congregate area there where 
they come and pick up food, anyone can come in that area and do 
that.
    Ms. Pingree. Got it.
    Secretary Perdue. It is a little awkward for the low income 
and others, but that is the way the statute is. You know, if we 
had more flexibility, we could be more open in the others.
    Ms. Pingree. I am sure that you would receive all the 
support you wanted from this committee and others who are 
concerned about it.
    You also mentioned the P-SNAP program, which has not 
apparently been used much. Are there barriers right now to that 
being implemented?
    That seems like it was kind of tailor made for what we are 
going through now, and it has not come up.
    Secretary Perdue. It has expired. It would require a 
reauthorization. It expired. I think it was a year that way.
    Ms. Pingree. Got it. Okay.
    You know, we are all kind of trying to think ahead about 
what has happened, what the challenges are, but what are you 
worried about at the USDA about the impacts of coronavirus and 
things that we may not be even considering yet?
    Secretary Perdue. Well, I think internally and externally 
we have over 100,000 people scattered around the country and 
others. We had some requests for teleworking in Seattle, which 
we granted. We had some in a Forest Service. It was 50 miles 
away with no outbreak, and we said just sit back and relax a 
little bit.
    But we have issued guidance to our employees on the 
internal side about just, first of all, all of the basic kind 
of things of what to do.
    We are refreshing, obviously, our pandemic plan. We are 
testing our systems over telecommuting to see the stress 
testing then to see if they are up to speed. Our IT person 
feels that they are, but we want to check those out to make 
sure if we have to utilize those.
    That is internal operation because, as you all know, we 
have got a lot of people that depend on USDA on a daily basis, 
from farmers and ranchers to consumers out here, and we have to 
carry on the work.
    So it is mostly being prepared. Our motto is be prepared, 
not panicked, and doing that, and that is what we are trying to 
do ahead of time.
    You know, you always want to ask yourself is there 
something we could have, should have, ought to have done that 
we would have looked at in the last part, and that is really 
where we have been in all of the guidance and recommendations 
to our internal team.
    Certainly trade is one of those components people ask a lot 
about. What about the phase one deal? We understand just from a 
physicality standpoint of people getting the work. This may be 
influenced some, but the good news is from China, they are 
still doing many of those non-tariff trade barrier types of 
things.
    They are dissolving those and resolving those point by 
point, indicating to us there as full intention to try to 
fulfill the hard number commitment they made, and that is going 
very, very well in spite of the coronavirus.
    Ms. Pingree. That is great.
    Well, I am out of time, but thank you so much for your 
answers. I appreciate that.
    Mr. Bishop. Dr. Harris.
    Mr. Harris. Thank you very much.
    And good to see you again, Mr. Secretary.
    You know, the competition is intense this morning. We have 
CDC a couple of doors down, and they have got a little problem 
on their hands.
    Anyway, let me first talk to you about a very important 
issue from my district, which is the USDA inspection for 
catfish. Now, as you can appreciate, not all catfish is the 
same. In the Chesapeake Bay, we have the blue catfish, which is 
an invasive species.
    And just two days ago I am told tales of, you know, people 
catching these 60 pound catfish that are basically eating 
things that are native to the Chesapeake Bay to the point 
where, you know, we have spent a lot of Federal dollars to 
build up our blue fish population, our crab population, and you 
know, this could all be for naught because of the blue catfish.
    Now, blue catfish tastes good, I am told. The trouble is 
that, as you know, in 2017 they moved the inspection of catfish 
processing from FDA to USDA, and the current USDA regulations 
are just too onerous for our watermen to make a profit catching 
these invasive species.
    So the invasive species just keep on going on instead of 
what would make a great idea, which is, oh, yes, let us 
actually harvest them and kill two birds with one stone. We 
produce a product, American made product, and, by the way, we 
take care of this invasive species.
    So I am going to ask you. Could the department, for 
instance, under their rules and regulatory scheme, exclude 
invasive species from the more onerous requirements of catfish 
processing regulations?
    Secretary Perdue. I am not aware that we could if they are 
used as a food source. Obviously, we take food safety very, 
very seriously, and if they are being consumed like pork and 
beef and chicken, I do not know that we could do that legally 
in that way.
    I am more interested in really the onerous part of what you 
are saying of why the watermen feel like it is overbearing in 
that way, and let us resolve that issue first.
    Mr. Harris. Sure. No, Mr. Secretary, you know, it is 
simple. You require an inspector there at all times when these 
boats come in. And you know the way watermen work. You know, 
sometimes they will go out. They will come in in the evening, 
and you cannot have an inspector there right at that moment.
    So hopefully we can work together and maybe eliminate that 
because this is a huge problem for the Chesapeake Bay. You 
know, we have two bills before the Maryland legislature asking 
Congress to please, you know, provide some relief because these 
are invasive species.
    So I would appreciate it. I would appreciate working with 
you on it.
    Just a couple of other things in my limited time. I think 
that you are doing the right thing when you are looking at work 
requirement for able-bodied adults under the SNAP program. I 
know that the department comes under a lot of criticism for 
looking at that policy or toward that policy, but I just think 
it is the right thing to do.
    I think my constituents believe that we are a generous 
Nation. We do have a safety net, but this actually helps people 
out of the safety net while providing them, you know, support 
during that.
    The other thing that I am very interested in, but I do not 
think we are going to get off the ground, although we should, 
is the Harvest Box program because I think, you know, the trend 
in America right now, and I know because my daughters do it, 
is, you know, you have got to have home delivery or easy pickup 
of groceries, and to blend that with the availability of 
providing more availability of nutritious products in food 
deserts, this all comes together as you now encourage private 
vendors to create these market boxes and actually deliver them 
to places where you would have no access, no access to healthy 
food.
    So I think, again, that is a project that I certainly 
advocate for, and that I hope, you know, we can move somewhere 
along those lines because I actually think it greatly 
improves--you know, it is a win-win. It is a win-win for our 
farmers. It is a win for those areas, especially the food 
deserts where we would be getting food there.
    We potentially could get nutritious food there where it is 
very difficult to get food.
    Finally, one thing is that--and, again, we are talking, you 
know, we are with the CDC for people over there two doors down, 
but you know, that COVID-19 problem arose from animals. I mean, 
that is a transmission from animals sold in a market to humans.
    We do not have the equivalent here as a focus on how we 
control diseases, and now that we appreciate that a lot of 
these novel viruses are going to be mutations with a reservoir 
and an animal source.
    So we need an entity that thinks about this, that spends 
all of its time thinking about this like we have the CDC 
thinking about it for humans, how to prevent transmission 
human-to-human.
    How do we control these kinds of diseases in the animal 
population?
    Secretary Perdue. That is a great question, obviously. That 
is really what our whole purpose of our food safety inspection 
system is all about. If you wanted to create a market out here 
and just sell bats, that is not appropriate, and you would be 
stopped from that, and that is the good news about really the 
protein aspect. FDA does it on the vegetables and other eggs 
and things like that. We create the protein in the Food Safety 
Inspection Service.
    And certainly vigilance from a research perspective over 
the zoonotic diseases is very, very important in that regard.
    If I could go back to a couple of things you mentioned, we 
tested in Texas for rural areas' delivery of food that way, and 
it worked very, very well. I think if we could be permitted to 
do something on a choice basis, to allow half of the food 
stamps to be delivered to people, I believe there would be more 
assumption in limited pilot projects over choice, if we gave 
people the choice, not mandate it, but gave the choice. I think 
we would see a lot of uptake there.
    The other thing over the E&T and the ABAWD rules, I wish 
you all could have gone with me to Baltimore the other day to 
an education and training facility. It was just the most 
amazing thing.
    These were machinists. They were teaching unemployed people 
how to code these machines there and welding techniques. We had 
employers. We had participants. We had training. It was great, 
and we are trying to replicate that system out here.
    We have got an obligation to help people move that have not 
been employed to move out, not just cut them off, but our goal 
is to help move them, move them to sustainability.
    Mr. Harris. I appreciate that. Thank you.
    I yield back.
    Mr. Bishop. Mr. Cuellar.
    Mr. Cuellar. Thank you, Mr. Chairman.
    Mr. Secretary, I appreciate what you and your men and women 
do for the country and certainly what you all do in Texas.
    I want to ask you a couple of questions that we have added 
in the appropriations bill. One is section 741 that deals with 
what we call the 10-20-30 program, that is, 10 percent of the 
funding from, and there is a list of programs, will go to areas 
that have had 20 percent of its population at the poverty level 
for the last 30 years, something Clyburn and some of us have 
been working on.
    My concern is I have asked some of the folks in Texas, and 
they are not familiar with the 10-20-30 program. This is not a 
rider. It is actually a section. It is a bill.
    So I would ask you all to please have your folks make sure 
they comply with this part because I did ask some of my Texas 
folks, and they had no idea about the 10-20-30 program, which 
is one.
    Second, another rider that we added has to do with SNAP, 
the SNAP program, and how the Department of Agriculture and the 
Department of Education, you all can work together and provide 
outreach for eligible college students.
    So I want to see what sort of plans on the rider that I 
added, see what plan you all can do with the Department of 
Education to reach out more to the college students to get that 
type of assistance, and of course, the 10-20 program.
    And then finally, actually I was going to ask two, but I 
will ask one more. Fever ticks, through the help of the 
chairman and the ranking member, I have been able to add money 
for fever ticks.
    And in Texas, as you know, and I have been there with prior 
Secretaries; I have been with them as we dipped the cattle. The 
quarantine has not gotten smaller. What worries me, the 
quarantine area has grown, and as you know, the cattle industry 
in Texas and other parts is very important.
    If this will continue to spread, it would cause great 
damage to our cattle industry.
    So one is the 10-20-30 program. Two is how you all can help 
us with college students so they can be eligible due to 
outreach, and of course the fever tick situation.
    And, again, I appreciate you have got some real good folks 
down there in Texas, and I appreciate the good work that they 
do.
    Secretary Perdue. Thank you, Congressman.
    Before I say anything, congratulations.
    With the 10-20-30 program, it is a common program in rural 
development. And it may not go by that name, but obviously a 10 
percent set-aside for high poverty areas that have been there 
for 20 percent poverty for 30 years. That is the 10-20-30 
program that came.
    And so that is fundamental in our rural development 
program. If your folks are not aware of it or do not feel like 
we are in compliance there, then we want to hear about that 
because that is pretty standard operating procedure in rural 
development programs.
    And certainly from the food, SNAP program for college 
students, we do not make a distinction whether they are in 
school or not. They come in. They are on their own that way. 
Then they are eligible. They qualify, and we go forward in that 
way.
    You know, if they are working, certainly, and probably not 
making a wage that disqualifies them, then they are eligible to 
do that.
    Mr. Cuellar. Right, and as per the rider, if you all could 
just work with the Department of Education and just do that 
outreach, we would appreciate it.
    And on the 10-20 also, it is not only the rural 
development. I mean, there are like a whole bunch of programs 
there that I certainly want to make sure we work with you all 
on that.
    Secretary Perdue. Okay.
    Mr. Cuellar. Anything on fever ticks?
    Secretary Perdue. Yes, sir. I have been in the area and 
talked with ranchers, and most of the refuge down there mostly 
is Department of the Interior land in that area.
    We have got a problem. There are the carriers of Nilgai and 
deer as well, and many of the ranchers do not want to do the 
things that it takes down there to quarantine their animals in 
that way, but we are working with them.
    I met with them down there and felt like we are making 
progress on it in that way. It is an important thing, and I 
think we have got it stopped. We have not eliminated it yet, 
and that is the goal.
    The challenge, obviously, is that many of the pests come 
across the border, and we are limited sometimes in the 
provisions there.
    Mr. Cuellar. Right, and that is what I was going to ask 
you, is the language that I have added was to work with the 
Mexican officials.
    Secretary Perdue. Right.
    Mr. Cuellar. Because you do have wildlife that crosses, and 
we cannot dip ourselves out of problems, out of this particular 
situation because it is not only the cattle, but it is the 
wildlife.
    Secretary Perdue. That is right.
    Mr. Cuellar. So, again, I appreciate that you have got some 
good folks.
    I would ask you to also look at your tick riders because I 
have got a lot of comments from our folks that we need to have 
more of a presence there with the tick riders down there, what 
we call tick riders there.
    But anyway, you all do a good job, but I appreciate it. Any 
way we can work together or try to get you extra resources, we 
would love to work with you on this.
    Secretary Perdue. Thank you, sir.
    Mr. Cuellar. Thank you.
    Mr. Bishop. Thank you, Mr. Cuellar.
    Mr. Secretary, I am concerned about how your relocation of 
ERS and NIFA is proceeding. As of the latest pay period, you 
were short a total of 429 employees in Kansas City out of your 
target of 576. That is about 75 percent short.
    Because this has been such a, for lack of a better word, a 
mess, you are backfilling ERS and NIFA in Washington with 
retired staff, contractors, temporary staff, cooperative 
agreements, and grants with universities and other groups.
    They are doing the work of the permanent staff who left in 
response to the move. We received other information from USDA 
about the cost incurred in relation to the move that conflicts 
with what we were told when the move was being planned.
    By the way, we have asked questions about the cost of the 
backfilling, and we have still not received answers.
    Both agencies have hemorrhaged hundreds of years of 
institutional knowledge, and the cancellations or delays of 
future reports is inevitable.
    Last week several of my House Agriculture Committee 
authorizing colleagues expressed concern about delays that we 
have been hearing about, some NIFA awards, especially the 1890 
scholarship program.
    The farm bill, which was passed over a year ago and the 
funds still have not gone out the door. Timing is critical, and 
as we move later in the year, the scholarship fund not being 
delivered will impact the incoming class and the 1890's 
abilities to attract the best and the brightest minds.
    So I am afraid that the example of the 1890 Scholarship 
program delays is the first signal of an oncoming wave of 
program delays, missed deadlines, and report cancellations.
    I think you stated to Representative Alma Adams that you 
would specifically find out about the delay in delivering 
funding awards with the 1890 Scholarship Program.
    Can you share what you have learned since last week and why 
there has been a delay of over a year?
    And I had a meeting with a number of them last week also 
who, when they found out that I would be entertaining you 
today, asked me to please inquire on that. So I would like to 
do that please, sir.
    Secretary Perdue. Did you use the word ``entertaining''? 
[Laughter.]
    Mr. Bishop. I did actually.
    Secretary Perdue. What I have learned since the question 
the other day is where are we on that, and certainly the 1890 
Program being a new program, some of the other delivery of 
money at being obligated was obligated on time. The cycle of 
one- and two-year programs in NIFA obviously go over a cycle, 
and it goes all the way back to the shutdown of the mayor 
putting us a month behind as we move forward. We are probably 
another month behind. We expect all these obligations to be out 
by March the 30th, and we prioritize the HBCU.
    They have been notified they are going to get the money, 
but you know, like a lot of people, and they want to see it in 
hand, and we have not dispersed it yet, but they can plan for 
these students, they can recruit these students coming in for 
the fall is when it would be implemented, and we have notified 
them of that.
    Mr. Bishop. Yeah. Mr. Secretary, I am sure that you are 
aware that these are some of the more delicate institutions, 
the HBCUs and minority-serving institutions, and being able to 
plan and to know exactly what cash they will have on hand will 
certainly--is invaluable to them, and not being able to do that 
puts them in great jeopardy. One, of being able to assure 
students that they will be able to get in and have the 
resources they need, and two, in just keeping their doors open 
in many instances.
    So, I would urge you, Mr. Secretary, to please, if, to the 
extent that you can, try to expedite these funds, because they 
are really sweating bullets, and they really, really are 
concerned about having access to those dollars as soon as they 
can possibly get them.
    Secretary Perdue. Those were the written instructions we 
gave to our folks this week.
    Mr. Bishop. Thank you, Mr. Secretary. My time on this round 
is just about over. So, at this point, let me recognize Mr. 
Moolenaar.
    Mr. Moolenaar. Thank you, Mr. Chairman. Just, Mr. 
Secretary, I was hoping to follow up with you a little bit on 
the tart cherries issue and, you know, in the first round, we 
were discussing the pressure on the tart cherry industry, and 
it comes from the what I would consider unfair trade practices 
from Turkey, and my understanding is the--originally, the 
International Trade Commission determined that counter-
available subsidies are being provided to producers and 
exporters of dried tart cherries from Turkey.
    The preliminary determination was an estimated counter-
available subsidy of 204.93 percent. The preliminary 
determination of the estimated dumping margin was up to 648 
percent, yet in January, the ITC determined that the tart 
cherry industry is not materially injured or threatened with 
material injury by reason of imports of dried cherries from 
Turkey, and with that subsidy rate and the dumping margin, it 
just seems to me that that--I don't understand how they came to 
that conclusion, but my understanding is the investigation is 
complete, and completed with a surprising end, and I just 
wondered if there was anything we could do together to, you 
know, help with these specialty crops that have been 
disproportionately affected by these farm subsidies that the 
ITC has failed to take action on, and wondered if you would 
also be open to coming to mission and maybe touring a cherry 
farm or other great specialty crop producers.
    Secretary Perdue. I was surprised as well, Congressman, and 
when we saw the initial percentages there, we thought we had a 
win, and when the final adjudication was not, then I didn't 
understand that. I think again from USDA, using the tools that 
we have on Section 32 is really what we have available there 
right now. We are open to other suggestions that you have, but 
we are--as you well know, Michigan has a wide diversity of 
specialty crops, and in that way, we addressed really some of 
the sugar beet issues that were----
    Mr. Moolenaar. Yes----
    Secretary Perdue [continuing]. On this last year in that 
way, but many others, but yes. I would--we look forward to 
getting around in specifically these kind of areas, or having--
hosting them and telling us some of the challenges that they 
face. Certainly, they feel like they have done in this case 
what they needed to do. I don't know. I can't explain the 
outcome.
    Mr. Moolenaar. Okay. Thank you, and the other area I wanted 
to just follow up with you on. We talked a little bit about the 
ReConnect Rural Broadband Program, and you know, I appreciate 
the work you are doing.
    I know you have been making this a top priority as you 
travel around the country, and I am just wondering what else 
the federal government can do to address this divide between 
rural and non-rural communities so that our rural communities 
are not left behind? I think USDA is working on it. The federal 
FCC is working on it. Are there other things we could be doing 
to assist in this effort?
    Secretary Perdue. I think again, all of us are working on 
accurate mapping, which I think what you all did in the 
flexibility on the latest rounds was we had been prohibited. If 
two or three houses in a census track were served, they were 
deemed unserved, or they were deemed to be served. Well, you 
gave us a percentage of flexibility there.
    I think again from maybe more flexibility and the 
population there, and some of the flexibility of what it really 
means on a location by location basis would help in that 
regard, as well as the funding continuing, because we think 
once we've got the foundation of these awards that are moving 
very well, we and dealing with both telephone coops, electric 
coops, and the private sector, we've seen all those come in. 
Even communities have come in. So, I think if we just need to 
continue to do more of it, our goal is to get this $1.1 billion 
out as quickly as possible.
    Mr. Moolenaar. All right, thank you. Thank you, Mr. 
Chairman, and I yield back.
    Mr. Bishop. Ms. Pingree.
    Ms. Pingree. Thank you very much, Mr. Chair. I'm going to 
take you on a whole different topic.
    There has been a lot of attention to PFAS recently. I know 
my colleague from Michigan has had a lot of issues in that 
state, but we are hearing about it all over the country, and I 
want to talk a little bit about the impact on our farmers. 
Certainly, it is a touch time to be a dairy farmer, but even 
tougher when something like PFAS affects your farm, the 
contamination.
    Interestingly, we really only know about two cases that we 
have heard a lot about. The one in New Mexico, and then the one 
in Maine. The New Mexico one is related to an Air Force Base. 
The one in Maine is related to a sewage treatment byproduct 
being placed on the land a long time ago. So, it is a very 
complicated thing.
    Once there is PFAS contamination, it pretty much stops 
operations on your farm. It is very expensive to do the 
testing, which is the responsibility of the farmer or often 
left up to the farmer, and once you have that contamination 
issue on your farm, it is very likely no one is going to buy 
your milk again.
    What our experience has been is that the Dairy Indemnity 
Payment Program does not work well for farmers that are 
impacted by PFAS, so I am just curious if this is on your radar 
screen? Has this USDA taken a serious look at this? And how do 
we make sure there is a pathway to getting those farms back 
into production who have PFAS contamination?
    Secretary Perdue. Certainly. We--I know DoD is looking at 
the overall broader issue, but it certainly is and affects 
dairy farms particularly. We have dealt specifically with this 
New Mexico larger dairy and have paid the monthly indemnity 
fee. You know, that doesn't account profitability. You still 
lose that.
    It reimburses for cost, but I think the good news is 
recently, we are making some progress over at FDA checking over 
once clean water, clean feed is able to be brought into the 
cattle, then, there is a cleansing there. The meat can then be 
utilized safely of the standards and the residue levels that 
they have talked about.
    The land, then, is different, and I have recommended, and 
we are looking at just really purchasing those gals, and 
relieving this person of having to milk those cows.
    Ms. Pingree. Mm-hmm.
    Secretary Perdue. While you dump the milk as we go forward. 
It is a complicated effort in that way. We think we are close 
to resolving the New Mexico issue in that way.
    Ms. Pingree. Well, we will follow up with you after the 
hearing. Our case is somewhat different in Maine. The New 
Mexico case, in some ways, was fortunate because it was next to 
a DoD facility. We don't have that same ability, but some of 
the things in the Dairy Indemnity Program have not worked for 
our farmer, but we will get the exact information to you.
    I know we have been trying to work with the department, but 
this case just hasn't been successful for a variety of reasons, 
but as you can imagine, it is a financial disaster.
    Secretary Perdue. I am not as familiar with the minutiae.
    Ms. Pingree. I understand.
    Secretary Perdue. Most of the PFAS issue in New Mexico was 
water generated, water affected, not so much the land itself. 
So, we would be happy to take a look at Maine.
    Ms. Pingree. Great. That would be helpful, and just 
finally, I have a perpetual question on the original of 
livestock final rule.
    Secretary Perdue. Mm-hmm.
    Ms. Pingree. I know the common period on the proposed rule 
ended in December. It is something the organic industry has 
been waiting for a long time. So, are we closer to getting it 
across the finish line? Do you have a timeline for sending the 
final rule to OMB?
    Secretary Perdue. On the origin of what we--? Just the--you 
are--because I don't want to confuse this. That is the country 
of original--?
    Ms. Pingree. No. The origin of livestock. The organic rule 
on origin of livestock. Dairy cows----
    Secretary Perdue. Yeah----
    Ms. Pingree [continuing]. In particular.
    Secretary Perdue. Yes. I think we are. I think the 
transition phase is really pretty close to going. I think it 
is. If not, it is already there. There was an issue over 
transition to organic standards, and I think the industry will 
be happy with the certainty that provides, not being able to go 
back and forth, and you know, kind of once organic, always 
organic. In that way, I think the people who participate in 
organic standards, I think, will be pleased with the rules.
    Ms. Pingree. Great. Well, we are looking forward to seeing 
that rule and having a resolution on that.
    And with that, I yield back. Thank you very much.
    Mr. Bishop. Thank you, Ms. Pingree.
    Mr. Secretary, the Partnership for Public Service, a 
nonpartisan nonprofit organization issues annual rankings of 
the best places to work in the federal government using data 
from the Office of Personnel Management, and in 2017, when the 
USDA became, ``The most improved large agency,'' about moving 
from ninth place to seventh place, all right, you said that 
these rankings show that USDA is also a great place to work and 
is improving every day.
    For the last two years, however, USDA has ranked 16th and 
17th. I am sorry. 16th out of 17 of the large agencies. Worse 
yet, out of 420 agency subcomponents that were ranked in 2019, 
USDA had 3 of the bottom 6: The Economic Research Service at 
415, the Office of the Assistant Secretary for Civil Rights at 
418, and the National Institute of Food and Agriculture at 419. 
I think both know why ERS, Civil Rights, and NIFA were ranked 
so low.
    With respect to the department's ranking, since you 
supported that finding in 2017, do you agree with the latest 
finding?
    Secretary Perdue. I think the data is the data. 
Anecdotally, I don't get that sense as I move around and walk 
around USDA. I think again, you have understood the NIFA, ERS, 
and factually, we have had some issues in OSCAR as well that we 
are working hard to do. It is a very important part of USDA's 
program programs, and I think we are on the right track in that 
regard. So, as far as me being able to explain that, I can't. 
It doesn't match what I sense and feel as we get around and 
talk to our people.
    And while we are on that, I want to put in a good plug for 
the USDA personnel. This last year, 19 disaster. We had another 
MFP appropriation implementing the Farm Bill and frankly, with 
the really frustrating ability to hire people in this economy. 
And so, the people who have been there have done more with 
less, and I appreciate that.
    Maybe that might have some influence on it, because there 
has been a lot of work to do the last couple years over 
implementing the Farm Bill, as well as this disaster, MFP 
payments, and others, but they--as well as the regular farm 
programs. They have done a wonderful job. I am proud of them, 
and I hope to make them all proud of me.
    Mr. Bishop. We appreciate very much their hard work and 
your hard work in leading the department. Let me switch gears 
for a moment and talk about the Trade Market Facilitation 
Program.
    You have said on multiple occasions that you are telling 
farmers not to expect or anticipate a third round of market 
facilitation payments. I think that is good advice. As 
optimistic as you and I and farmers may be now with the signing 
of the phase one trade deal with China, the USMCA, and the 
other trade deals, I am afraid that the initial retaliatory 
tariffs did permanent, or at least long-term damage.
    Farmers and producers have received temporary government 
aid, but they lost stable and allowable markets that they had 
cultivated for years. So, even as the first phase of the China 
trade deal goes into effect, it doesn't mean that the farmers 
are in the clear. Our markets will be slow to return, and the 
bottom line is that the tariffs still are above pre-trade war 
levels.
    Last month, the Farm Credit Administration was up here, and 
they said that loan officers are working with farmers to 
diversify their portfolios to better handle these uncertain 
times and this, sadly, includes recommending all farm income. 
This is far from ideal. So again, as optimistic as we are about 
improving fortunes, what lasting damage should we expect to 
see, and do you think the events of the last three years are 
likely to attract more people, particularly young people, into 
farming?
    Secretary Perdue. Mr. Chairman, I think when--we will not 
be able to attract or retain young people in farming until we 
can provide them a profitability proposal out here that allows 
that economic sustainability to take place.
    We saw a lot of young people come into farming in those 
years of 2008 to 2013 that were kind of career highs of 
profitability from agriculture. I brought a chart here that I'm 
really stunned by--frankly, though, and I brought it just 
because I'm excited about it, I'm optimistic. You're 
optimistic, but farmers are also optimistic.
    This is their--the red line is their index of future 
expectations, and you can see it comes back to October of 2015. 
The blue line is the index of current conditions, and then 
future expectations.
    This obviously took place before the coronavirus, but 
farmers are optimistic out there I think with these trade 
deals. We just need to make sure they come about. That's--your 
question, I think the enforceability provisions on the phase 
one, there's a lot of demand out there. The good news is we see 
China taking action that can fulfill those numbers, 
notwithstanding the corona slowdown now.
    Mr. Bishop. Yeah. My concern is that in spite of that and 
the valiant efforts that both Congress, the agency, as well as 
some of our states like Georgia have done to try to fortify the 
farmers that were suffering, particularly from the natural 
disasters, we're still seeing an enhanced--an astronomical 
number of bankruptcies, which means that many of our farmers 
will not be around to enjoy that rebound once our relations 
with China get back to normal. So, that's a concern, but it--at 
this time, let me--we--I recognize Mr. Moolenaar.
    Mr. Moolenaar. Thank you, Mr. Chairman, and Mr. Secretary, 
thank you for the update and I--similarly, Chairman Smith from 
the Farm Creditor Administration appeared before the 
subcommittee last month and noted that the farm credit system 
remains financially strong overall, but that certain sectors of 
the farm economy are experiencing stress, and with respect to 
the coronavirus, I'm just wondering if--and maybe this is a 
question for Dr. Johansson.
    If you as a department have any insights on how your latest 
projections of growth might be--you know, with respect to trade 
and how that's all going to be affected by the coronavirus, 
have you had a chance to do any modeling, or any updated 
information based upon this new situation?
    Dr. Johansson. Thank you for the question, Congressman. 
Yes, we've been looking at different projections of global 
growth. More--I would say we focused more on the Chinese growth 
projections and how that might affect phase one, knowing that 
that would likely shift phase one purchases further out into 
the year, just due to the fact as the Secretary mentioned, 
while we can work forward on some of those agreements on SPS 
issues, the actual purchases with shipping being slowed down in 
ports and that kind of thing, we were likely to see those 
purchases shifted out further.
    More recently, we've turned our attention to thinking about 
if we see some more global economic conditions slow down in the 
first quarter here, or potentially in the second quarter, how 
that will affect demand for agricultural products.
    So, yes, I think normally we would look and see how much 
purchasing power in emerging and developing economies, for 
example, would be reflecting changes in economic conditions, 
and it's likely that if there is a slowdown here in the first 
part of the year, I think most forecasts show a rebound in the 
later part of the year. So, again, we haven't published any 
results, but we've been looking at that for sure.
    Mr. Moolenaar. And do you have any idea how, you know, 
the--obviously with the news of Italy kind of quarantining 
everyone, and it--how does that work for agriculture exports to 
Italy? How--you know, how--how does that affect things?
    Dr. Johansson. Yes. Well, certainly, we would like to be 
selling more products into all of Europe, and Italy included. 
Certainly when they have a quarantine as they've imposed over 
the last couple days, that will affect trade in and out of 
Italy for sure.
    I don't have any numbers in terms of how much our actual 
exports are into Italy at this time. I think by and large the 
Secretary mentioned our major trading partners, Japan, Mexico, 
Canada, and China are all being benefited by the agreements 
that we have in place.
    Of course, we're acknowledging the practical limitations of 
worrying about getting trade accelerated at a time when 
countries are focused more on their public safety issues, but I 
think that's a great question to look at, and we're certainly 
trying to bring our modeling up to speed to reflect different 
parts of the country that may be imposing different types of 
import and export restrictions.
    Mr. Moolenaar. Okay. Thank you. Thank you, Mr. Chairman. 
I'll yield back.
    Mr. Bishop. At this time, I'd like to yield to Mr. Pocan.
    Mr. Pocan. Thank you very much, Mr. Chairman, and thank 
you, Mr. Secretary. I apologize for not being here for the 
first part. We have the CDC also, and these days, more people 
are talking about coronavirus than agriculture, even in 
Wisconsin. So--but no disrespect, and I do want to say thank 
you very much for coming and visiting the facility on campus. 
You're a man of your word. You're the only person I think I've 
invited who has ever come to my district and followed up on 
something in my seven years here.
    So, thank you, and I really do appreciate that, and 
hopefully we'll figure out a way to get that building done. You 
know what the--I didn't tell you that day, and I should have, 
is they cleaned it up for you. So, they swept up the 
cockroaches and everything else, and I told them they shouldn't 
have, because I wanted you to see it in its whole glory. But 
you came, and I really appreciate that. So, thank you.
    A couple of questions. Let me start with market 
facilitation program. You know, we lost 10 percent of our dairy 
farmers in Wisconsin, and it's been really a tough hole. Some 
farmers get as little as two bucks through this program 
depending on what they're growing.
    2,600 farms got less than $1,000. The head of our farmer's 
union in Wisconsin said that the true value of what farmers 
lost, it didn't even make up the difference at all. So, it was 
certainly something that allowed farmers to pay off some bills, 
but it didn't clear their debts. These payments were next to 
nothing.
    The question I have is, you know, it really didn't solve 
many of our farmer's problems. It was a very small amount to 
many, and then conversely we found out that through the 
assistance program and through some purchases, $67 million went 
to JBS USA, a subsidiary of a Brazilian company. So, a 
Brazilian company got 67 million, Wisconsin farmers in totality 
got 43 million, less than one Brazilian company, and then some 
farmers got as little as checks for two dollars. Can you help 
me figure out how we're--what we're able to do next to help out 
those farmers, especially as we still have some ongoing issues 
with China?
    Secretary Perdue. Certainly. Some of the--as you well know, 
the dairy issues have been under duress for a while. The 2014 
farm bill had hoped that it would be--serve dairy farmers 
better. It didn't.
    You all did correct that in the 2018 farm bill, and the 
margin coverage program I think is going to be really helpful. 
We saw a good windfall last year in 2019. So, your dairy 
farmers that were still in business had a good year with the 
dairy margin coverage program last year in that way. The market 
facilitation program was an anti-trade tariff retaliation 
program, and the exports that were--the damage that was done by 
that was the way that was calculated.
    Smaller dairies, so obviously it was based on production. 
Smaller dairies would get less than those that were larger. It 
was never a design to make people whole, and we'd have needed a 
lot more billions of dollars to make dairy people whole over 
the last five years in that way. So, that's where we were.
    Mr. Pocan. If I can, Mr. Secretary, just a question, 
because you brought it up, the margin protection program.
    Secretary Perdue. Yeah.
    Mr. Pocan. So, as I understand it, for farmers in 
Wisconsin, they got about .20 centers per 100 weight of milk. 
If you're selling milk at $29 a 100 weight, and the break even 
point is about $32, the amount was pretty small actually that 
dairy farmers got, and that's why I'm just trying to figure 
out, because that's the problem, because I'd agree, the trade 
assistance was more for my soy and corn folks, but still, it 
was very, very small dollars, and even on the dairy side, it 
didn't provide very much when they were already under water.
    Secretary Perdue. As I indicated, it was a trade damage 
program, not a price support program. So, where dairies were 
under the economic duress of the last--previous five years, and 
the--and the indemnity--crop insurance indemnity, or the dairy 
program didn't perform as well as people had hoped under the 
2014. I think you all have rectified that. If you look at the 
numbers from 2018 of the Wisconsin dairies that participated, 
and the amount of money they got from the dairy market margin 
coverage program was vastly improved in that way.
    Mr. Pocan. But I would love to work with you more, because 
last year----
    Secretary Perdue. Okay.
    Mr. Pocan [continuing]. We actually hit our record of dairy 
farmers that closed down. We're number one in the country for 
farm bankruptcies, and we lost 900 dairy farms last year alone. 
So, it is--it hasn't worked, and I guess that's what I'm trying 
to stress is that as much as maybe from a DC numbers 
perspective it looked good.
    From a dairy farmer in Wisconsin perspective, it looks like 
bankruptcy, and that's the problem we're having. So, we do need 
to something else pretty quickly and substantially. I agree, 
there's some over production, there's some other issues 
absolutely out there. But if we keep losing at this rate, it's 
going to really have a devastating impact in places like 
Wisconsin.
    Just in the second I have left, biofuels, can I try to--I 
come late, and I go long. Are we working with the EPA--I know 
it's the EPA program on the waivers, but obviously you know the 
impact it has on the egg community. Are you working with them 
to try to make it so that we can get rid of some of the waivers 
that were granted so we can get back to ethanol production?
    Secretary Perdue. We absolutely are hard, in that we--the 
10th decision--the 10th Circuit Court decision was a benefit--
--
    Mr. Pocan. Yeah.
    Secretary Perdue [continuing]. There. We think that will 
reduce the amount of refinery waivers that are--refineries that 
are eligible for the waivers, which is significantly reduced 
the number of gallons that are waived. It's been a real 
hardship on the ethanol industry and those producers.
    Mr. Pocan. Yeah. Whatever we could do. I know it would be 
much appreciated.
    Secretary Perdue. Okay.
    Mr. Pocan. Thank you, Mr. Secretary.
    Mr. Bishop. Thank you, Mr. Pocan. The gentlelady from 
California, Ms. Lee.
    Ms. Lee. Thank you very much. Thank you, Mr. Chairman. 
Thank you, Mr. Secretary. I too apologize for being late, and 
hopefully my questions aren't redundant, but thank you so much 
for being here.
    A couple of things I wanted to ask you with regard, again, 
to COVID-19. One, in terms of food banks who are responding to 
this epidemic/pandemic, will they be reimbursed, especially the 
non-profits, for helping deliver food to individuals who cannot 
for obvious public health reasons make it to food banks?
    Secretary Perdue. The--we provided funds, administrative 
and delivery and storage funds to them through the market 
facilitation program over the market acquired program that 
we're doing the $1.2 billion putting more--$1.2 billion through 
the food banks. We did give them I think overall--I can't 
remember how many millions of dollars we increased that for the 
administrative costs, the logistics, and the storage and the 
warehousing in that regard.
    Ms. Lee. Has that been--since the public health----
    Secretary Perdue. That----
    Ms. Lee [continuing]. Emergency, or----
    Secretary Perdue. No, that's been----
    Ms. Lee [continuing]. Prior to that?
    Secretary Perdue [continuing]. Prior to that, yes.
    Ms. Lee. Prior to that, okay. So, the need obviously now is 
greater, and the reimbursement rates and the level of 
reimbursements will probably increase. And so is there a way to 
make sure that given this public health emergency----
    Secretary Perdue. I'm not aware that we have----
    Ms. Lee [continuing]. That you're able to do----
    Secretary Perdue [continuing]. Any authority or 
appropriation to do that. We use that--other than through the 
market facilitation program to do that, but I'm not aware that 
we've got any direct type authorization, or appropriation to do 
that.
    Ms. Lee. Okay. Well, Mr. Chairman, maybe we'll look at that 
and see----
    Secretary Perdue. Okay.
    Ms. Lee [continuing]. If in fact the need warrants us to 
drill down a little bit, because this is going to be extremely 
important.
    Secretary Perdue. And many of these may be called upon to 
serve the food kits when schools close as well.
    Ms. Lee. That's right. So, thank you very much. Also, now, 
considering the many low waged workers are going to lose their 
hours----
    Secretary Perdue. Right.
    Ms. Lee [continuing]. Due to the cancellation of events, 
people choosing for obvious reasons, again, public health 
reasons, not to eat out, closure of office buildings. Will you 
be calling on a suspension of the low cost meal allowance 
nationally? People such as janitors, food service workers, 
parking attendants, ticket sales people, you know, other people 
who depend on a minimum wage just to barely get by, they won't 
have sick time to cover lost wages.
    Secretary Perdue. I think we look forward, as we all heard 
yesterday over a more broad economic stimulus package, we look 
forward to coordinating with you all in administration from the 
food perspective there rather than going--I think there ought 
to be a one government approach. I'm not sure exactly all the 
plans for economic recovery in that way, but we know that food 
should be an important part of it.
    Ms. Lee. Okay. We'd like to work with you on that, and 
also, we know this three month time limit, and to secure 20 
hours a week when in fact people are going to be harmed now----
    Secretary Perdue. Right.
    Ms. Lee [continuing]. Even more so by the three month time 
limit. How do you--I mean are there waivers that you right now 
can, can grant with regards----
    Secretary Perdue. The----
    Ms. Lee [continuing]. To this time limit?
    Secretary Perdue. There are. They are called Good Cause 
Waivers. And the states have that discretion. Any time there is 
an outbreak there if a job--they can't attend their job because 
of not going to work or the company says don't come to work or 
they have the illness themselves, the state can provide a Good 
Cause excuse where they do not have to fulfill that work 
requirement. That is----
    Ms. Lee. And do you approve those waivers or does the 
state----
    Secretary Perdue. That----
    Ms. Lee [continuing]. Just----
    Secretary Perdue. That----
    Ms. Lee [continuing]. Automatically do this?
    Secretary Perdue. The state are already authorized to 
provide a Good Cause excuse to do that. That is not a waiver 
type of issue.
    Ms. Lee. Okay. And then the other question has to do with 
school meals that are served outside of the system. How about a 
waiver--I think the provisions--well, first of all, is there a 
blanket waiver right now as it relates to the reduction of the 
price of meals and school waivers?
    Secretary Perdue. Not a blanket waiver because our 
attorneys have indicated that statutorily we don't have the 
authority to issue a blanket waiver. But we have indicated to 
the states if they as the answer will be yes.
    Our attorneys have told us we have to be asked. We can't 
voluntarily issue a blanket waiver. But if we are asked, the 
states have indicated the answer is yes, they will receive a 
waiver.
    Ms. Lee. And then finally let me ask you the provisions of 
Disaster SNAP versus Pandemic SNAP.
    Secretary Perdue. Yeah. Right.
    Ms. Lee. Can you kind of describe what those differences 
are----
    Secretary Perdue. Yes.
    Ms. Lee [continuing]. And what that means in terms of 
funding from this committee?
    Secretary Perdue. Sure. To the best of my ability, the 
Pandemic SNAP was something that Congress created during the 
H1N1 outbreak a few years ago. It was--it expired after a year 
and so it is no longer authorized under the P-SNAP.
    I think we inadvertently left something up on a website 
that indicated that, but as of right now there is not a P-SNAP 
program because it was a program that was temporary and 
expired. It might be--there might be a need for something like 
that now.
    The D-SNAP is a disaster program where it gives more 
availability when they are not able to get to grocery stores or 
food sources that--for cash assistance.
    Ms. Lee. So is D-SNAP authorized?
    Secretary Perdue. D-SNAP is authorized in natural 
disasters.
    Ms. Lee. And this would not be considered a natural 
disaster?
    Secretary Perdue. No, I don't think it would be. I would 
have to consult, again, with our Office of General Counsel. I 
don't believe we have the statutory authority to declare a D-
SNAP if that is to be--I don't think the public health 
emergency qualifies for that.
    Ms. Lee. Well, when you talk to your counsel, couldn't you 
ask them is it broad enough for us to include a public health 
emergency as part of this? Because if in fact the others--the 
Pandemic SNAP is not authorized, and we can't use that----
    Secretary Perdue. Right.
    Ms. Lee [continuing]. D-SNAP is only a disaster related. We 
have got to find some way to have a public health emergency 
provision in one of these--somehow----
    Secretary Perdue. I don't disagree.
    Ms. Lee [continuing]. Designate that. Don't disagree.
    Mr. Bishop. Will the gentlelady yield?
    Ms. Lee. Yes.
    Mr. Bishop. Would--what you are suggesting that you need 
more authorization--you need more authority in order to do----
    Secretary Perdue. Well, yes, sir, as I indicated earlier, 
the----
    Mr. Bishop. Public Health SNAP.
    Secretary Perdue [continuing]. The P-SNAP is not--it 
expired so there is no authorization or appropriation for the 
P-SNAP. Funding is not necessarily an issue if we----
    Mr. Bishop. Have authorization?
    Secretary Perdue [continuing]. If we had authorization on 
the disaster type----
    Mr. Bishop. So we need to include that in whatever----
    Ms. Lee. Yeah.
    Secretary Perdue. Yeah, that would be one of the 
possibilities.
    Ms. Lee. Mr. Chair, yeah, I was asking in terms of this 
next bill that we put forward, would this be reasonable for us 
to look at to include in the next legislation as it relates to 
next steps?
    Secretary Perdue. That is one of the potential solutions. 
Yes.
    Ms. Lee. Okay.
    Secretary Perdue. We would be happy to really work with you 
on Technical Assistance to see if there are better or different 
types of things that we can do or go back to a--I am not all 
that familiar with the provisions of P-SNAP. But we would be 
happy to work with you on a Technical Assistance basis.
    Ms. Lee. Okay. Thank you very much, Mr. Secretary. And 
thank you, Mr. Chairman.
    Mr. Bishop. Thank you, Ms. Lee. Mr. Secretary, during your 
hearing last week with the House Agriculture Authorizing 
Committee, I was stunned to hear you say that you have had some 
funding issues with respect to the Farm Service Agency.
    If that is what you believe, it has never been reflected in 
a budget request from the department. FSA has never asked for 
more funds to hire up to whatever optimal staffing level that 
was believed to be needed.
    In fact, it was just the opposite. You are using attrition 
and streamlining efforts to justify hiring reductions. So is it 
your position that FSA's 2012 request of 1.1 billion dollars is 
enough to fully fund an optimal workforce?
    Secretary Perdue. Yes, sir. I think the 2021--the 2021 
budget as requested will fully fund FSA. When we started hiring 
up two years ago in that way, we did find a limitation over 
budget.
    Mr. Bishop. Okay.
    Secretary Perdue. So that is what we expect going forward. 
We think there is funding there now.
    Mr. Bishop. Last year we provided $100 million more to FSA 
than was requested. But this year the FSA request includes 
reduction of $38 million which is attributed to staff attrition 
and streamlining.
    Why would you not want to put these resources towards 
hiring new FSA staff, particularly since--for example, in 
Georgia our customers are saying that they don't have enough 
staff and that the staff that they have access to are not 
accessible enough.
    Secretary Perdue. Well, one of the things I mentioned 
earlier, Mr. Chairman, it has been exceedingly frustrating to 
be able to hire through OPM rules. And what we have to--we have 
to post these jobs nationwide. And we may get a job applicant 
from--that qualifies from Utah that doesn't want to move to 
Georgia or vice versa. And that is kind of what the limitations 
has been.
    We appreciate some of the temporary direct hiring authority 
which we believe we utilize in order to fulfill these offices 
in optimum office productivity guidelines that way. But it has 
been--it has been a challenge to hire people.
    I never thought we would see a time where it is challenging 
to hire people in the federal government. But people are--have 
choices today. The economy--they have a lot of choices, and 
many of them didn't want to move.
    Mr. Bishop. Do you have a hiring plan?
    Secretary Perdue. Yes, sir.
    Mr. Bishop. Okay. Would you provide that to us. And would 
you also provide the committee with the optimal number of FSA 
employees and what it would take to actually----
    Secretary Perdue. Absolutely.
    Mr. Bishop [continuing]. Get there.
    Secretary Perdue. Certainly. Certainly.
    Mr. Bishop. Now, let me turn to another perennial concern 
that we have.
    Secretary Perdue. Okay.
    Mr. Bishop. In October the Office of Inspector General 
released on a report on its review of the FNS Nutrition 
Assistance Program, disaster funding in Puerto Rico, following 
Hurricanes Irma and Maria.
    The IG found that what a lot of us already know and that is 
that Puerto Rico does not have legislative authority to operate 
a disaster nutrition program and as a result essential disaster 
funding didn't get to the survivors until six months after the 
hurricanes.
    Further, the IG found that since Puerto Rico was unable to 
operate a Disaster Nutrition Assistance Program was unable to 
adequately plan for the hurricanes. Do you agree that Puerto 
Rico should be a part of the Disaster SNAP program?
    Secretary Perdue. And to answer the question, obviously, we 
know that Puerto Rico has a block grant which should give the 
territory more flexibility in fulfilling their issues.
    I am not sure that putting them under a traditional SNAP 
plan would help or hurt the territory. It looks like they would 
have more ability to serve their people through the block grant 
with limited rules and regulations in that way rather than 
administering a traditional type of SNAP plan as other states 
must do.
    Mr. Bishop. The block grant though has a cap on it. And if 
the need exceeds the block grant, they are out of luck. And 
they have got people that will go unserved.
    Secretary Perdue. Well, you all were very generous, as you 
remember, to Puerto Rico in extending that beyond that time 
period. And it was--I am not sure that the issue of serving 
people was--limited to funding.
    Mr. Bishop. And I do understand that, but it seems 
cumbersome to have to wait until a disaster occurs and for 
Congress to have to pass a special bill for Puerto Rico if that 
were already in place, the provisions for that.
    Secretary Perdue. But they get a block grant routinely. And 
you enhance that with D-SNAP and others in that way. As I said 
from--and we--you know, Mr. Chairman, we are limited in the way 
of--states administer this program. That is one of the issues.
    You all put all the money there, but states administer the 
program. We have limited ability to control the quality of 
service that states provide.
    Mr. Bishop. And I understand that. And of course Puerto 
Rico is not a state, but I am concerned--and there is a great 
deal of concern about the territories being able to have the 
resources they need when they need it.
    And there seems to have been some disparity. And because of 
that, we are trying to explore what we can do to eliminate that 
problem re-occurring every time there is a disaster which may 
require resources that exceed whatever the block grant cap is. 
My time for this round has expired. Ms. Lee, do you have 
additional questions?
    Ms. Lee. Yes. Yes, Mr. Chairman. Thank you. Continuing with 
our discussion on SNAP--as you know Low Cost Food Plan is not 
currently used in SNAP, but many experts agree that the--is the 
Thrifty Food Plan is outdated and does not accurately reflect 
the cost or amount of food that needs to be consumed every day.
    I believe we asked you for a report on low cost food and 
helping to determine SNAP allotments per person. It was about a 
year ago that we asked for that report. Do you have an update 
on that report, Mr. Secretary? I think it is extremely 
important that we know where this is.
    Secretary Perdue. I am sorry, ma'am, if we have not 
reported it. I don't have anything personally this morning, but 
I will go back and look at that request and see.
    But we--that is, that is obviously something we need to 
work together on to determine what levels that you authorize 
over food availability under SNAP. But if we haven't done that, 
I will certainly enquire and find out why.
    Ms. Lee. Thank you. Do you know when we should expect at 
least a response on when we would get this report?
    Secretary Perdue. Well, you should have received a response 
eight months ago, but I--I will have to find out where it is in 
order to answer your question. But we will be back with you----
    Ms. Lee. Okay.
    Secretary Perdue [continuing]. Directly on that.
    Ms. Lee. Thank you very much, Mr. Secretary. And the other 
issue, of course, is the rule that--you know, in terms of the 
work requirement rule. Have you thought about considering 
delaying this rule while COVID-19 remains a serious public 
health threat. Something--this is very serious.
    And I have mentioned this before how opposed many of us our 
to this--really it is a cruel rule of taking food out of the 
mouths of hungry individuals. And now with the public health 
emergency added to this, why can't we just postpone or delay 
this until at least this critical moment is over?
    Secretary Perdue. Ma'am, what we are trying to do is 
enforce the rules that was intended or the laws that was 
intended--120 days, as you know, in that way. We give--you give 
states the authority over 12 percent of a population, no 
questions asked in order to do that.
    Our goal as I mentioned earlier going to Baltimore to see a 
job training center is we believe the ultimate best thing for 
these folks are to help them to get a job of a livable wage 
that they can provide for their families. We can--we looked at 
delaying.
    And frankly as I mentioned earlier, the Good Cause ability 
that states have if there are extenuating circumstances of 
disease or health or others, they are excused from that work 
requirement based on their states' determination.
    Ms. Lee. But in addition to states, just the rule in 
general, Mr. Secretary, so many people--I think 60 or 70 
percent of individuals who are working are utilizing SNAP 
benefits because wages are so low.
    And until we raise the minimum wage--until we make sure 
that everyone has a living wage that they can afford to feed 
their families, how can we do this because people are working?
    Secretary Perdue. Well----
    Ms. Lee. And----
    Secretary Perdue. And if they make wages that qualify them, 
they are still eligible for SNAP, and we continue to do that.
    Ms. Lee. But the rule will not allow for that. It is a rule 
that would----
    Secretary Perdue. The rule simply goes back to the 1996 law 
that says for--the population we are talking about, able-
bodied, adults, without dependents. Those are the people that 
really don't have children to look after, don't have 
disabilities. And really the--not even the elderly. The elderly 
was qualified from 18 to 49 years old.
    So if you are 50 above, it doesn't--that doesn't apply to 
you in that population. We are trying to provide those folks--
and obviously President Clinton and others had quotes about the 
goal was to move people into sustainable lifestyles, not 
permanent dependence.
    Ms. Lee. I agree with that goal. However, people are trying 
to find work. And through no fault of their own, they can't 
find work. A lot of our job training programs have been cut 
back. I--I am very concerned by this.
    I am former SNAP recipient--food stamp recipient myself, 
and believe you, me, I couldn't be--I wouldn't be here today 
had these requirements been in place. You--and again I didn't 
agree with that--Clinton welfare reform law. And it has really 
damaged the lives of so many women especially with children. 
They couldn't finish their college education because of the 
work requirements.
    And so now with the economy the way it is, you know, 
whether there is a public health emergency or not. People are 
really--and especially in black and Latino communities, they 
are trying to find work that pay decent wages. And they can't 
find it.
    Secretary Perdue. Ma'am, if they can't find work in an 
economy of three and a half percent unemployment, I am not sure 
when they can.
    Ms. Lee. Mr. Secretary, when you look at the--it may be 
three and a half percent for the general population, but in 
communities of colors it is a lot higher. It is twice that.
    Secretary Perdue. And we are continuing to issue waivers. 
We have issued, I think, 80 something issues waivers for labor 
market areas under these new rules in 18 different states where 
there are pockets of unemployment issues.
    Ms. Lee. Okay. My time is up. Thank you, Mr. Chairman.
    Mr. Bishop. Thank you, Ms. Lee. I have one other area of 
inquiry, Mr. Secretary. And I think we will be about ready to 
close out. It has to do with the swine inspection rule. We 
currently await the Inspector General's report on worker safety 
data that was used in developing the swine rule.
    When the rule was proposed, USDA claimed that its data 
showed a likely reduction in working injury rates for those 
plants that chose to opt into the new system. Experts have 
warned that there are significant limitations in the data that 
was used by FSIS to draw its conclusion.
    They go on to conclude that quote ``It is impossible for 
FSIS to draw any statistically valid conclusion about worker 
injury rate differences in the HACCP Inspection Model Program 
versus the traditional plans''. Can you tell us how many 
establishments have--are expected to opt in and approximately 
what percent of the pork production would they represent?
    And the Inspector General, of course, will soon be 
completing her report on the data and the other information 
used to draft the rule. If the report found flaws in the FSIS 
analysis, will the department stop implementation while you 
address any of the findings that she yields?
    Secretary Perdue. Mr. Chairman, yes, the--this was decided 
to go forward based on 20 years of pilot projects, as you may 
remember, in five establishments that account for 15 percent of 
the processed pork in the United States.
    This has been tried for 20 years there. The data that we 
have there in those establishments are the foundation for the 
data that we provided in that way, which a 20 year pilot 
project is a pretty long time to evaluate. That was the basis 
that we felt comfortable moving forward on the Swine 
Modernization Program that way.
    Obviously, if they are a legitimate, factual data that we 
would already be aware of it. If we--if someone can point us 
something to accurate numbers that we are not aware of, we 
would certainly reconsider. Our goal is not to hurt people.
    Mr. Bishop. Right. So the answer is yes if the Inspector 
General comes up with data that is inconsistent or does not 
statistically support the implementation of the rule that you 
will reconsider it. I guess that is the answer based on what--
--
    Secretary Perdue. Yes.
    Mr. Bishop [continuing]. What you just said.
    Secretary Perdue. If it is valid, irrefutable evidence that 
is real numbers certainly.
    Mr. Bishop. Because and I--in all candor, these 
recommendations have been made by various administrations of 
both parties. So it is not just this administration that has 
made those recommendation. The industry has been seeking it for 
a while. And our concern is we just want to make sure that 
worker safety----
    Secretary Perdue. Yeah.
    Mr. Bishop [continuing]. Is protected, the health, safety, 
and welfare of the workers and of the public are our paramount 
concern, and that is the reason that I am asking. And I hope 
that you would reconsider if in fact the Inspector General's 
report yields statistically significant problems.
    Secretary Perdue. We share your concern on worker safety 
and consumer safety. And the answer would be yes if we are 
determined otherwise.
    Mr. Bishop. Ms. Lee.
    Ms. Lee. Very quickly. Thank you again, Mr. Chairman. Okay. 
Mr. Secretary, let me just ask you about the WIC Program which 
serves--what--6 million low income women and young children to 
help ensure that they receive a healthy and appropriate diet at 
a critical time that is crucial for children's development. So 
I am sure you agree with this goal of WIC, right, Mr.----
    Secretary Perdue. Yes.
    Ms. Lee [continuing]. Mr. Secretary?
    Secretary Perdue. Absolutely.
    Ms. Lee. You agree with that. And so when--and I look at 
the budget though, and I see the request of $5.5 billion which 
is a level that is $550 million of last year's level. And I am 
wondering how that was calculated.
    I am really puzzled about this because the request as I 
understand it is based on assumptions of the Nutrition Services 
Administration's cost. And that level that you assume for the 
average monthly recipient is $22.44 for fiscal 2021.
    And so I am trying to figure out what the cost was for last 
year, but why would you support this huge--and this is a big 
cut, $550 million less when the need is even greater?
    Secretary Perdue. Ms. Lee, as you know, the WIC Program is 
a whosoever will, may come. And they going to be served in that 
regard. These numbers, we believe fully support the amount of 
people that will show up. We don't know. We have got lower 
birth rates. We have had children who are later in life.
    What we also see is a hesitancy after the free formula cuts 
off after a year. People are eligible for two more years, but 
they don't continue in that regards. We don't know why there 
has been a lower utilization.
    It may be economic issues and others, but these numbers 
fully support. There is also a reserve if more people came. 
There is a reserve there that--we are going to serve every 
person that shows up for WIC services.
    Ms. Lee. But it is my understanding that the level last 
time was $25.85 per recipient per month. Now, this budget--if 
our calculations are correct--is $22.44.
    Secretary Perdue. I can't----
    Ms. Lee. So that is reducing the amount per participant----
    Secretary Perdue. I can't speak----
    Ms. Lee [continuing]. Regardless of how many there are.
    Secretary Perdue. I can't speak to that unless it assumes 
lower number of people wanting to be served. It doesn't make 
any sense that the per person cost--now, I think that some 
math, it extrapolates the total there assuming the same number 
of people show up. The trend line indicates that we don't 
expect that to happen.
    Ms. Lee. Yeah. And I would like to see your trend lines 
and----
    Secretary Perdue. Okay.
    Ms. Lee [continuing]. And the basis for this because from 
what I know--and this is just anecdotally--the need is 
increasing, especially in communities where you have high rates 
of poverty and where you have many low income women and women 
of color who need WIC.
    Secretary Perdue. Sure. And would you mind if our budget 
analysist gives you the numbers here?
    Ms. Lee. Sure.
    Secretary Perdue. It looks like she has----
    Ms. Lee. Mm-hmm.
    Secretary Perdue [continuing]. Some numbers there----
    Ms. Lee. Mm-hmm.
    Secretary Perdue [continuing]. That support that.
    Ms. Navarro. Thank you, Mr. Secretary. So for WIC, the 
average per person monthly food benefit is actually increasing 
between 2020 and 2021. So it goes from $41.14 to $41.91. And as 
the Secretary mentioned, it really is the average participation 
that is decreasing for WIC.
    So for WIC per month, the 2020 budget assumed 6.4 million 
participants where it decreases by $200 billion. So it goes to 
$6.2 million--and for all the reasons that the Secretary 
already cited, lower birth rate being the major factor.
    Ms. Lee. Yeah. No. And I would like to drill down a little 
bit because I chair the taskforce on poverty and opportunity. 
And this is one program that has been identified as a strategy 
to lift families out of poverty. And to see it being cut like 
this tells me we are going in the wrong direction, but I would 
like to see how you came up with these numbers. Thank you, Mr. 
Chairman.
    Secretary Perdue. We are all in for WIC. And whosoever 
comes, get served.
    Ms. Lee. Thank you very much, Mr. Secretary.
    Mr. Bishop. All right, Ms. Lee. Mr. Secretary, Doctor 
Johansson, and Ms. Navarro, thank you for being here today. We 
look forward to working with you as we continue the Fiscal Year 
2021 Appropriations process. And we will be sending a few 
additional questions for the record. And we ask that you get 
your responses to us by the deadline that is set by the 
subcommittee.
    Again, I thank you for your cooperation and for the job 
that you do. We share the goal of making sure that we continue 
to produce the highest quality, the safest, the most abundant, 
and the most economical food and fiber and fuel anywhere in the 
industrialized world. And we truly want to do all that we can 
in the legislative branch to help you to do right and to feed 
everyone.
    With that----
    Secretary Perdue. Thank you, Mr. Chairman.
    Mr. Bishop [continuing]. The subcommittee is adjourned.

                                         Wednesday, March 11, 2020.

                      FOOD AND DRUG ADMINISTRATION

                                WITNESS

STEPHEN M. HAHN, M.D., COMMISSIONER
    Mr. Bishop. The subcommittee will come to order.
    I apologize for my delinquency. I had to come from the 
Capitol, had another hearing, and so I apologize for keeping 
you waiting.
    Good morning. I want to welcome all of you to today's 
hearing this morning. Our hearing is to review the Food and 
Drug Administration's fiscal year 2021 budget request. Our 
witness is the Commissioner of the Food and Drug 
Administration, Dr. Stephen Hahn.
    Welcome, Commissioner. This is your first appearance before 
this subcommittee, so we would like to take the opportunity to 
very cordially welcome you. You come to the agency with an 
impressive set of scientific and leadership qualifications, and 
your leadership will be needed, definitely, to navigate the 
vast and ever-changing issues under the FDA's jurisdiction.
    I want to take the opportunity to highlight an issue that 
is on the minds of many, many Americans right now: coronavirus, 
COVID-19. The FDA plays a vital role in ensuring the safety and 
the efficacy of any vaccines, therapeutics, or drugs that are 
designed to address the coronavirus. It also monitors our 
medical product supply to identify and to mitigate any 
shortages that may result from the disruptions the coronavirus 
has already caused on the global marketplace.
    These are issues that we continue to monitor very closely, 
and we are committed to making sure that the FDA has the 
authority and the funding that it needs to continue its role.
    We hope the recently enacted supplemental appropriations 
bill will assist the FDA in carrying out its vital job during 
this crisis. But I do want to note the observation of a leading 
expert on public health. When asked what went wrong with how 
the Federal Government handled this crisis, he replied, what 
went right?
    I will have further questions on the administration's 
handling of the coronavirus outbreak, but I should also note 
that we continue to actively monitor your efforts related to 
youth use of vaping products.
    The deadline for companies to submit pre-market 
applications is just 2 months away. Preserving the ability of 
adults to use vaping devices as an off-ramp from smoking while 
preventing bad actors and youth-appealing flavors from 
remaining on the market is a delicate balancing act, and we 
look forward to hearing more about how you intend to accomplish 
this while upholding FDA's mission.
    I want to thank you for being with us today, and I look 
forward to today's discussion.
    Before moving on, I certainly want to note that our 
distinguished ranking member, Mr. Fortenberry, is unable to 
join us this morning. And, at this time, I would like to ask 
Mr. Aderholt, who is the former chairman of this subcommittee, 
for opening remarks.
    Mr. Aderholt.
    Mr. Aderholt. Thank you, Mr. Chairman, and good morning.
    And good morning, Commissioner Hahn. Good to have you here. 
And, as mentioned, of course, this is your first appearance 
before the Appropriations Committee, so welcome, especially, to 
that. And we have enjoyed over the years working with your 
predecessors, and so we look forward to working with you as 
well.
    And congratulations on your new job. I know just in 
December you were sworn in, so still somewhat new to the job, 
but I know that you have hit the ground running because you 
have had no choice, with the environment that we are in today.
    Under different circumstances, we would probably ask a lot 
of questions about the fiscal year 2021 President's budget, but 
I suspect, as has already been mentioned, a lot of our 
discussion today is going to center around the public threat 
that we are seeing with the coronavirus.
    I plan to focus my attention on a couple of key priorities. 
One of the issues of how the coronavirus outbreak in China and 
across the globe has forced us, as a Nation, to examine our 
critical medical supply chain and the vulnerabilities of our 
drug and device sourcing overseas. This increased attention to 
our supply chain elevates another related and much-ignored 
problem of how FDA treats these drug and device producers 
overseas versus the production facilities in the United States.
    Secondly, I would like to briefly explore what options you 
think are available to increase competition of generic drugs to 
make medications more affordable to the people faced with 
daunting healthcare costs.
    When the Health and Human Services Deputy Inspector General 
appeared before this subcommittee less than 2 weeks ago, she 
reminded the members here on this dais that over 80 percent of 
active drug ingredients and 40 percent of finished drugs on the 
U.S. American market, from ibuprofen to reduce fevers to 
antibiotics to treat your infection, are produced outside the 
United States.
    These troubling dynamics take on special urgency given the 
spread of the coronavirus. The FDA has identified at least 20 
drugs that exclusively source active pharmaceutical ingredients 
or finished products from China. FDA also issued an alert that 
at least one Chinese drug maker has ceased production of a 
human drug due to the coronavirus infection at a manufacturing 
site.
    And I think it is important that we reduce this national 
vulnerability and that Congress act to make production of 
critical drugs and other medical supplies on U.S. soil more 
attractive. One such option involving FDA is a switch to 
advanced manufacturing.
    As I noted earlier, there is inherent unfairness in how 
FDA's foreign and domestic inspections are carried out. This 
could be another reason why production has moved off our 
shores.
    According to the Health and Human Services Inspector 
General, FDA inspectors routinely conduct surprise inspections 
in the U.S. to ensure that drug companies are producing 
medicine in a safe, clean, and responsible manner. However, 
when it comes to foreign inspections, FDA customarily gives 
companies advance notice, often as much as 12 weeks, that 
enables the drug suppliers plenty of time to clean up their 
act.
    This is counterproductive and creates an unlevel playing 
field for companies trying to manufacture drugs here in the 
United States. This is a real problem if our drugs are sourced 
from over 150 countries, including China and India.
    Now, moving on to the issue of generic drugs, one of your 
predecessors noted that one of the greatest contributions that 
FDA can make to the cost of medicine is to increase competition 
with generic drug availability.
    One such challenge appears to involve the orphan drug 
review process. As I understand it, the law allows FDA to grant 
7 years of market exclusivity to a drug manufacturer if the 
drug is intended to treat a disease affecting less than 200,000 
patients, or such exclusivity is granted if the manufacturer 
cannot expect to recover the cost of the drug development and 
marketing.
    While the ultimate policy goal is to incentivize drug 
development needed by many Americans with rare disease, the act 
may be used to block competition. Our constituents struggle 
with the high cost of healthcare, and if this is an area where 
Congress can help, FDA needs to work with us to fix it as soon 
as possible.
    And so I would appreciate your input today as we move 
forward through this hearing.
    In closing, thank you not only to you but to your dedicated 
staff for their work around the clock doing their part, too, as 
we look forward and move forward with this coronavirus outbreak 
that is affecting not only the United States but around the 
world.
    I thank you, and I yield back.
    Mr. Bishop. Thank you, Mr. Aderholt.
    At this time, Mr. Hahn, you can proceed with your opening 
statement. We will take the entire statement for the record. 
You may summarize if you would like, or you may take the full 
time.
    Dr. Hahn. Chairman Bishop, Congressman Aderholt, members of 
the subcommittee, thank you for the opportunity to appear 
before you today to discuss the President's fiscal year 2021 
budget request for FDA.
    As a cancer physician, researcher, and leader of complex 
medical organizations, I have personally relied on and trusted 
the FDA throughout my own career. It is my sincere privilege 
and the honor of a lifetime to serve as Commissioner of Food 
and Drugs.
    As the gold standard for protecting health, the FDA is 
trusted by Americans and admired around the world for its work 
ensuring the safety, efficacy, and security of our Nation's 
medical products and the safety of our food supply.
    Behind me are the agency's center directors and other 
agency senior leaders. They represent the more than 17,000 FDA 
employees who serve the American public. I have been 
overwhelmed by the professionalism, commitment to public 
service, and remarkable expertise of FDA employees. I am 
humbled to be working alongside them, and they work every day 
to improve the lives of Americans.
    I would also like to note that, in addition to their day 
jobs, they are part of the all-of-government response to the 
COVID-19 outbreak. Please join me in thanking them for their 
service to our country.
    There are three discrete areas I would like the agency to 
focus on during my tenure as Commissioner.
    The first is unleashing the power of data. The agency has 
lots of data. Just think about the massive amounts of data that 
we obtain and create with the thousands of drugs and devices 
that we review each year. How can we, the FDA, harness the 
power of these data to help, where appropriate, make us a more 
nimble and better informed regulator? Utilizing data in a 
smarter, more modern way can allow us to improve our regulatory 
decision-making.
    The second area we would like to focus on is more outward-
facing, and that is empowering American patients and consumers. 
FDA has done terrific work incorporating a patient- and 
consumer-focused approach. We want to continue building on this 
progress, empowering the American public to be even more 
informed about the products we regulate. In addition, we want 
to increase our efforts to give consumers the background 
knowledge and key information they want across all of our 
regulated products.
    And the third area we will focus on is innovation, choice, 
and competition. We are operating in a time of unsurpassed 
scientific and technological innovation, and I am proud of the 
work that FDA has done in promoting such innovation.
    In terms of choice and competition, as Congressman Aderholt 
mentioned, take, for example, our work on generics. Ninety 
percent of the drugs dispensed in this country are generics. In 
the previous 3 fiscal years, we have seen record number of 
generic approvals--900 in both fiscal years 2017 and 2018 and 
over 1,100 in fiscal year 2019.
    We know that more generics on the market means more 
competition in the marketplace. A recent report found that a 
39-percent reduction in average manufacturer price occurred 
when a single generic was added to the market and that up to a 
95-percent reduction in price was seen with six or more 
competitors. We also have data to show that, for the period of 
January of 2018 through July of 2018, this saved the American 
consumer $26 billion.
    We want to make this progress in other spaces as well, 
including biologics, and we know we can. We look forward to 
further advancing scientific and medical progress of this 
country while maintaining FDA's gold standard of safety and 
effectiveness.
    I would be remiss if I did not mention our efforts in the 
COVID-19 outbreak. This is the most recent example, in my 
opinion, of how FDA adapts and responds to emerging public 
health issues.
    At present, this virus continues to spread and has reached 
several parts of the globe. As of yesterday, CDC reported 647 
cases in the U.S., although we have heard reports in the news 
that that has increased, and CDC will update its data at noon 
today.
    FDA is playing a central role, Mr. Chairman, as you 
mentioned, working closely with our public health partners. We 
are helping our partners to conduct more widespread testing for 
the virus by issuing emergency-use authorizations. And we are 
also issuing guidance that allows for laboratories to develop, 
validate, and immediately use newly developed tests to achieve 
more rapid testing in the U.S.
    We are also working very closely with partners to assist in 
the development of treatments, vaccines, and other diagnostics 
for the virus, as well as surveilling the medical supply chain 
for potential shortages and disruptions.
    This is the work of our agency at its finest. As the 
outbreak evolves, we will be sure to update the subcommittee on 
our work.
    I would like to close by thanking the subcommittee for your 
continued support of the agency. We all very much appreciate 
that, including the investments you just provided FDA in the 
recently passed supplemental bill. As you all know, FDA plays a 
vital role in protecting and promoting the public health, and 
this subcommittee's continued interest and support allows us to 
fulfill our mission.
    Once again, thank you for inviting me. I look forward to 
answering your questions.
    [The information follows:]
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    Mr. Bishop. Thank you very much, Dr. Hahn.
    Let me begin the questions.
    The U.S. has lagged behind many other nations in its 
ability to test patients for coronavirus. Administration 
officials, including you, have made a series of what have 
appeared to be confusing and inaccurate predictions over the 
last few weeks about how many tests would be available and when 
they would be available. People are frightened. They are not 
being well-served by this lack of accurate information.
    Let me run through a series of questions with you.
    Did HHS or the White House decide to use CDC tests and to 
limit them to being used in only 12 labs? If so, why?
    Dr. Hahn. No, sir, they did not.
    Mr. Bishop. Okay.
    Why did FDA wait a month after the public health emergency 
was declared and 17 days after problems with the CDC tests were 
revealed before allowing the use of tests that were developed 
by non-CDC labs?
    Dr. Hahn. Sir, I can go through that if you want.
    Mr. Bishop. Yes, sir.
    Dr. Hahn. Okay.
    At the beginning of the outbreak--and that was in January, 
sir--prior to any U.S. cases, FDA reached out to developers who 
we work with regularly and in the context of past public health 
emergencies, as we have done in the past, to encourage the 
development of tests and what we could do to actually 
facilitate development.
    In January, we began collaboration with not only CDC but 
manufacturers around the development of a diagnostic test. And 
as you probably know, sir, on February 4 we approved the 
emergency-use authorization for CDC.
    We have, since that time, worked with over 100 developers 
on the development of diagnostic tests using a template we 
provided.
    And I just want to quote a developer who was quoted in the 
trade press just recently about this. Commenting on FDA, ``They 
have done all the work. They have even given us a cover letter 
that they want and said, `Cut and paste it on your letterhead.' 
They could not have made it any easier.'' And this is quoted in 
the press.
    We are now currently engaged with over 50 developers--and 
we have been over the entire month of February--on what we call 
pre-EUAs, which is really helping them back and forth on the 
development of their tests. We review their data as it is 
generated, and we provide feedback to help them develop those 
tests, sir.
    Mr. Bishop. Okay.
    Now that the FDA is allowing these other labs to develop 
and use their own COVID-19 tests, do you have an oversight 
process in place to ensure that the tests are working properly, 
both prior to FDA's review of the labs' own validations and 
long-term? And if so, what is that oversight process?
    Dr. Hahn. Sir, thank you very much for that question, 
because I think that is an important point for the American 
people.
    Throughout the response and, frankly, even before this, 
with the development of diagnostic tests, our role is to 
provide the scientific rigor around these tests. And I am going 
to approach this like a doctor, like I am.
    If I have a patient in front of me who has come to see me 
with a question about if they have coronavirus, what I want to 
know is, when I take that test for that patient, the 
information that I give to them is reliable. And, in 
particular, what I want to say is, if the test comes back 
negative, I have to be sure it is negative, because I know that 
patient is going to go home and hug grandmom, and we want to 
make sure that they are truly negative.
    This gets to one issue of tests, which is sensitivity, to 
make sure there are no false negatives. And one of the things 
we have done throughout this with all of our developers, 
including CDC, is actually pay a lot of attention to the 
science behind this.
    Sir, you were completely accurate about mentioning that we 
have recently loosened somewhat our regulatory approach to this 
to allow individual labs--and most of them are academic lab 
centers--develop their own tests. These are CLIA-certified 
labs, so they can perform high-complexity tests.
    What we have told them is: You develop the lab. You do the 
validation that you have always done and we know you do well. 
You have 15 days to come back and give us that information so 
that we can do an independent scientific check, but, in the 
meantime, you can begin testing patients.
    Mr. Bishop. Okay.
    Do you have an estimate for how many tests will ultimately 
be needed? And how do you plan to hit that number?
    Dr. Hahn. Thank you, sir, again, for that clarification. 
CDC would be best to ask regarding the number of tests that 
will be needed, but I am very happy to take that to Dr. 
Redfield and get back to you, sir.
    But just to give you an accurate number of where we are 
right now on tests, which is very similar to what we announced 
at the press conference on Saturday from the White House, all 
public health labs in this country have tests.
    Now, there is some confusion, and we tried to clarify this 
on Saturday, so I just want to be clear. I am talking about 
individual tests, not test kits. Now, we send out test kits, or 
the companies do, and they contain the capacity to do the test. 
So what I am describing, sir, is the number of tests that would 
be available.
    There are approximately 200,000 tests that have been sent 
out to the public health labs. CDC is responsible for this and 
has been in constant contact with them, and particularly in the 
areas of Washington, California, New York, providing additional 
tests as needed.
    There are two companies, Biosearch and IDT, who have 
manufactured the CDC test and are presenting those--or selling 
those around the world. Most of those, sir, are going to 
nonpublic-health labs. As of this weekend, Saturday, 1.1 
million tests were distributed, and we now have 2.486, so close 
to 2.5, million tests in the system.
    Now, with the current testing procedure----
    Mrs. Lowey. I apologize. Several hearings at the same time.
    Dr. Hahn. Yes, ma'am.
    So, with that 2.486 million tests, the estimate is that 
over 989,000 patients can be tested with the current testing 
approach. Dr. Redfield has announced that they are looking at a 
different approach that would allow just one swab and one test 
per patient as opposed to two, which should increase the number 
of patients who can be tested with what is in the system right 
now.
    And then the final point, sir, I would just like to make 
is, we have been in touch every day with manufacturers, both 
about the tests as well as all the reagents that are needed for 
the tests, with the manufacturers--and there are two of them--
who are currently producing and sending out the tests for the 
CDC test. They tell us that they should have 4 million 
additional tests out in the system this week. They continue to 
tell us the same thing. We will update you if there is any 
change to that.
    And, sir, just one last thing. We have been in constant 
touch and on our website we have frequently asked questions 
about these tests. We are updating it daily as we get feedback 
from lab developers. And, today, we are going to establish a 1-
800 line so that--for 24/7, we will man it--anybody can come to 
us and ask us a question about the development of tests and any 
reagent shortage they might be seeing.
    Mr. Bishop. I apologize for going over my time, but I 
thought that the information that you were giving was very 
important and critical, and so I extended my time. And I 
apologize to my colleagues for that.
    But, at this time, without objection, I would like to 
recognize the gentlelady from New York, the chairman of the 
Appropriations Committee, out of order, to make sure that she 
is able to ask some questions before she has to go to other 
hearings that are ongoing.
    And, of course, if she would like to make an opening 
statement, we will certainly entertain that.
    Mrs. Lowey. You are very generous. I appreciate it.
    And I am sorry that I missed your statement, but I think I 
will go to a question regarding testing and automated approval.
    In my home county of Westchester, New York, as you probably 
know, 108 cases of coronavirus have been confirmed over the 
past week of 173 statewide. The New York National Guard has 
been called in to distribute food and sanitize public places 
within a 1-mile radius where the virus is most dense.
    New York is taking aggressive steps to combat the virus by 
increasing testing capacity and has asked the Federal 
Government for approval to use additional labs, including at 
qualified hospitals, State facilities, and private labs, to 
process tests as quickly as possible.
    Things have calmed down a little bit, but I won't repeat a 
lot of the questions and criticism that the Federal Government 
has gotten from New York, because they organized quickly, 
immediately.
    So the first question I am asking: When will FDA approve 
all of the requests of New York State for approval of 
additional laboratories? And, specifically, when will FDA 
approve automated testing at all requested sites, which could 
result in much more rapid testing?
    So I apologize if I missed your discussion of testing. Did 
I? But if you could just answer me.
    Dr. Hahn. Yes, ma'am.
    Mrs. Lowey. And you will bear with me if he has already 
answered it.
    Yes?
    Dr. Hahn. Congresswoman, I did not answer specifically the 
New York question. I am very happy to do that.
    I received permission early this morning, approximately 
6:00 a.m., from Dr. Zucker from the New York State lab to 
comment about our conversations. We have had extensive 
discussions daily, several times a day, about the needs of New 
York State and are providing maximum flexibility for their 
laboratories.
    As you know, the Wadsworth State lab has done a terrific 
job. They were the second emergency-use authorization that we 
issued, after the CDC. And they have done a terrific job of 
developing a test. As they have explored the areas where they 
want to expand, we have provided them with the appropriate 
regulatory flexibility.
    I understand that we have a call today with Dr. Taylor and 
our folks here to provide what you are requesting. We just need 
to understand the full scope of what they want.
    They have done the validation testing. And what I did 
mention, Congresswoman, which is really important, as a doctor, 
I want to make sure that the test is valid and that the right 
information is in the hands of the public health officials and 
doctors so that, if you tell someone they have a negative test, 
it is a real negative test, and they don't go home, hug 
grandmom, grandfather, et cetera, and potentially spread 
disease.
    So that is so important, and the New York State labs have 
done a terrific job. It is hard work, and it takes a lot of 
effort and scientific expertise. We are working hand-in-glove 
with them. We should have an answer today on that, 
Congresswoman.
    Mrs. Lowey. Have you had problems, by the way, in other 
States of inaccurate testing, shortened periods of time, 
lengthened periods of time? Or is New York the only State that 
is doing its own testing?
    Dr. Hahn. I am not aware of any inaccuracy in testing. Most 
of the other States, ma'am, are using the CDC test and the kits 
that are distributed by the CDC through this company IDT.
    However, you know, we are aware that--and this is one of 
the things that, you know, potentially CDC and Congress could 
work on--the platforms that are used are varied across the 
country. There are a number of different commercial platforms.
    On our website and what will be available on the 1-800 
number I am describing will be all of the flexibility we have 
given around those platforms. Because it can't just be one 
platform; we need to use the entire installed base of the 
country to be able to run these tests.
    However, Congresswoman, what is important is that, as we 
expand to different platforms and different extraction 
techniques--so you take the sample and you do the extraction to 
put it in the test--we need to make sure that there is still 
validity of the tests. Because what we don't want are 
inaccurate results for the American people. That would make the 
situation much worse.
    Mrs. Lowey. Thank you.
    Now, if I can get to my favorite issue, the looming 
deadline of May 12, 2020, for e-cigarette manufacturers to 
submit their products for review. I am worried about 
enforcement and transparency. FDA likely has already received, 
or soon will, thousands of pre-market tobacco product 
applications. And after May 12, those products that have not 
submitted an application should be promptly removed.
    If FDA does not publicly list the products that applied, 
how can State and Federal enforcement agencies know whether a 
product can legally remain for sale? For example, how can we 
know if Puff Bar puts in an application for mango but not cool 
mint?
    Dr. Hahn. Congresswoman Lowey, as you probably know, we 
have to protect confidential commercial information. 
Applications that we receive, as you completely say, by the May 
12, 2020, deadline, it will be our responsibility to enforce if 
we do not receive an application for a covered product, and we 
will do so.
    Mrs. Lowey. Wait a minute. These products are being sold to 
the market, to the public. They are not doing this in secret. 
The public should know which products are complying and which 
are not.
    Dr. Hahn. Congresswoman, I can get all of the information 
around what we will do when that deadline comes in. I can tell 
you that that deadline hasn't slipped. We will be receiving 
applications. For those who have not submitted an application, 
that will become part of our enforcement against those products 
that aren't part of the application process.
    Mrs. Lowey. Let's discuss Puff Bar for a minute and 
disposable e-cigs.
    I was optimistic when President Trump said he would clear 
the market of flavored e-cigarettes. In the end, he listened to 
his political advisors instead of public health experts and 
announced a loophole-filled proposal that left thousands of 
kid-friendly flavors on the market and allowed disposable e-
cigarettes to flourish. Now, young people are purchasing cheap, 
easily concealable disposables.
    Are you cracking down on flavored disposable e-cigarettes? 
And most of these products, and Puff Bar's disposable in 
particular, are new. They have come on the market after August 
2016. Why hasn't the FDA taken them off the market?
    I must tell you, I found out about e-cigarettes about 5 
years ago from kids in elementary schools, with 60 percent in 
elementary schools and junior high. What are we doing? Why are 
these still on the market?
    Now, I know you are new to the FDA. And I had many 
discussions with your previous person. But I don't understand 
what is going on.
    You know, originally here--and I have been in this Congress 
a long time--the FDA wasn't allowing products on the market 
until they were reviewing them.
    In any event, can you answer that question?
    Dr. Hahn. Yes, Congresswoman. If it is okay with you, I 
would like to go through exactly the questions that you asked. 
And I----
    Mrs. Lowey. If it is okay with my chairman.
    But I think this is an issue that has been challenged for a 
long time by many of my colleagues, because we are seeing it in 
their districts as well as mine.
    Thank you.
    Dr. Hahn. Congresswoman, thank you.
    Mr. Bishop. The chair defers to the chairwoman.
    Mrs. Lowey. Oh, you are very kind.
    But I think--I really see the urgency here. And I think--
you have been chair of this committee a long time--products 
shouldn't be going on the market until they were approved by 
FDA. Something is backward around here. They are on the market. 
We have to fight to you to review them.
    But, in any event, let me defer to you, because of the 
generosity of the chair.
    Dr. Hahn. Thank you, Congresswoman. And I did enjoy our 
conversation about this--maybe not ``enjoy,'' but it was a very 
fruitful conversation, I thought. Actually, I did enjoy it.
    Just to preface this, the agency takes this issue very, 
very, very seriously. I am a father, I am a grandfather, and I 
am a lung cancer doctor. I have seen the ravages of tobacco, 
and I have sat across from patients who have suffered from 
that. What I don't want to see are more youth addicted to 
nicotine and the potential for them to go on to combustible 
tobacco products.
    This is a significant and very, very high priority for the 
agency. And I want you to know that Director Zeller is behind 
me. We have a very close relationship. There is not a day that 
goes by that we don't discuss something related to this 
subject.
    What I can tell you is that we used data from the 2019 
Monitoring the Future Study to inform the guidance policy, but 
it has three prongs. The first is, as you mentioned, the 
flavors that are most appealing to kids in the cartridge-based 
ENDS products.
    But the second and the third prong are around any product 
that has--and I can give you the exact wording here--``any ENDS 
manufacturers that are not taking the appropriate precautions 
that we find to protect youth are part of our enforcement 
guidance.''
    So the products you describe, if we find that in fact they 
are being marketed to kids or in our active daily monitoring we 
see those trends, we will act appropriately. And any one, not 
just kid-attractive, but any one that is marketed--any of these 
products that is marketed to minors will fall into the same 
category.
    We are, likewise, concerned about alternative sources for 
kids, such as the disposables, and we are tracking that very 
closely. And Director Zeller and I promise to be aggressive in 
the enforcement associated with that.
    Mrs. Lowey. Thank you. Now that we have solved the problem, 
I will turn it back to the chair.
    Mr. Bishop. Mr. Aderholt.
    Mr. Aderholt. Thank you, Mr. Chairman.
    As FDA knows very well, the men and women of this Nation 
have an expectation that the Federal Government will protect 
the health and well-being of its people. Your dedicated 
professionals there at FDA know this very well. However, our 
Nation has an inherent vulnerability when drugs are sourced 
from over 150 countries, including China and India, as I 
mentioned in my opening remarks.
    Just let me just throw out a basic question to you. Do you 
believe that our drug supply is safe?
    Dr. Hahn. Congressman, I want to assure you, this 
subcommittee, and the American people that we do, in fact, 
believe that the American drug supply is safe and secure.
    I do agree with you, sir, that we need to look at the 
issues of redundancy of manufacturing, where the sources of 
active pharmaceutical ingredients are as well as final drug 
form.
    This is an issue of utmost importance, and I think it has 
been highlighted by what we have found in the coronavirus 
outbreak, in that we have certain authorities around the 
medical product supply chain that we can use. With drugs, drug 
manufacturers are required to tell us if there is a shortage 
that they are aware of. What we don't have is full and robust 
information about the supply chain. And this, of course, is 
what comes to the fore with something like coronavirus.
    We have a number of legislative proposals we have put 
forward, both in the drug, device, and animal drug sphere, that 
we think will give us additional information to help keep an 
accurate track of the supply chain.
    Congressman, the other thing that I think is really 
important is what you alluded to, and that is, a longer-term 
solution is advanced manufacturing. This is certainly a drug 
supply and a medical product on the prescription drug side but 
also on the device side as well.
    I think we have to do whatever we can to stimulate advanced 
manufacturing in pharmaceuticals and also to encourage domestic 
production. I think that will give us the appropriate 
redundancy and allow us, for essential medications and vaccines 
in particular, to ramp up when we need to.
    Mr. Aderholt. And that leads me to my next question. In 
this latest budget supplemental, we fought for and were 
successful in providing you with roughly $20 million for 
advanced manufacturing activities and, of course, new ways for 
drug and vaccine manufacturers to help entice drug companies to 
bring production back to the United States.
    The $20 million supplemental was in addition to the $38.5 
million that Congress provided in the fiscal year 2019 budget.
    What is FDA currently doing to entice drug and medical 
device companies to reestablish their manufacturing base here 
in the United States?
    Dr. Hahn. Thank you, Congressman. A really important 
question and one of utmost importance, particularly in this 
time of the coronavirus outbreak.
    And thank Congress very much for the support that you have 
given us over the years. It has been very, very helpful.
    We are providing technical assistance and technical 
guidance to manufacturers. As you know, we have oversight over 
the manufacturing of drugs as well as biologics and devices. 
And if we can shift to an advanced or even continuous 
manufacturing approach, we want to be able to provide guidance 
about what that oversight would look like so that there is some 
regulatory certainty for pharmaceutical companies.
    And we obviously see this even more and more from the 
coronavirus, but what we need to do and what the goal of the 
advanced manufacturing is is to improve the agility, 
flexibility, and redundancy and to have more information about 
the supply chain. We want to make sure that we do everything we 
can to bolster this drug supply to support U.S. and, obviously, 
international demand.
    A couple of things, sir, that we have done with the money 
that has been appropriated, $38.5 million so far: We have 
established two new programs to advance the science of 
technologies around influenza preparedness. So, obviously, that 
is a really important issue, particularly in light of what we 
are seeing now with coronavirus. And we have issued a draft 
guidance to give regulatory clarity, which we are receiving 
comments on, on continuous manufacturing for prescription 
drugs. Just two examples of what we have done with the money so 
far.
    In terms of the supplemental funding, thank you very much, 
sir, for that funding and for all of Congress. It is extremely 
helpful.
    We are currently working through the specifics on our end, 
but we intend for this to be an all-of-agency approach since it 
is not just prescription drugs but devices, animal drugs, as 
well as biologics. And we are intending to pull together a 
completely collaborative approach on this and build on what we 
have already done.
    Mr. Aderholt. My time is about out, so I will wait until 
the next round.
    Mr. Bishop. Ms. Pingree.
    Ms. Pingree. Thank you, Mr. Chair.
    And thank you so much for being here with us today and for 
the work you are doing, particularly during this challenging 
time. I know a lot of people at the FDA must be working a lot 
of hours, and we greatly appreciate that.
    It was interesting to read the story that I think was in 
The New York Times today or yesterday which kind of led us 
through some of the processes that maybe haven't gone right and 
particularly some of the challenges in Washington State with 
who is able to do the testing and did we have information 
before they were technically able to release it. And I think it 
is just yet another reminder of all the things that we have 
been learning about what doesn't go right and what is good in 
our system.
    So, without, you know, looking back at that and second-
guessing all that at this moment in time, where we really have 
to think about, you know, are we on track--and you gave us a 
lot of very good answers about that.
    I did have a chance to talk with our own health department 
in Maine and our director of CDC in Maine. And we are very 
fortunate because at this point we are still one of the States 
that has not had a positive test. But we all know the 
importance of being prepared and having the capacity to deal 
with it when we do.
    One of the things that he mentioned to me is that we still 
need to expand the availability of testing to nongovernment 
labs, like those in hospital systems. What do we need to do to 
get them on line more quickly?
    Dr. Hahn. Thank you----
    Ms. Pingree. And I totally understand as well, I wanted to 
say, I appreciate your focus on the importance of accuracy and 
not having negative tests, but one thing that is clear is we 
don't want to have too many hurdles in the way of getting this 
capacity out there.
    Dr. Hahn. Yes, ma'am. And it is completely a balance, 
because you are right, we want to have a good test, but, on the 
other hand, we can't throw up roadblocks to getting those tests 
to the American people. Completely agree. That is exactly where 
the agency is.
    So, as you know, we recently issued some guidance, EUA 
guidance, for flexibility around laboratory-developed tests. 
Now, who are those people who would do that? They could be a 
hospital system. They could be an academic center. In fact, 
most of the ones--and there are 18 of them now around the 
country who have done this.
    What we have told them is, if you are a CLIA--and CLIA is 
certification process through CMS Laboratory that does high-
complexity testing. If you are that laboratory, we know you are 
a great laboratory. You can go ahead and develop the test. Here 
are some recipes. Here are the reagents. Here is the 
information about those tests. You can develop that test. We 
call it an LDT, laboratory-developed test. You can do the 
validation, because you know how to do that. Once you are sure 
and confident to the validation, you get started with that test 
testing. You can do that.
    Now, we are requiring them to just let us know that they 
have started so that we can keep track of who is doing this. 
And then within 15 days they come back and give us the 
validation information. We are doing the check of that.
    And that, I think, answers the other question that was 
brought up: How can we ensure that there is scientific validity 
there? We are very confident of these labs. They are terrific 
labs around the country. But everybody needs a second check, 
and we are prepared to do that.
    Ms. Pingree. So I apologize for my ignorance on this, but 
are the in-hospital systems that I was being asked about, are 
they already CLIA, or is that part of the problem, that they 
have to be certified?
    Dr. Hahn. Well, I can't speak to the specific labs, but 
many large hospitals, certainly the academic labs, are CLIA-
certified labs.
    Ms. Pingree. We don't have academic hospitals in Maine, 
just our big not-for-profit systems.
    Dr. Hahn. It could be very well that they are. Our team is 
very--I mean, I have told you we can----
    Ms. Pingree. We will follow up.
    Dr. Hahn. We can definitely follow up on it.
    Ms. Pingree. Yes. Okay.
    Secondly, how do we ensure that those labs are sharing the 
results with State health departments so, as these things are 
growing, they have the information they need to do the work 
with the public and the preventative work?
    Dr. Hahn. Congresswoman, you are asking all the right 
questions here. The Coronavirus Task Force that I am a part of, 
the White House task force, we have been addressing this issue, 
because what we do need is to develop, like with flu, a system 
where there is, you know, the ability to report that. CDC--and 
I believe Dr. Redfield spoke to that today--is working with the 
White House task force to actually develop that system.
    We have information now about public health laboratories, 
because they do have the requirement to report to CDC. But a 
nationwide reporting system for coronavirus would help very 
much to address the issues that you have brought up.
    Ms. Pingree. So do you anticipate--and I can hear you 
saying maybe this isn't exactly in your domain, but--that we 
will expand that requirement that other testing labs are 
reporting to State health departments so that they can track 
what is going on?
    Dr. Hahn. I can't speak for the CDC right now, and that 
would be a question that is best addressed to them. But, ma'am, 
we can get back to you with the answer to that question.
    Ms. Pingree. Great.
    Well, thank you. I am out of time, but I really appreciate 
your answers. Thank you.
    I yield back.
    Mr. Bishop. Thank you, Ms. Pingree.
    Mr. Moolenaar.
    Mr. Moolenaar. Thank you, Mr. Chairman.
    Commissioner Hahn, thank you for being here with us today. 
And I want to thank you and then all the professionals at the 
FDA for their work, just ongoing work in protecting public 
health but also especially during these trying times. So we 
appreciate that very much.
    Dr. Hahn. Thank you, sir.
    Mr. Moolenaar. I wanted to ask you--on March 9, the FDA and 
FDC issued warning letters to seven companies for selling 
fraudulent COVID-19 products. And my understanding is they were 
asked to respond to the letter to correct the violations, and 
what I am wondering is, have they responded?
    And, also, do you have the resources you need to identify 
and issue warnings to companies that may be making bogus 
claims, but also to take enforcement or legal action against 
these companies?
    Dr. Hahn. Thank you, Congressman, for asking that question.
    We are taking this extremely seriously, just like we do in 
all of the medical products space, but particularly during this 
time. I think you are highlighting a really important point, 
which is that we do not want false information about what works 
in this outbreak.
    We did announce that we issued these warning letters. I can 
get more information about the followup with those. I don't 
have that right now.
    But I can tell you that in all the spheres of medical 
products we have a progressive approach, which includes some of 
the things that you have spoken about. Again, I can provide 
more information about that.
    Mr. Moolenaar. Okay. Thank you.
    Dr. Hahn. Thank you, sir.
    Mr. Moolenaar. Well, thank you for doing that. I think that 
is important.
    Dr. Hahn. Yes, sir.
    Mr. Moolenaar. Also, I had received yesterday a letter 
responding to a letter that I and 56 colleagues had sent 
regarding the use of dairy terms in the labeling of nondairy 
products, and I want to thank you for that response. We have a 
lot of dairy in my district. And the use of dairy terms on 
nondairy products may cause consumers to mistakenly believe 
that these products have similar nutrient levels as real milk, 
which is not accurate.
    Can you provide us an update on the FDA's ongoing work to 
provide clarity between dairy and nondairy products to ensure 
that consumers are not being misled?
    Dr. Hahn. Yes, sir. As I mentioned in my opening statement, 
one of our priorities for the upcoming year is, in fact, 
empowering the American consumer. And you are bringing up an 
excellent point, sir. We want the most accurate and up-to-date 
information in the hands of the American public.
    And I share your concern that the labeling of some plant-
based dairy alternatives may lead consumers to believe that 
these products have the same key nutritional attributes as 
dairy products even though these products can vary widely in 
their nutritional content.
    We have been working diligently. This is a fairly 
complicated issue, as you know. And we are evaluating and 
analyzing the full variety of those plant-based products to get 
the most up-to-date information into the hands of the American 
public.
    We are also aware, sir, of some challenges on the legal 
side for labeling restrictions, some challenges we have had 
under the First Amendment. We are working through those, as 
well, with the agency's lawyers.
    But we are working closely with industry on this. We want 
to hear from stakeholders, industry, also consumer groups, 
about what is the best information that we can get out.
    I want to emphasize also that we are a science- and data-
based organization, as you know, and we want the science and 
the data about nutritional facts labeling to be present on the 
labels for the American people.
    Mr. Moolenaar. Great. Thank you.
    Also, I wanted to talk with you a little bit about, when 
Congress passed the Drug Quality and Security Act, we 
recognized the need for the FDA and States to work together to 
ensure safely compounded medications. And the language that we 
put in the--recognized revisions made in the new MOU for human 
compacting released in September of 2018 encouraged the FDA to 
work with stakeholders.
    And I understand that the goal is to have States sign on, 
but about half of the States have said that at this point they 
haven't signed on or aren't willing to sign on. Can you 
elaborate on the status on this?
    Dr. Hahn. Yes, sir. This is a really important point, 
because we are trying to balance certainly the safety of 
compounding--as you know, there have been some high-profile 
outbreaks that have occurred with respect to infections and 
compounding--but also with not making this overly burdensome on 
States.
    We have received a lot of feedback about this. And just to 
make it clear from the beginning, we want every State to sign 
this MOU. That would be really important, because we want to 
have the cooperation and work very closely with the States.
    So we are working hard on the MOU. We are looking at 
revisions, and we hope to be having something out in the coming 
months. But, again, just to state, we want as many States as 
possible to sign this memorandum of understanding.
    We also understand completely that access to compounded 
drugs is critical for some patients, and we don't want to deny 
that access to those patients. So finding the right balance 
between safety and getting those drugs in the hands of patients 
will be really important. It is one of the things that we are 
doing in this MOU.
    And if I have a moment, I can just tell you some of the 
things that are in the MOU that might help the States. We have 
increased the threshold for what is called ``inordinate 
amounts'' to 50 percent from 30 percent, which should help a 
lot in terms of advancing this.
    We have removed the burden on the States to need to take 
action when a compounder distributes more than that. And we 
have allowed them to just notify us so that we have that 
information, rather than their taking action.
    And we also awarded a grant to the National Association of 
Boards of Pharmacy to actually put together an information-
sharing system, which we think will really help the States move 
forward on this important subject.
    Mr. Moolenaar. Great. Well, thank you.
    And, Mr. Chairman, thank you for that added extra time.
    Mr. Bishop. Mr. Pocan.
    Mr. Pocan. Thank you, Mr. Chairman.
    And thank you, Commissioner, for being here. I just want to 
say you do have big shoes to fill. I think Commissioner 
Gottlieb is someone we all had a great working relationship 
with, as I know we will as well. I have great respect for him. 
Yesterday, we had him come to the Progressive Caucus and 
present. And you don't have a whole lot of, honestly, Trump 
appointees, American Enterprise Institute employees come by to 
the Progressive Caucus, but he got it because we respect him so 
much. So I look forward to having that relationship.
    Help me to make sure I understand this. So you said 989,000 
people can get tested with the tests that are out there right 
now. But, as I understand it, we can only process about 16,000 
a day right now. So, at that rate, that would take 61.81 days. 
And if we get it up to 20,000 by the end of the week, what they 
are hoping for processing, that would still be 49.45 days.
    Is that math correct? Am I understanding that we only 
process that few and that is the reality? You can have tests, 
but unless they are processed, they are nothing.
    Dr. Hahn. Congressman, I think you are heading down the 
right path in the way of thinking. It is complicated, as you 
know. There is the up-front processing of the sample, where you 
extract out what you need to do the test, and then there is how 
you run the test and the process that you do.
    One of the things that we have done--and, again, this is a 
dynamic process----
    Mr. Pocan. Just as quick as possible, because I have so 
many questions.
    Dr. Hahn. I am sorry. Yeah, we are expanding the platforms, 
both on the----
    Mr. Pocan. So where are we today? Are we at 16,000?
    Dr. Hahn. I can get that information to you, sir.
    Mr. Pocan. But does that sound about right, 16,000?
    Dr. Hahn. I can't speak to the absolute number.
    Mr. Pocan. Have you seen Scott Gottlieb's----
    Dr. Hahn. I have.
    Mr. Pocan. Because he put it out there.
    Dr. Hahn. I have a huge amount of respect for Dr. Gottlieb.
    Mr. Pocan. So do you think he is close to right, or do you 
think he is way off?
    Dr. Hahn. I think that I would want to get you the most 
accurate information possible, sir.
    Mr. Pocan. Okay. And I think it is really important, 
because it is--it appears not truthful if we say there are 
989,000 people that can get tested but you can only process 
16,000 a day. That is a real problem. We have to way ramp that 
up.
    So I heard you talking about how you are giving them 
information, you are having them let us know if they can ramp 
it up. We should be aggressively ramping this up. If his 
numbers are right--and I would bet--I would say ``my hair,'' if 
either one of us had it, that he is right, because he often 
is--that is a real problem. And I think we should be more 
honest that we can't process that many.
    So that number should be off the top of your tongue right 
now, I really believe, if we are going to be honest with 
people. This is the problem that I keep hearing from people. 
They feel like they are not being told the total truth. And 
because of that, there is a lot of misinformation.
    So, if that 16,000 number is way off, say that. But if it 
is pretty close to 16,000, we need to get that kind of 
information out as well.
    Dr. Hahn. Yes, sir.
    Mr. Pocan. And so I would really appreciate that, like, 
sooner rather than later, sort of, so we know where we are at 
on that. Because, again, it is not fair to say there are 2.486 
million tests that can cover 989,000 people if, indeed, 16,000 
a day. That is 2 months to process that. So I just think that 
is a really big asterisk, so big it barely fits in the room.
    Dr. Hahn. We will get that information to you, Congressman.
    Mr. Pocan. Okay. Thank you.
    Also, are we facing shortages of--and I have a few 
different areas--one, the reagents needed to run the 
coronavirus diagnostic test? Two, of the three drugs that 
people are being treated with the most, I am going to massacre 
the names, but ciprofloxacin, azithromycin, and piperacillin? 
And the final one is, is it true that we are rationing 
sedatives necessary for people on ventilation as a result of, 
for example, any serious respiratory illnesses, that those are 
being rationed right now too?
    So I guess the questions are the reagents, those three 
drugs, and the sedatives.
    Dr. Hahn. Congressman, we are aware of pressure in the 
supply system on the reagents for these tests, and our medical 
device shortage group has been 24/7 working on this issue. We 
have a lot of frequently asked questions on our website. I 
mentioned earlier today we are going to----
    Mr. Pocan. Could you just answer those questions----
    Dr. Hahn. Yes, sir.
    Mr. Pocan [continuing]. Because of my very, very limited 
time.
    Dr. Hahn. Okay. We are out there with the laboratories, 
providing them alternatives for these reagents. When we become 
aware of shortages, we are going to let the American people 
know----
    Mr. Pocan. So what is the supply we have right now for 
reagents? You probably know that off the tip of your tongue.
    Dr. Hahn. So we know--we have been reaching folks. We know 
that there are pressures particularly around RNA----
    Mr. Pocan. Is it a 2-week supply that is about what is out 
there right now?
    Dr. Hahn. Again, we have to contact multiple----
    Mr. Pocan. We need those--I mean, honestly, no offense, 
those are not answers you are giving me. Like, those should be 
at the tip of your tongue right now. We really need to know 
that.
    How about those drugs?
    Dr. Hahn. We are not aware of any shortages of those drugs.
    Mr. Pocan. Of those three?
    Dr. Hahn. Right.
    Mr. Pocan. Okay.
    And then how about--we were told there is rationing of the 
sedatives for people on ventilation, and there is a real 
concern about that.
    Dr. Hahn. We are not aware of any----
    Mr. Pocan. I am seeing nodding heads, though, behind you 
from your staff.
    Ms. Woodcock. Intermittent shortages of propofol.
    Mr. Pocan. Okay. Thank you.
    But that is the kind of stuff that daily--like, I am not 
happy CDC is--they were going to only update every 3 days. They 
took numbers off. They said they were going to put them back 
up, but their numbers are still way off. I just think this 
stuff is real important for us too.
    In the 30 seconds I have left, I don't know if you can 
answer this, but who is distributing tests? Who is getting the 
tests out there? What agency?
    Dr. Hahn. Right now--to public or nonpublic health labs?
    Mr. Pocan. Public.
    Dr. Hahn. To the public, CDC is.
    Mr. Pocan. Okay. Do you know this? I was told a military 
base in Afghanistan that is 75 miles from the Iranian border, 
they have people who have flu-like symptoms. They are testing 
negative for flu. There are five known coronavirus cases in an 
Afghan town a mile away. And they can't get tested. They have 
no tests for coronavirus.
    Do you have any knowledge of that? Because that is 
something that is really worrying me.
    Dr. Hahn. I do not, sir, but if you give us the 
information, we will go to CDC and work on that.
    Mr. Pocan. Yeah. We have contacted the Department of 
Defense, and, yeah, we should get that out to CDC. Thank you.
    Dr. Hahn. Thank you.
    Mr. Pocan. Appreciate it.
    Mr. Bishop. Dr. Harris.
    Mr. Harris. Thank you very much.
    And I am sorry China put us behind the eight ball on 
coronavirus by delaying the announcement of the disease for a 
month or a month and a half and arresting physicians who 
actually brought it to light. But that is the way communist 
countries work.
    Commissioner, on the topic of China, I think there is a 
note here that you have announced that foreign inspections are 
not going to be conducted through April 2020. You are 
postponing your inspections outside the U.S.
    Now, I have to ask you--because China makes a significant 
amount of, certainly, raw materials for our drugs, some of our 
drugs--how can we possibly trust them? How can we trust the 
safety of the drugs and the precursor that we are going to 
import from China if we are not going to do inspections?
    I mean, the Government in China has already proven they 
can't be trusted. I mean, you know, they watched for a month, 
month and a half, they watched this coronavirus epidemic start 
that now may become a pandemic because of their actions. How 
can we trust them?
    And going to the future, what does the FDA plan to do to 
make sure of the security of our drug supply from Chinese bad 
action?
    Dr. Hahn. Thank you, Congressman, for that question.
    First of all, in the current state, FDA is confident of the 
safety and security of the American drug supply. We acknowledge 
exactly what you are saying. We have postponed our surveillance 
inspections in China and other high-risk areas for the 
protection of our employees, and we are following the State 
Department guidance regarding travel.
    That being said, for for-cause inspections outside of 
China, we are taking those on a case-by-case basis and only 
looking at the most mission-critical and essential travel.
    We do have a number of ways that we can look at the safety 
and security of the drug supply. Inspections are not the only 
tool that we have. We have something called the PREDICT system, 
which is a computerized algorithm that allows us to look at 
where we would assess imports and inspect those imports that 
are coming from countries that we believe would be at the 
highest risk. We have updated that system to actually include 
the fact that we postponed some of these inspections, and that 
is allowing us to change our screening approach.
    Mr. Harris. Okay. Thanks.
    Just a very brief question about the premium cigar issue, 
because, look, we have to go after those devices and those 
tobacco products that are targeted or used by young people, but 
I don't think premium cigars falls into that category. You 
know, I have a shop right down the street, and I don't see 
teenagers going in for it.
    So does the FDA plan to provide any further modifications 
to the applicability of the deeming rule as it relates to 
premium cigars? Or will the FDA consider delaying the upcoming 
May compliance deadlines for premium cigars until a resolution 
can be reached on this very small subset of, really, adult 
products?
    Dr. Hahn. Sir, we acknowledge the importance of this issue 
as well as the comments you made regarding who uses the premium 
cigars.
    As you probably know, the premium cigar issue is part of an 
ongoing legal action. We will maintain the May 12, 2020, 
deadline. That will be maintained.
    We do have a number of approaches that we can use with 
premium cigar makers that will make it easier for them to 
approach this May 12, 2020, deadline, including the substantial 
equivalence pathway, and we are glad to share that information.
    Mr. Harris. Sure. Thank you very much.
    Just briefly, on the naloxone co-prescription, I think 
naloxone is an important tool in our toolbox against deaths 
from the opioid epidemic. Could you please provide an update on 
FDA's consideration on recommending co-prescription of 
naloxone?
    Dr. Hahn. Yes, sir. This is actually--you are right--a very 
important issue for FDA and for the Nation.
    We are making efforts just in general around naloxone, for 
that to be available on the over-the-counter market. That is 
one issue.
    The second is we have designed, tested, and validated the 
key labeling requirements to facilitate that. And in April we 
approved the first generic naloxone, as you know.
    We are working hard with government officials as well as 
industry for the co-developed product, sir.
    Mr. Harris. But very specifically the co-prescription. And 
you understand, I mean, that is----
    Dr. Hahn. Yes, I totally understand.
    Mr. Harris. I mean, that is one way to get it into the 
hands or into those households where there is a risk because 
narcotics are being written into that, you know, prescriptions 
are written. I mean, what is the FDA doing about co-
prescription?
    Dr. Hahn. So we are working with industry as well as other 
government agencies to help in the development of that.
    Mr. Harris. Of that. Okay.
    Dr. Hahn. Thank you, sir.
    Mr. Harris. And just finally, as you know, I am interested 
in making certain that, when it comes to cannabis-derived 
products, that we make certain that they don't--I think that 
they should be regulated pretty broadly until we have more 
scientific evidence.
    What is the FDA doing about CBD and the very broad--I mean, 
I don't have my computer. I could search for ``CBD''; the first 
10 things will claim health benefits of it. What is the FDA 
doing?
    Dr. Hahn. Yes, sir. So we are taking that really seriously. 
As you know, we have a working group in the agency, and we just 
issued a report to Congress. Congress gave us money to actually 
do the sampling so we could have some more information.
    We have a knowledge gap, sir, that makes it difficult for 
us to know how to proceed in several areas. But what I can tell 
you is the following: We have taken action against companies 
who have made false claims about CBD products--curing cancer, 
treating Alzheimer's. And those are the highest-risk areas. We 
will continue to enforce that.
    We are exploring the possibility of some regulatory 
approaches from an enforcement approach that should help us 
actually get to the right place and prioritize the highest-risk 
areas.
    Mr. Harris. Okay. Thank you very much.
    And I yield back, Mr. Chairman.
    Mr. Bishop. Ms. Lee.
    Ms. Lee. Thank you very much, Mr. Chairman. Thank you for 
this hearing.
    Thank you for being here. Good to meet you, Commissioner 
Hahn.
    Okay. For the last week I have been drilling down, and my 
staff has been working on this, I have been doing the research, 
trying to figure out this whole issue of hand sanitizers.
    Lo and behold, I learned that it is considered a drug and 
subject to FDA oversight. Didn't know that.
    Now, manufacturers are required to notify FDA if there is a 
permanent discontinuance or an interruption in the manufacture 
of a drug. Yet, I then found that it is only the life-
supporting or life-sustaining drugs that they are required to 
report shortages of.
    Now, given the public health emergency we are in, of course 
the first priority, washing hands for 20 seconds. But second to 
that is the use of hand sanitizers. I have been in three 
cities, can't find hand sanitizers anywhere at all.
    Many communities, rural communities, unhoused people who 
are living on the streets, communities of color, a lot of 
people don't have access to water, and this is the only kind of 
alternative they have, and these are the directions from our 
own government to use. But if it is not available or if people 
can't afford it, what do we do?
    So I was looking at alternatives. And New York, of course, 
now they are using incarcerated workers to produce their own 
hand sanitizer. And then I said, well, what else can we do 
since our own government is not telling us what to do? And I 
had asked Dr. Redfield, Dr. Fauci, Secretary Mnuchin. 
Congresswoman Norma Torres asked the Ex-Im Bank director, 
because we heard that, of course, the sanitizer is being 
exported.
    So I decided to try to figure out what to do myself. And so 
online, there is a recipe for making it yourself. Two thirds 
cup of rubbing alcohol, one third cup aloe vera gel, mixing 
bowl, spoon, funnel, two-ounce spray bottle, liquid soap 
container, masking tape, and pen.
    So I am saying this to you because we are telling the 
public that this is important to have. It is important also 
even if there is access to water, using doorknobs, you know. 
Well, you know all of the issues.
    And so what in the world is going on? And why is there 
such--why are we so quiet about it? No one could answer my 
question. Secretary Mnuchin just said he would take it to the 
task force because we were told it is the White House task 
force that is looking at this.
    But this is a big issue. It may not seem to be that big of 
an issue. But if people don't have access or can't wash their 
hands and this is the only thing they have and our government 
is telling them to use this and they can't find it, what do we 
do? Do we make our own?
    Dr. Hahn. Thank you for that question, Congresswoman. And I 
just want to acknowledge something that you said that I think 
is very important. This is very important for the American 
people and something that FDA takes seriously.
    It is regulated, as you say, under our authorities with 
drug, with CDER, the Center for Drug. And in that area, drug 
manufacturers are required to tell us if there are shortages.
    We are aware that there are pressures in the hand sanitizer 
manufacturing. And what we do is we proactively go to 
manufacturers, talk about their supply, try to match them up 
with the supply chain, and try to ask them and get them to ramp 
up the manufacturing. This occurs across the medical products 
sphere.
    Ms. Lee. Okay, but just on hand sanitizers, this is not 
happening because it is not available.
    Dr. Hahn. Congresswoman, I can get you the most up-to-date 
information that we have about what we are hearing back from 
manufacturers, because we agree that getting as much out there 
as possible is important.
    Ms. Lee. It is very important. But let me tell you, though, 
in the meantime, if the direction is to--the public health 
requirements are to use hand sanitizer short of being able to 
wash your hands and you can't find it, what do you tell people? 
What do we tell our constituents?
    Do you believe this recipe I just laid out serves us well? 
I mean, should that be posted as an alternative until the 
supply is there? Or what do we tell individuals now?
    Dr. Hahn. So your question is a good one. I don't know that 
recipe, and I don't want to give the American people false 
information about recipes. But we will look at that, yes, 
ma'am.
    Ms. Lee. But people are using this because they can't find 
this. And then oftentimes when you try to get it online, it is 
$150. I mean, go and check it out yourself. Nowhere in 
Washington can you find it.
    Dr. Hahn. Yes, ma'am.
    Ms. Lee. And so FDA--and I was surprised, and so that is 
why I am really glad you are here today, now that I found that 
it is FDA that has the oversight responsibility and 
manufacturers are required to report these shortages. But 
somehow you have got to get the word out to people what to do 
in lieu of this if, in fact, this is not available.
    Dr. Hahn. Yes, ma'am. We have a drug and devices shortage 
group. They are leaning in on this. They are talking to the 
manufacturers every day. And we have posted on our website all 
the shortages that we are aware of. I can get up-to-date 
information to you, Congresswoman.
    Ms. Lee. Thank you very much. Thank you, Mr. Chairman.
    Mr. Bishop. Thank you, Ms. Lee.
    Mr. Cuellar.
    Mr. Cuellar. Mr. Chairman, thank you so much. And I 
apologize, we have Homeland, we have Defense committees, and we 
have Ag, of course.
    Dr. Hahn, again, thank you. I want to say thank you for the 
great work you did at the MD Anderson there in Texas, in 
Houston. I appreciate all of the work. And what is it, about 
140,000 patients that you all look at and people that have been 
suffering from cancer. And I just want to say thank you for the 
work that you all do there at MD Anderson.
    Dr. Hahn. Thank you, sir. That was all due to the great 
people in the State of Texas.
    Mr. Cuellar. Thank you so much.
    A couple of things. One, compounding. I understand we have 
to find a balance, making sure we have safety, but at the same 
time, if there are any folks that do have special needs, and 
that we set up a scientific framework that works. Because if 
you look at it, in the old days, when we looked at pharmacy, 
that is the way they started off. I mean, that is originally, 
you know, instead of going to the big companies, that is the 
work that used to be done, compounding.
    Tell us what you are doing to make sure that we set up a 
balanced approach and have a scientific framework that works, 
protects safety, but still addresses some of the special needs 
for patients.
    Dr. Hahn. Congressman, thank you for that question. And you 
are absolutely right, this has to be a balanced approach.
    We recognize that some Americans very much depend on 
compounding to get the vital medicines they need. On the other 
hand, we are aware of outbreaks that have occurred, safety 
issues that have occurred in the past regarding compounded 
drugs.
    So trying to get the most appropriate framework in place 
that has the balance there, ensure supply, but at the same time 
make sure that it is safe as well is really important.
    I can tell you a few things that we are doing. We are 
trying to streamline the processes around this to make it 
easier for compounders. But also, as you know, we are working 
on a memorandum of understanding with the States to try to make 
it less burdensome on them.
    We are pushing that forward, hopefully in the next couple 
of months, but we have had to receive feedback from them, and 
that is appropriate, and other stakeholders to make sure we get 
to the right place and achieve this balance.
    We are continuing to create the 503 bulk substance list. As 
you know, compounds are nominated. We have to assess them and 
add them to the list. And thank you very much. Congress 
provided us additional funding for that. We can hire some more 
people to actually expedite that. The sooner we expedite it, 
the better place we will be with this.
    And then, finally, we have created and are bolstering what 
we call the Compounding Center of Excellence, which really will 
help us pull a lot of resources together and address this 
really important issue.
    Mr. Cuellar. Okay. Well, thank you for that work.
    Let me bring it to the opioid crisis. Smaller communities 
are really being hit hard and I just want to see what we are 
doing to address the issue.
    I know all of us have been talking about coronavirus, but 
we still have so many people that died from opioid overuse. Can 
you tell us what you all are doing to address that issue, 
especially helping the small communities?
    Dr. Hahn. Yes, sir. You are absolutely right. It is not as 
if the other issues and challenges that face us go away during 
coronavirus, and this would be one of them.
    Just quickly, my perspective on this is as a cancer doctor 
who completely understands the need for a balance between 
making sure these opioids are in the hands of people who need 
them, but at the same time making sure that we are trying to 
reduce the dependence on these.
    And there are a couple of areas that we are working on. 
One, as I mentioned earlier, we are working on Naloxone, both 
as the combination products, but also getting an over-the-
counter Naloxone. This is the reversal agent for opioids, which 
would be a really important thing.
    We are also working in chronic pain. So how do we develop 
abuse deterrent drugs--not we, but innovators around the 
country--to actually get them on the marketplace to help with 
what we know are the known factors associated with abuse.
    I think it is also really important, we are encouraging 
manufacturers and research in the area of nonopioid approaches 
for chronic pain. Because as you know, sir, that is where we 
have often seen some of the problems of the epidemic, is in the 
chronic pain situation. And this is an all-of-agency effort, 
and we are definitely taking this seriously, and just to 
express to small as well as large communities our concern for 
this and our ongoing effort to make sure this is a top priority 
for us.
    Mr. Cuellar. All right. And I certainly understand. I mean, 
right now the media attention, the Members of Congress, the 
general public is on. The coronavirus is a serious situation. 
But at the same time we still have other issues that we need to 
continue working.
    So to your men and women that do a good job, thank you so 
much. And good to see another Texan.
    Dr. Hahn. Thank you, Congressman.
    Mr. Bishop. Thank you, Mr. Cuellar.
    Dr. Hahn, there has been a great deal of press attention on 
the shortage of the N95 respirator mask in the marketplace and 
the Strategic National Stockpile. We have a national shortage 
partly due to China shutting down exports of masks that are 
manufactured there. HHS says that we have about 1 percent of 
what we would need in a pandemic.
    As medical devices, N95 masks are under FDA's jurisdiction. 
Does FDA know what the supply of those masks is? Can you tell 
us the most important things that Congress can do to help you 
address existing and potential interruptions in the supply of 
medical products in the United States?
    The budget request includes a legislative proposal to 
require medical device manufacturers to notify FDA of potential 
supply shortages, just as drug manufacturers do. The emergency 
supplemental provides funding to assist FDA with supply chain 
interruption work, but it did not provide the requested 
legislative authority.
    Do you still believe that the legislation is needed even 
with the additional funds that we provided last week? And to 
get something through Congress fast, would it make sense to 
limit such legislation to products that the Secretary deems 
needed for the outbreak, and perhaps to sunset it after the 
outbreak ends, while we consider long-term measures?
    Dr. Hahn. Thank you, sir, for that question. And, yes, we 
still believe that our request around legislative authority on 
devices where masks would be in part of are necessary so that 
we have a more accurate picture of the supply chain.
    You bring up a very good point, sir, and this is true for 
other devices as well as the N95 masks. So just a little 
background, the N95 masks, there are two different types. One 
are FDA authorized for the medical situation, and the other are 
for industrial, authorized by NIOSH.
    There is one important difference between the two, and that 
is high volume or high pressure spray of liquids, such as in 
the operating room if you are a surgeon and blood is coming 
your way. So that is the major difference.
    What we did to try to increase the supply of these masks is 
issue some regulatory flexibility, that was Monday, a week ago, 
to let medical providers know that they should follow the CDC 
revised guidance about this. You can use either one of those 
two types of masks. And there is a lot more of those other 
masks available than the surgical ones that I mentioned. You 
can use those other masks in the nonsurgical setting. It is all 
according to the CDC guidance. And we believe that flexibility 
should help.
    I also understand that there are some liability issues 
around this that manufacturers have mentioned, and that is a 
separate subject than what FDA does.
    I can tell you, sir, that we are in constant touch with 
manufacturers over the respirator N95 issue. We know that there 
are spot shortages. We know that there are shortening of the 
supply chain associated with this and there is demand. We are 
staying on top of it. If any shortages are identified by FDA, 
we will let the American public know.
    Mr. Bishop. Okay. Let me switch gears for a moment.
    The safety of our food supply is very important, and we 
have undoubtedly made improvements in our food safety systems. 
Recent recalls, of course, are reminders that we still have 
work to do.
    Key indicators of FDA's performance are down significantly 
between 2018 and 2019. Notably, domestic inspections down 18 
percent, import visual exams down 25 percent, and import 
samples down 21 percent.
    Congress has funded over 2,700 human food FTEs for the 
Office of Regulatory Affairs to address this. Unfortunately, at 
the end of calendar year 2019, the Office of Regulatory Affairs 
has only allocated 785 positions for the compliance and 
inspection staff, not to include import and lab staff, who work 
on food safety.
    What accounts for the declines in inspections in recent 
years in domestic inspections, import exams, and import 
analysis? And what accounts for their not filling positions in 
human food inspection and compliance activities?
    Dr. Hahn. Sir, I will address the filling positions issue 
first, because that is a critical need at the agency.
    We have spent a lot of time since my arrival at the end of 
December looking at the issue of human resources and hiring 
qualified people to do these inspections. We have made a 
substantial amount of progress in the last 2 months, but we 
have a lot more progress to do to get the appropriate people 
here. And so we are doing everything we can to ramp up the 
number of inspectors.
    The volume of food that comes into this country both from 
an import point of view but also domestically produced is 
substantial. We have a couple of different ways that we are 
approaching this in addition to inspections.
    And one of the things that we asked for is additional 
funding for an artificial intelligence-based approach to this 
so that we can keep up with the demand around inspections. What 
this will do is allow us to better target where we need to do 
the inspections and where it is best for us to look so that we 
have more information.
    We have done a pilot around this, and we have actually 
determined that we think this can substantially increase our 
ability to do that.
    Mr. Bishop. But we have funded 2,700 FTEs, but you are only 
utilizing 785 positions.
    Dr. Hahn. Sir, we are working very hard to fill those 
positions. We have cleared a lot of obstacles just recently on 
that.
    The other point I want to make is that we do depend upon 
and work very closely with our State partners to do these 
inspections as well.
    Mr. Bishop. Okay. We would to like to hear a little bit 
more about that.
    Mr. Aderholt.
    Mr. Aderholt. Thank you.
    Dr. Hahn, I am aware that there are therapeutic antibodies 
that can be used to treat some viruses. Is the use of these 
therapeutic antibodies something that could treat COVID-19?
    Dr. Hahn. Sir, we have been approached by innovators, by 
developers around this.
    So there is a class of drugs called antiretrovirals, drugs 
that would treat a specific virus, in this case coronavirus. 
There are monoclonal antibodies, as you describe, that would be 
another step in the treatment.
    We are aware of innovators--and I can't give you specific 
details about that because of confidential commercial 
information--who are also looking in that space. And we have 
been approached by many, and I mean many groups, innovators, 
manufacturers, around all of these particular therapeutics. And 
then of course we have the vaccines, which is a much longer-
term thing.
    Across that entire spectrum of treatment, the 
antiretrovirals, the monoclonal antibodies, and the vaccine, we 
are accelerating our work with the manufacturers to get as much 
regulatory clarity, but also to help them with the development 
process and to get them into patients as quickly as possible.
    Obviously, some of these are new and unproven therapies. 
They are going to have to go through clinical testing in order 
to get them into patients on a routine basis.
    Mr. Aderholt. Is there anything that can be done to help 
sort of by rapid grant emergency use approval to ramp up this 
manufacturing?
    Dr. Hahn. We would love to work with Congress on this right 
now. We have the appropriate tools and people to actually 
interact. We would love to share ideas with you, sir, about 
what more could be done to accelerate this. This is, as you can 
imagine, with the group behind me, a top priority in terms of 
trying to accelerate the development of these therapeutics.
    Mr. Aderholt. And we have heard media reports that blood 
banks across the country are experiencing shortages. To our 
knowledge, individuals cannot get affected with COVID-19 
through a blood transfusion, is my understanding.
    Can tell us if you have heard from blood banks and if they 
are experiencing any shortages?
    Dr. Hahn. Congressman, thank you very much for asking that 
question.
    First of all, you are absolutely right, we have no evidence 
that COVID-19 is transmitted through blood in the blood supply. 
No evidence of that.
    Secondly, we are aware, and it has happened within the last 
several days, that there are some concerns about people not 
donating blood because of the restrictions that we might have 
on group gatherings, et cetera.
    Consistent with local health authority recommendations, we 
encourage Americans to continue to donate blood because this is 
a vital issue for many Americans around the country.
    So let me just state that again. Consistent with local 
health recommendations about what sort of settings folks should 
go to, we encourage Americans to continue to donate blood and 
blood products.
    Mr. Aderholt. Okay. And of course I know your background is 
not infectious diseases but rather oncology. But could you tell 
us, give us a comparison from what your understanding is as a 
medical doctor and the research you have done, what the 
casualty rate for just the regular virus is as opposed to 
COVID-19, for especially say over 65-70 years of age?
    Dr. Hahn. So the White House COVID-19 task force is working 
on this. Dr. Birx and Dr. Fauci are definitely leaning in on 
this and are doing the modeling associated with this.
    I can tell you on a broad scale, because as you pointed 
out, I am definitely not an infectious disease doctor, the 
following. This appears to be a particularly problematic and 
lethal virus for elderly and those with underlying 
immunodeficiency states. Those who are getting chemotherapy. 
Those with other coexisting medical problems, in some cases, 
severe diabetes, dialysis, et cetera. So the mortality rate 
seems to be higher in those patients.
    Interestingly enough, and a welcome bit of information, is 
younger folks often don't even know they have it even though 
they have got infected. Now, the interesting thing about that 
is that is both a good thing, because we don't want them to be 
sick, but also a negative, because people don't know that they 
have been infected.
    With respect to the mortality, there is a range here. You 
probably know that there is a range of number of people who die 
of flu every year, and that can be 10,000, 20,000 according to 
CDC statistics, all the way up to 65,000 to 70,000.
    I don't yet have--and I believe Drs. Birx and Fauci are 
working on this--the estimates for the exact mortality rate 
associated with COVID-19. We believe that it is going to be 
relatively close or perhaps even higher than a bad flu 
outbreak.
    But again, I would recommend, sir, that we wait for Dr. 
Fauci and Dr. Birx to finish their modeling and let the 
American people know.
    Mr. Aderholt. Do you know what, for the regular flu, for 
those that are, say, over age 70, what the regular flu, the 
casualty rate is at?
    Dr. Hahn. So we know that from the CDC data that those 
numbers can vary between 0.1 and 0.4. We also know that it can 
be significant in the elderly. I can take that question to Dr. 
Redfield and get an accurate answer for you, sir.
    Mr. Aderholt. Yeah, and I would like to know what compared 
to, say, with a diagnosis of the coronavirus, how that compares 
to that age group, you know, if it is, you say 0.4, 0.8, 
whatever percentage it is for a regular virus, the normal virus 
that is very common, as opposed to what the coronavirus would 
be and how those two numbers compare.
    Dr. Hahn. Yes, sir. I will ask Drs. Redfield, Fauci and 
Birx to get those data. And as soon as they are available from 
them, we will make sure that you all have that.
    Mr. Aderholt. Thank you.
    Dr. Hahn. Thank you, sir.
    Mr. Bishop. Ms. Pingree.
    Ms. Pingree. Thank you very much, Mr. Chair.
    I am just going to take an entirely different tack here. So 
a brief moment of not talking about the coronavirus.
    One of many colleagues brought up CBD, and I know, I saw 
the pained look on your face when that came up. I do appreciate 
that you submitted the report to Congress last week. It is an 
issue that has been of great concern to my constituents, the 
hemp growers around the country. It is, as you know, 
complicated and it has been challenging.
    I think many of us were disappointed that the report didn't 
provide more clarity in concrete steps forward. I know you are 
focused on safety, and you reiterated in your testimony today 
about the companies that are marketing products and the many 
ways that human and animal health and safety may be put at 
risk.
    But you haven't taken any robust action to issue regulatory 
guidance that would clear the market. I know you have written 
some letters, but it doesn't seem like that is enough.
    And aren't you concerned that having no guidance and total 
inaction is actually worse for public health and safety than if 
you did do something? I mean, right now it is just out there 
and there are false claims and people aren't sure what to do. 
So how do you see this timeline moving forward?
    Dr. Hahn. Congresswoman, thank you for the question. And I 
did appreciate our conversation about this. And as we discussed 
and as I mentioned previously, there has to be a balanced and 
pragmatic approach here.
    These products are out there and we have to acknowledge 
that. The American people are telling us that they want to use 
these products because they think they are beneficial. We want 
to make sure that we have the data to inform those decisions. I 
am thinking particularly in the dietary supplement side of the 
world.
    So we are exploring this enforcement guidance, just as you 
state, to provide some clarity, clarity to the American people, 
clarity to the industry.
    It has taken us a bit of time within the agency to get to 
this point. I am pretty comfortable that we are going to work 
forward in the next few months to actually get this. We are 
working through the process within the Department and the White 
House to get to that point.
    And it will be a balanced approach, acknowledging the fact 
that you can't make claims about cancer, Alzheimer's, et 
cetera, you really can't target vulnerable populations, 
pregnant, lactating women, teething rings for babies, and other 
vulnerable populations, but that we know there are agents out 
there that people believe could be helpful.
    And we need to gather data and do research. And so a major 
part of our effort is to actually do that and kind of figure 
out what we can tell the American people.
    And then what we do moving forward? Is it more on the 
enforcement prioritization? Is it rulemaking? We don't want to 
rush to that judgment until we have the data to make the right 
decision. But acknowledging 100 percent what you are saying, 
which is more clarity is needed regarding this from this 
agency.
    Ms. Pingree. And just to be clear, I have a tremendous 
number of constituents who see an enormous amount of value in 
the product, and as you said, are already using it for a whole 
variety of reasons. I have people who are producing the 
product. And I think one of challenges is, too, though, 
legitimate growers, legitimate manufacturers right now sort of 
knowing that there is just such a plethora of stuff out there 
and claims out there it makes it hard for the serious producers 
to really move forward.
    The fiscal year 2021 requests $5 million. How do you see 
that being helpful to accelerate your process? Is that enough 
money? Where are we with supporting this effort?
    Dr. Hahn. Thank you very much for that, because one of the 
things--I mean, the critical need here, besides getting the 
enforcement policy forward and providing regulatory clarity, is 
conducting the research and gathering the data.
    We have opened a portal to collect data. We would very much 
value working with legitimate manufacturers to see how we could 
gather those data about safety and efficacy. We are so 
interested in bringing that forward, putting that together, and 
helping us to inform the right way to move forward.
    We are interested in learning about manufacturing, what are 
the best manufacturing principles, making sure that the content 
is what it is and what it is said to be. All of those things 
need to be addressed moving forward.
    So we are going to use the funds, both from an informatics 
point of view, but also to do the research and data collection.
    Ms. Pingree. I also understand that U.K. food safety agency 
recently provided some advice on the upper limits. Do you 
communicate with other countries and how they are looking at 
this, EU counterparts? Do you imagine that there would be an 
upper limit guidance?
    Dr. Hahn. It is a really good question. We have looked at 
this internally. And I think the context here is really 
important. And, yes, we have talked to other regulars that can 
answer that upfront.
    But as you probably know, CBD has gone through as an active 
pharmaceutical agreement through the pharmaceutical--for a drug 
pathway, and is a part of an approved drug for the treatment of 
two very serious pediatric seizure disorders.
    What we have learned from that is that we do have to be 
careful on the safety side. Those drugs are terrific for these 
indications. But it has given some insight into this.
    It would be very difficult and not a lot of science and 
data behind being able to establish that upper limit at this 
point. And we don't want to put something out that 
unnecessarily either restricts, but also perhaps makes a 
mistake on the safety side as well. I don't see that happening 
right now until we gather additional information.
    Ms. Pingree. Great. Well, I yield back. And thank you very 
much for your answer.
    Mr. Bishop. Thank you, Ms. Pingree.
    Dr. Hahn, a 2017 HHS inspector general report on FDA's 
domestic food safety inspections included a number of troubling 
findings, such as, one, the FDA wasted its inspectors' time 
going to facilities who were out of business or not operating; 
two, even when inspectors found very serious violations, FDA 
did not always take actions to remedy the problem, often 
relying on voluntary actions by the facility; and three, that 
the FDA consistently failed to conduct timely follow-up 
inspections. In half of the cases FDA took no action within the 
year and in 17 percent of the cases it never did a follow-up 
inspection.
    What corrective steps has FDA taken to address these 
inspector general findings?
    Dr. Hahn. Sir, thank you for that question.
    We take very seriously the inspector general's findings 
around this. We discussed earlier that we are hiring 
inspectors. We are increasing the training of inspectors. We 
are using other techniques, artificial intelligence, et cetera, 
to actually buff up the approach that we are taking and have a 
more targeted approach to this where there is the highest risk 
associated with the products.
    But, again, sir, I want to acknowledge the fact that we 
totally hear you about those and we are working internally to 
address all of those and increasing our capacity to do the 
appropriate inspections.
    Mr. Bishop. Thank you.
    The dietary supplement industry has ballooned since passage 
of the Dietary Supplement Health and Education Act of 1994. 
This is a $60 billion market, but we don't actually know how 
many products are out there, because manufacturers are not 
required to notify FDA of the products that they make.
    Your budget asked Congress for the authority to require the 
disclosure of this information. This is known as product 
listing. Can you tell us more about why this proposal is needed 
and what the benefits will ultimately be?
    Dr. Hahn. Mr. Chairman, I would like to thank you because 
you totally laid out the issue here for the agency.
    You are right, this is a pretty big industry, and we have 
limited authorities and resources. Really haven't kept up with 
the quickly expanding marketplace that we see.
    And the American public depends upon us to help reassure 
them about the safety of some of these products. It is becoming 
increasing complicated. And our program is actually quite small 
compared to that market.
    So the additional $3 million in resources that this 
subcommittee previously provided in 2020 will have an impact, 
both around the guidance we can provide industry but also 
around the ability to surveil the industry and take action when 
necessary.
    On the authority side, we are seeking those new authorities 
in the fiscal year 2021 budget to require, as you state, all 
supplements to be listed with FDA. Because that is the start, 
sir, is understanding what is out there and then assessing what 
claims are being made, and that will help us in prioritizing 
our enforcement actions.
    We think this will give us a better understanding of the 
landscape and it is the beginning of a journey regarding this 
to help the American people make the absolute best decisions 
they can.
    Mr. Bishop. Thank you.
    Mr. Aderholt.
    Mr. Aderholt. Thank you. And as we wrap up here, I just got 
notice that the World Health Organization has declared the 
coronavirus a pandemic. I understand from the reports that the 
organization had previously resisted from that classification, 
but it is now going forward to that. Just your thoughts on 
that.
    Dr. Hahn. Yes, sir. This is typically, as you point out, a 
World Health Organization designation and I am not privy to 
what the World Health Organization's thinking is. They have not 
been willing to call this a pandemic.
    Their assessment now, as you point out, and I thank you for 
that information, is that this fulfills the criteria of a 
pandemic, which is basically widespread global cases of the 
coronavirus outbreak.
    That doesn't change what we need to do in this country. We 
still need to take the appropriate precautions that CDC is 
asking us to do. Wash hands. If you are a vulnerable 
population, take the appropriate steps.
    We recently from the coronavirus task force have a terrific 
guidance document. It is a two-pager that says: How do you keep 
your home safe? How do you keep the workplace safe? How to keep 
schools safe? It has got very practical advice around this. 
These are the things that the American people need to be doing 
now, and it is very important guidance, washing hands, social 
distancing, all of those things.
    So the fact that the World Health Organization has declared 
this a pandemic, as you described, is important information. It 
doesn't change what we need to do internally to protect the 
country. And I think we need to address other issues from a 
travel perspective, and that is what the coronavirus task force 
is doing.
    Mr. Aderholt. Let me ask you this, to keep it from people 
going into hysteria, and especially with the classification as 
a pandemic.
    The average person out there, I assume that if they get a 
sore throat or if they get a cough or a low grade fever it 
doesn't automatically mean they have the coronavirus. How do 
you tell the general public and anybody that gets a sore throat 
or something to go in hibernation for 2 weeks or is it truly 
just a sore throat? Is there anything, distinguishing thing 
that we could be helpful? Because we are going to run into a 
lot of constituents that are going to have this question, and 
family members, whatever. So just your advice and comments on 
that.
    Dr. Hahn. Congressman, this is an excellent question and 
really important for the American people. And there is a lot of 
guidance from CDC and coronavirus.gov around this. We can help 
make that available to your constituents.
    I am going to go doctor here on you, sir, and that is, if 
you are a patient who is or a person who is concerned that they 
might have coronavirus, we recommend that you contact your 
provider. If you don't have a provider, there are local public 
health services that you can contact regarding this.
    You notice I am not saying go in to see the provider. Let 
the provider provide guidance about this.
    And it all depends on your situation. I will give you 
couple examples. If you are a 20-year-old with a sore throat, 
that is a different situation than if you are someone who is 
getting cancer chemotherapy and you are 60. And the 
recommendations from your provider will be different, both 
about what you should do immediately to treat yourself and what 
you should do from a testing perspective.
    So we really very much depend upon our provider base and 
the State public health officials to provide guidance to 
patients about this.
    A couple things, though, that are general. One is, if you 
are sick you shouldn't go to work. You should stay home and 
recover. No matter where you are, you should really at all 
times wash your hands.
    If you are well, you are a younger person, for example, and 
you are around someone who is a vulnerable person, and this is 
in the CDC guidance, you should basically act like you might be 
a carrier of coronavirus to protect that person.
    We know that the people most at risk and the most 
vulnerable are the elderly and those with significant 
underlying conditions, such as cancer treatment, such as severe 
diabetes, such as some people with cardiovascular diseases, et 
cetera. They are all listed on the CDC website, and that is the 
absolute best guidance we can give the American people.
    Younger people are at lower risk, maybe not even knowing 
they have it, and that is why this guidance. If you are around 
somebody who is vulnerable, just be careful, you should act as 
if you have it and protect them.
    Mr. Aderholt. Okay. Just in concluding, I want to just end 
by, as we had talked earlier about the treatment of foreign 
drug inspections. And I know that there is an argument to be 
made out there by FDA that talks about that there are other 
ways that you can inspect drug facilities, I think you alluded 
to it today, and there are other tools that can be used.
    But considering FDA's treatment of foreign drug 
inspections, granting what the Office of the Inspector General 
says is there is up to 12 weeks' notice, does FDA treat 
domestic drug or medical device manufacturers differently?
    Dr. Hahn. Excellent question, Congressman. Thank you very 
much.
    So we have the same rigorous standards for foreign as well 
as domestic manufacturers. Now, there are complications. Some 
countries where we don't have in-country people we are required 
to get visas before we go in.
    But I want to be clear about something. FDA has conducted 
foreign inspections that are unannounced. We have done that and 
will continue to do so when appropriate.
    And unannounced inspections only are done for a for-cause 
basis. So when a reason is identified, such as a report of an 
injury or an illness related to a product, we can and have done 
a for-cause unannounced inspection. And pending the travel 
restrictions that we have now right now, we will continue to do 
that.
    The other point I want to make is that this is a 
postponement of inspections. This is not a cancellation of 
inspections. So even the routine surveillance inspections, we 
are planning to go back and to the best of our ability, 
depending on how long the travel restrictions are in place, we 
are planning to go back and do those surveillance inspections.
    Mr. Aderholt. But is it generally that a lot of overseas 
companies get 12 weeks, up to 12 weeks' notice at times?
    Dr. Hahn. They can at times, but I can tell you, 
specifically to your question, we have done unannounced visits 
in both China and India.
    Mr. Aderholt. Okay. Thank you.
    Mr. Bishop. Dr. Hahn, thank you for being here today. We 
appreciate you taking time out to share your knowledge. I am 
sure that the American public is sitting on the edge of their 
seat listening.
    And we wish you success in leading the FDA. We look forward 
to continue to work with you and to your efforts at the FDA.
    We will be sending some additional questions for the record 
and we ask that you get your responses back to us by the 
deadline set by the subcommittee.
    Again, we would like to thank you.
    And with that, the subcommittee is adjourned.


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Coffey, Ann......................................................     1
Davis, Hon. Rodney...............................................    78
Fong, Phyllis....................................................     1
Gonzalez-Colon, Hon. Jenniffer...................................    71
Hagedorn, Hon. Jim...............................................    73
Hahn, S. M.......................................................   117
Harden, Gil......................................................     1
Murrin, Suzanne..................................................    51
Paradis, Peter, Sr...............................................     1
Perdue, Hon. Sonny...............................................    81
Perry, Hon. Scott................................................    70
Schrier, Hon. Kimberly...........................................    75
Smith, G. R......................................................    31

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