acronym calgama. it stands for california leafy greens marketing handling agreement. and we're also going to be talking about the proposed nationalization of that agreement. the hearing will focus on bagged or value added leafy greens ready to eat.

consumers are quite familiar with those products. and look at the role of private industry and government in regulating these products. and the economic, environmental and food safety impacts of that regulation. now, without objection, the chair and the ranking minority member will have five minutes to make opening statements, followed by opening statements that -- of other members, not to exceed three minutes by any member who seeks recognition. without objection, members and witnesses have five legislative days to submit a written statement or extraneous materials for the record. and without objection, the chairman and ranking member will each have ten minutes for questions in the first round, after which we'll proceed under the five-minute rule. pre-cut, packaged, leafy greens marked as ready-to-eat have become increasingly popular.

capturing 70% of the leafy greens market. americans appreciate the convenience of this partially processed product, and are eating more fresh produce as a result. that's a good and important development and will likely help to improve the health of americans. yet, as the popularity of bagged lettuce and spinach has increased, so have rare but serious food-borne illnesses associated with it. outbreaks of e. coli 157 and other pathogens have occurred in relation to pre-cut, packaged, leafy greens, at least once a year, practically every year since 2003. regulation to prevent these outbreaks rests in the hands of the industry. the california leafy greens handler marketing agreement,

calgoodma, was implemented to stave off regulatory action by the state of california. it ensured a specified set of good agricultural practices designed primarily by the food and drug administration, to improve the safety of leafy greens. in spite of its name, calgama is having an impact on farmers, in all parts of the nation, due to the requirements of compliance with calgama imposed by national processing and retailing outlets which buy and market their produce. the usda is currently proposing the creation of a national marketing agreement along the lines of calgama. there's much good in the calgama initiative. it embodies the safeguarding of the american food supply.

handlers responsible for growers' compliance with food safety metrics pay for auditors trained by the usda and hired by the calgama board to carry out inspections adopted voluntarily by signatory farmers. calgama, however, has some blind spots as well. it condones a processing activity favored by the ready-to-eat processing industry known as coring. coring lettuce in the field. and only suggests minimal guidelines for sanitary treatment of harvest equipment used for coring. in spite of recent scientific research identifying the potential for transferring pathogens deep into the cored lettuce. where the subsequent washing process would be unable to reach.

calgama is silent on the use of certain packaging of ready-to-eat produce known as modified atmosphere packaging, the bags of ready-to-eat greens. calgama does not require an enforce at standard of cold chain of distribution. it does not impose tough requirements on packagers and distributors relating to the best consumed by date that's stamped on the ready-to-eat packaging. people have seen those. so they don't have any tough requirements on those packagers and distributors. to put that stamp on there. now, scientists tell us that if bagged produce labeled as ready-to-eat is not constantly refrigerated through the distribution chain, it quickly becomes a perfect habitat for bacterial growth.

harmful bacteria, such as e. coli 157 multiply unseen and undetectible to the eye of the consumer. legions of pathogens can thereby invade the up suspecting consumers' intestinal tract, overwhelming his or her immune system, causing severe and painful complications, and in some cases death. everyone who has experienced severe food poisoning knows what's at stake. while it's largely silent on key questions applying to upstream processing and distribution of ready-to-eat produce, calgama has a lot to say about the practices in stewardship. small and organic farmers in particular expressed concern about the costs and the

scientific justification for some of calgama's requirements. some of calgama's metrics seem to be in direct conflict with environmental protection and widely accepted agricultural practices. in some cases, streams have been contaminated, wild life refuge destroyed, biodiversity threatened, by farmers' efforts to remain in compliance with calgama. today we hope to address why calgama's regulatory framework has focused solely on farming practices to the exclusion of the rest of the supply chain. it seems the farmers have taken the brunt of the burden of minimizing contamination, when it may make more scientific sense to focus attention on the processing, packaging, and distribution of ready-to-eat produce.

consumers have a right to expect that the food they eat is safe. it's in the public health interest that americans consume greater amounts of raw vegetables. but whether or not nationalizing calgama as the usda has proposed is the best way to achieve those goals, is a question of this hearing. i look forward to hearing from all of our witnesses today on this important issue. and at this time, i recognize the honorable congressman jordan, ranking member of the committee from the state of ohio. >> thank you, chairman. i want to thank you for holding this hearing to examine the agreements. most importantly, we need to have a food supply that is safe. americans should be able to field confident that the produce they buy at the grocery store or served them at restaurants will not make them sex. the agreement such as calgama may ensure safer produce.

additional guidelines and regulations may be overly burdensome to some farmers, especially small and family-owned and run farms. i look forward to listening to the witnesses about their experience with the marketing agreements. the usda and fda also play a role in the marketing. i'm interested to hear how these roles may change it if a leafy greens marketing agreement is made national. i hope our witnesses can discuss the implications of hr-2749, food safety enhancement act of 20009, which is to be voted on yesterday, and may in fact be voted on later today. i look forward to hearing how your thoughts on that legislation as well. and also look forward to examining the pros and cons of making national the calgama agreement, and thank our witnesses for taking the time to testify here in front of the committee today. >> i thank the gentleman. does the gentle lady from the state of california have an opening statement? >> i do, mr. chairman.

i want to thank you so much for holding today's hearing to examine the leafy greens market, the role of private industry and government in regulating these products, and the economic, environmental and food safety impact of the california leafy greens market agreement. the hearing is happening at a very opportune time. and since 2003, pre-cut bagged lettuce has developed into the second fastest growth industry in the united states grocery sales. i'm from california. we believe in salads. and so making it critically important that adequate precautions are taken, and analysis conducted to endure that this increasingly popular food is not just nutritious, but safe. and we've taken steps, mr. chairman, in the state of california to regulate the sale

of not only the leafy greens package, but those in the bins as well. 98.5% of the e. coli outbreaks reported in leafy greens have been associated with bagged and pre-cut greens. now, the infamous 2006 spinach outbreak resulted in over 200 hospitalizations, nearly $400 million in lost product, and three deaths confirmed by the fda. in response to this, and other similar instances, industry leaders developed the california leafy greens marketing agreement to allow growers to join a voluntary regulatory framework which now encompasses 99% of california's leafy green business and is being considered for official and nationalization. i chaired those committee

meetings, mr. chairman, when i was chairperson of health and human services. the calgma, calma, includes a food safety inspection program conducted by the usda and the enforcement of metrics, regulations developed by scientists, governmental officials, growers, processors, and businesses to reduce microcontamination of leafy greens in the field to the supply chains. while i'm pleased that the farming industry has taken the initiative to create this comprehensive framework for food safety, i believe it's important d'mn#hd) vn&súuh h

a counter intuitive to create such regulations before, that is, there is conclusive scientific knowledge about how e. coli makes its way into the leafy greens supply. so i would like to thank you, mr. chairman, for allowing me to make this presentation. i'm sorry i cannot stay. they just called an emergency meeting of the progressive caucus to discuss the health care reform bill. and it's at 2:30. i just wanted you to know that. but i have staff here, and i will be hearing from them as to the witnesses and their testimony. so thank you so much. i yield back. >> i thank you the gentle lady. i'm sure she'll convey my sentiments in that meeting of the progressive caucus.

you can let them know that i'm giving a responsibility of chairing this hearing. thank you for your opening statement. if there's no additional opening statements, the subcommittee will now receive testimony from the witnesses before us today of the i want to start by introducing our first panel. mr. michael r. taylor is the senior adviser to the food and drug at the food and drug administration. mr. taylor, welcome. mr. taylor previously served as deputy commissioner for policy  and is a member of the national academy of sciences committee on environmental decision-making under an uncertainty. he's held numerous positions in the field of food safety and research, among them administrator of the food safety and inspection services at the u.s. department of agriculture, vice president for public policy at mon sant oh corporation. he was also a practicing attorney in the field at the law firm of king and spalding. ms. rain pegg is the

administrator of the agriculture marketing services, ams. the marketing and regulatory arm of the u.s. department of agriculture. welcome, miss pegg. prior to being appointed administrator at ams, miss pegg was deputy secretary for department of california food and agriculture. she also served as director of international trade and plant health for the california farm bureau, federation of national affairs and research division, and as a director of governmental relations to the agricultural council of california. thanks for appearing before our subcommittee today. it is the policy of the committee on oversight and government reform to swear in all witnesses before they testify. so i would ask that you rise and please raise your right hand.

do you solemnly swear to tell the truth, the whole truth, and nothing but the truth? thank you. let the record reflect that the witnesses answered in the affirmative. i ask that each of the witnesses now give a brief summary of their testimony. and to keep this summary under five minutes in duration. i want you to know that your entire statement and anything else you want to append to it will be included in the hearing record. mr. taylor, you will be our first witness, and you may proceed. five minutes. >> okay. thank you, chairman kucinich. and mr. jordan. i am michael taylor, senior adviser to the commissioner at the food and drug administration, which as you know is part of the department of health and human services. i am pleased to be with you today to discuss issues related to the safety of fresh produce.

as you know, fda is the federal agency that is responsible for regulating most of the food supply except for meat, poultry and processed egg products which are overseen by our partners at the u.s. department of agriculture. fda is committed to ensuring that the u.s. food supply continues to be among the safest in the world. president obama has made a personal commitment to improving food safety. on july 7th, this year, the multiagency food safety working group that the president established issued its key findings on how to upgrade the food safety system for the 21st century. they recommend a new public health focus approach to food safety based on three core principles. prioritizing prevention, strengthening surveillance and enforcement, and improving response and recovery. fda has been an integral park of the working group's continuing efforts to establish these principles. fresh produce, the topic of today's hearing, presents special safety challenges, as the chairman outlined. a number of illnesses associated

with fresh produce is a continuing concern for fda. the increased consumption of produce in its presh or raw form including ready-to-eat bagged products reflects growing consumer interest in healthy eating, which you indicated, which is, of course, a desirable trend from a public health standpoint. but these new consumption patterns and products challenge our food safety efforts. fresh produce has the potential to be a source of food-borne illness because if it consumed raw without generally interventions that would eliminate any pathogens that may be present. because most produce is grown in an outdoor environment, it is susceptible from contamination from both oh jens present in the soil, manure used as fertilizer, animals in or near fields and packing areas, and water used for washing or cooling. produce also may be vulnerable to contamination due to inadequate worker health and hygiene protections, environmental questionses, production safeguards or

inadequate sanitation and facilities. fresh produce is produced on tens of thousands of farms and contamination is any one step in the growing, packing and processing chain can be amplified throughout the subsequent steps. we also know that the possibility of harmful contamination can be minimized by understanding these potential entry points for pathogens, and by implementing preventive measures wherever possible throughout the system. thus, in keeping with the obama administration's prevention oriented food safety strategy, fda intends to improve safety of fresh produce by establishing enforceable standards for the implementation of preventive controls throughout the chain of production, processing and distribution. these regulations will capitalize on what we in the produce industry have learned over the past decade since we published our good agricultural practices guidances in 1998 and they will tap the best science and develop appropriate criteria or metrics for ensuring the effectiveness of controls, in particular production and processing settings.

in the short term, fda will issue commodity specific guidances for industry on the measures they can implement now to prevent or minimize hazards of fresh produce. the fda will soon publish guidances for the safety of leafy greens, melons and tomatoes. the guidance is described preventive controls the industry can implement to reduce the contamination in the growing, harvesting, transporting and distribution of these commodities. it is not enough, of course, to issue regulations and guidances. we must ensure the preventive measures they call for are widely and effectively implemented. fda will work with the state and federal partners to the enforcement program aimed at ensuring high rates of compliance with the produce safety regulations. fda recognizes the importance of leveraging of expertise and resources of other state and federal and local agencies to make sure the industry

understands the new requirements and help them achieve greater compliance. one way we could leverage resources is to work with the agricultural marketing service as they consider and implement marketing agreements and orders by incorporating fda standards and marketing agreements and conducting audits for compliance to such agreements, and contributes to the goals we all share, which is widespread compliance with modern preventive control measures. we believe ams by incorporating fda's marketing agreements and standards can help ensure high rates of compliance with fda's standards. in addition to highlighting measures of the executive branch to enhance food safety, the white house food safety working group also noted the need for congress to modernize the food safety statutes. legislative authorities for fda would enhance the science based controls, to establish and enforce performance standards to measure the implementation of proper food safety procedures, access to basic food safety

records, and new inspection mandate and other tools to foster compliance and other productions. the hr-2747 being considered by the house today addresses these needs, and the obama administration strongly supports its passage. thank you again for the chance to be here, mr. chairman. i look forward to answering your questions. >> thank you very much, mr. taylor. miss pegg, you may proceed. >> hello, mr. chairman, and thank you for the invitation to appear before you today. i appreciate the opportunity to share with you a brief overview of our activities regarding marketing orders and agreements for fruits and vegetables. as mr. taylor stated, fda is the federal agency responsible for food safety of fruits and vegetables. at usda the food safety and inspection service holds similar responsibility for meat, poultry and egg products. the mission of ams is to facilitate the marketing of agricultural products, ams is not a food safety agency. we are an agency with a long history of working with

producers and processors on marketing programs that involve inspections of product quality and verification production processes. under the agricultural marketing agreement act of 1937, marketing orders and agreements assist farmers and handlers by allowing them to collectively work to solve marketing problems. these programs are industry initiated and subject to public review. there's a seven-step process in initiating a marketing agreement. the industry petitions usda, which recently occurred on the national leafy green marketing agreement. usda holds public meetings which we'll be having on the national leafy greens marketing agreement in september and october. we review all comments in either terminate the proceedings or publish proposed rules. in the past we have terminated proceedings. of a potential marketing agreement or order. usda publishes a final agreement and appoints a committee. the committee develops best

practices. those best practices are sent out -- are published for public comment and then usda publishes a final metrics or best practices. marketing agreements only apply to handlers who voluntarily sign an agreement. fees are collected from handlers to cover local costs of administering these programs. the act provides authority to regulate the quality of commodities through federal agreements. usda considers the harmful pathogens of toxins to be a characteristic of higher quality products. federal marketing orders and agreements include minimum quality grade requirements, which can identify with the presence of mold, insect infestation, foreign material or other contaminants. the california prunes have a fumigation requirement relative to live infestations since 1961. since 1977, california raisins have required the absence of dirt, insects and mold, and

beginning in 2005, pistachio handlers were required to test all nuts destined for human consumption, for toxins that would lower the quality in market value of pistachios. on june 8th, ams received an industry proposal for a national marketing agreement for lettuce, spinach and other leafy greens. the purpose of the proposed agreement is to enhance the quality and increase the marketability of fresh leafy green vegetable products. through the application of good agricultural and handling practices. requirements implemented under the proposed program would be science based, conform to fda guidance and be subject to usda oversight. the program would only be binding on signatory handlers. the program would require signatories to verify any product handled comes from producers or handlers using verified good agricultural and handling practices. the program would authorize unannounced audits and apply to

imports, and food safety risks concerned by usda inspection would be required to fda. we are aware that there are concerns from various groups on the proposed marketing agreement. we welcome comments from those parties and other interested parties. and we'll carefully consider them. to conclude, mr. chairman, i would like to reiterate that the federal food safety policies for fruits and vegetables fall under the jurisdiction of fda. however, ams has marketing orders and agreements. the process for potentially establishing a marketing order or agreement is an open and transparent process. and considers all the points. i'm happy to respond to any questions. >> i thank the gentle lady. we will now proceed with ten minutes of questions, beginning with myself, and then i'll turn

it over to mr. jordan. i'd like to start with mr. taylor. mr. taylor, ready-to-eat is a ## california the marketing agreement is a voluntary industry sponsored means of quality and safety of processed leafy greens including those to be marketed as ready to eat. it was developed to preempt regulatory action from the california state assembly. has they made precut salads safer than they were before and if yes, what's the basis for that opinion? >> mr. chairman, the practices, producer practices, embodied in that agreement is a contribution to make the food safer. i think we all understand the safety of the product depends not only on that product on the production end but through processing and the way the product was handled throughout. >> when you say contribution, what do you mean?

what's the science behind that? >> the safety of these products in the end is -- >> pull that mic a little closer. >> sorry. >> thanks. >> the safety of these products really depends on prevention of contamination in the first place. for a raw fresh product we don't have processing steps that decisively kill pathogens so prevention is the key to safety. the point is the on-farm practices in the agreement make a contribution -- >> but isn't it true, but since it has been in effect there have been food-borne traces in the -- >> the safety -- >> do you remember some of them the romaine -- 2008 romaine lettuce outbreak? do you remember that? >> i'm aware of these outbreaks. >> and the iceberg outbreak of that year? isn't it true since nearly that case since 1999 that food-borne

pathogens that were traced to leafy greens involved precut packaged leafy greens, not whole leafy greens, mr. taylor? >> improving the safety of these products is a work in progress, mr. chairman. >> you didn't answer my question. one of the things in being in front of this committee it's a lot easier if you answer the question. you didn't answer the question. please answer the question. >> if the question is the marketing -- no it, hasn't. >> i'm going to repeat the question just to make sure you heard it. i asked it that isn't it true in nearly every case since 1999, outbreaks of food-borne pathogens that were traced to leafy greens precut greens not whole leafy greens? >> yes. >> now, mr. taylor, doesn't it show that processing of leafy greens is a significant

process -- the processing is a significant factor in causing outbreaks of food-borne pathogen isn't it so >> there are features of that process that do create an environment -- >> is that a yes or a no? >> yes. >> now, according to the ceo the fda reviewed the good agricultural processes imposed and the usda insists that it's mark-to-marketing agreement program is consistent with fda guidelines and regulations. one thing we noticed is a lot of requirements are imposed on farmers. while compare actively less burdensome guidance is from the processors from the farmers and turn them into precut packaged salads for to sell for the must be when i look at your testimony you're still pretty heavy on the farmer side. for instance, when calgama prevents farmers from planting 400 feet that wildlife poses significant risk of

contamination, calgama they pour lettuce in the field which has a potential of contamination with only a minimal guidance for the core lettuce. does the imposition of detailed requirements on farmers but suggested guidance on handlers and distributors justified bit science on how to make precut salads safer? >> the science says we need enforceable preventible measures throughout the system from farm through distribution and that's why the food and drug administration is going to issue regulations that will do that. >> the science says that but what about the requirements on farmers as opposed to handlers and distributors. you're saying there's a gap. are you saying that? >> there's a lot of work to ensure the safety of the produce, absolutely, mr. chairman. >> in fact, doesn't the fda's 2008 guidance for industry to minimize microbiofood safety

hazards for fresh cut foods and vegetables incorporate standards in the transportation of leafy greens that calgama does not? isn't that true. >> yes. >> we're making progress. i can't tell you how many times farmers especially small farmers have told me that the usda represents everybody but the farmers. let's hope the new administration succeeds in changing that impression. in the next panel we're going to hear from a farmer who has a lot of criticism and we're going to hear from a survivor of e. coli poisoning related to precutletus that she ate in 2008. as you know, usda, what is their double standard with specific not scientifically supportable requirements on farmers but on

protocols that benefit the processing companies such as lettuce in the field. >> we do not have a proposal. that's before the public. it's at the very beginning of the process. the hearings will begin in september and october. >> what do you think? >> what do i think? >> what do you think? >> i think at the end of the day the program needs to work for small producers. it needs to work for different cultural practices, regional differences. i think at the end of the day, that's the only way you're going to have the best national program. >> at the end of the day, do you think the processing companies ought to have protocols that are protective of the consumers? >> processors, yes, should. everyone has to play a part in the food chain. >> not just farmers food processors as well. >> of course. >> if calgama becomes nationalized there will likely be increased costs in growers, farmers, as they take mitigation

measures to be in compliance with the regulations and it will be environmental turning area of land that were previously wild into empty lots and the associated land erosion, runoff, stream contamination that follows. with this in mind do you believe that the usda should consider environmental impacts when promoting marketing agreements, regulating food production? >> yes. >> thank you. >> we must consider environmental impacts. we must make sure that it's in compliance with state and federal laws. i think the other point that you bring up is right now what farmers are facing -- and i just got an email last night from a farmer i know in california is, buyers are requiring good agricultural practices and even with the marketing agreement you're seeing buyers demanding good agricultural practices of farmers. >> let's talk about a specific issue that would matter to the processors as opposed to the farmers.

isn't it true that the best -- the best consumed-by expiration date that's stamped is now 15 to 17 days after the produce leaves the processing plant while only seven years ago, the best consumed-by date for fresh-cut produce was more like five to ten days? >> i actually have no knowledge of the best-consumed date. that may be an fda issue. >> let's go to mr. taylor. she deferred to you. >> sorry. >> did you get the question. >> we're partners here, mr. chairman. >> i see that partnership. now i want to find out how good are you a partner are? >> the best-consumed date are a company measure. those aren't an fda -- >> okay. they're company measures but isn't it true the best consumed date that was that stamped --

right now it's 15 to 17 days after the produce leaves the processing plant, right? is that right or not. >> i don't personally have those facts at my disposal -- >> you're the guy. you got to have them. it's 15 to 17 days after the produce leaves the processing plant. but a few years ago, mr. jordan, the best consumed-by date for fresh produce was more like five to ten days. now, you know, and i would ask you, mr. taylor, to take note of that because wouldn't it show you that you're making -- you're closing a window here a little bit on issues of safety? you're opening up the possibilities of contamination especially if these bagged, leafy greens become hot houses of contamination if there's not consistent refrigeration.

>> science-based controls is about issues like that. what is the likelihood of growth and the conditions that would reduce growth and what's an acceptable holding period for products? so in doing our preventive control regulations that's the kind of issue that we'll need to address. >> okay. one final question and we're going to go to my colleague, mr. jordan. miss pegg, calgama is silent on the selection of best-consumed by dates. it doesn't prior processors to reverse the trend longer and longer best-consumed dates. isn't that right? >> i don't -- i really don't know on that. and i don't know -- >> the correct answer in this case was yes. >> oh, okay. >> we're going to go to mr. jordan. >> thank you, mr. chairman. let me thank our witnesses again for being here. let me just pick up where the chairman was. mr. taylor, you said you didn't know the 15 to 17 days and then,

what, a few years ago was 5 to 10 days. is that you personally don't know or is that something that the usda does not track and does not have any knowledge of? >> i'm with the food and drug administration. i'm confident that our experts, technical experts, would have that information and we would certainly share what knowledge we've got for sure. >> well, i guess -- miss pegg is that -- would you say the chairman's statement was accurate? that's, in fact, been what's happened over the last several years that date from 5 to 10 to 10 to 15? >> i went to a lot of discussion in 2006 when the outbreak occurred but i don't know what the guidance is or where the trends have gone, so i don't have any information on that right now. >> one of the bills we're going to be voting on is mr. dingell's

legislation, at least it looks like that. give me your thoughts on that piece of legislation because many in the agricultural committee are concerned about that. miss pegg, i think you in your introduction to the chairman have a background with the california farm bureau. so let's start with you. your thoughts on that bill that looks like it's going to be on the floor here in just a few minutes. >> well, the bill clearly -- we support. we do support the bill and we look for -- looking at what the working group produces and looking at other -- as they review current statutes and regulatory authorities and seeing how we can move into the 21st century. i think what many of these measures -- >> let me ask you specifically about some of the concerns we've heard from folks in agriculture. >> i got a long email last night. >> and in particular, your former employer, the farm bureau.

do you think they're's way off base or again recognizing where they were before, do you think they've got some valid concerns? >> you know, i think that we have to -- i think in working with fda and usda, we have a good partnership where we can both educate one another about what happens in the field and they can assist us in giving us guidance on food safety practices. so i think it's a good partnership. that's why i personally am not -- do not necessarily share the concerns of my former employers. >> mr. taylor, would you like to comment on that bill. >> i think the core strength of this bill is that it would have congress mandate the shift from a transition strategy and the fda to set and enforce standards for preventive controls to make food safer. for produce it would, of course, direct fda to issue regulations to establish enforceable preventive controls and direct the fda to take into account the

diversity of the grower community to take into account environmental impacts. i mean, these are all factors that have to be considered in order to get it right in terms of, you know, having an abundant, safe, supply of safe products is a goal that we have i think the bill has progressed and on-farm activity to those areas such as fresh produce where there is going to be a science-based or risk-based justification for establishing standards. and so i think it's a fairly focused bill -- >> let me ask you some practical questions. the family of that year who this time of year who sets up the sweet corn stand makes a few extra dollars for their family. tell me the impact the legislation on the floor today or what we're talking about in this hearing -- tell me how -- tell me how they might be impacted. >> in developing regulations

like this for an industry that has that -- >> and in my background i remember dealing with this back in the state house it was an uproar when there were some changes in the state of ohio on how we were going to address truck farms or whatever the official title they're given, and we heard from mom and pop produce businesses all over the -- all over the state. >> activities like that, i mean, it's very hard to envision how a federal regulation could establish a meaningful preventive control regime, so we would look where the appropriate exemptions and how do you put the boundaries around these requirements on we achieve the food safety objective but also do it in a feasible, realistic way. that's the command we hope we get from congress and we plan to do that. >> miss pegg. >> i think he does bring up what you have to take into consideration on what happens on different scales and i think we'll be working a lot with fda on the implementation of it and

providing our experience and our guidance in that area. >> absolutely. >> mr. chairman, i have no further questions. thank you. >> we'll go to a second round of questions and it should be a little bit shorter and go to the next panel. mr. taylor, if you stretch out that best-consumed by date on ready to eat produce, it's a benefit for the processor. it obviously facilitates long-distance transportation. instead of 5 to 10 days, 15 to 17 days best-used by.

but isn't a shorter best consumed-by period in the interest of protecting the public's health, mr. taylor? >> again, the question is what are the holding conditions for that product and what's the nature of the product? and i think you got to have a scientific answer to that question. and there's no question if you have pathogen growth potential and you're not having safe handling practices then the longer you hold product, the greater the risk. >> well, let's look at a science-based case. in the case of the 2006 e. coli 157 outbreak that affected at least 204 people, has the fda correlated the location and date of the consumption of the tainted spinach and the date of illness with the date of harvesting?

harvested, best-used by, 204 people with cole. have you done that correlations. >> i don't know the answer for that. i started four weeks ago. i can find out what investigation was done and i can give you a brief answer. >> since you don't know the answer and you started four weeks ago, and it's lovely to have you here, will the fda submit in writing to this committee for inclusion in the record a spreadsheet with that information for each of the known victims of e. coli 157 poisoning, namely, the location and date of consumption of the tainted products, the date of illness, and the original date of processing? can you do that? >> we will provide you the information that we have, and we'll --. >> if you could do that, we'd really appreciate that. and as a matter of fact, while

we're at it, can you do that for all produce-related outbreaks since 1999? you know which ones they are. we talked about a few of them. just create a spreadsheet. it shouldn't take too long to do. since you already have the information. put it in a useable form for this committee so that we can help news our deliberations about this issue of the transportation time and the best used by date which so many consumers use as guidance as to whether or not to consume something. one final question for each of the witnesses, mr. taylor again, given calgama's purpose to protect public health by reducing microbiocontamination

of leafy greens, would it be more consistent to have science-based restrictions on the marketing and practices of ready to eat produce rather than calgama's current near silence or lack of specific requirements on those issues? >> mr. chairman, i can't speak to the scope of the permissible scope of marketing agreements with the usda but the answer to whether we need standards at each of those stages along the way that are enforceable and set bit food and drug administration, the answer is clearly yes. >> science-based. >> yes. >> and just to differentiate,, too the california marketing agreement with based on the california act and we're looking at the national process, through this process and through the public process we can ensure that a final program does include all those components. >> well, i want to -- before we conclude this, i'd like to go back to mr. taylor.

i want to read you a few opinions about the effect of the packaging used to market ready to eat produce. this is a quote. because of the higher relative humidity of ready to eat packages, the risk of pathogenic growth is higher each degree over 40 degrees will increase the risk of pathogenic growth. this is from a ph.d. university of georgia. the problem comes when leafy greens are coming home in ready to eat bags. if they're left anywhere when temperatures are above 50 degrees fahrenheit it's wildly known they can become breeding grounds for bacteria, unquote. mr. r.atwell, a ph.d. in food and safety. another quote, it's a perfect environment for all kinds of things to grow, unquote.

mr. taylor, isn't it true that all confirmed incidents of e. coli outbreaks -- 157 outbreaks since 1999 have been caused by precut packaged greens? >> as far as i know. the only qualification because i'm under oath and i don't want to misstate. >> the chair recognizes mr. jordan. do you want to take five minutes? >> i'll be brief. a question on the bill again that's going to be on the floor here in a few minutes. according to what we've looked at in the bill, this gives the fda pretty broad authority to regulate how crops are raised. i mean, in effect -- i know we'll have a farmer on the next panel dictating how farmers produce their crop. is that your understanding of

how the legislation is going to work? >> there's no sort of broad authority for fda to tell farmers how to grow their crops. there's very specific authority that if we, based on science, can identify a commodity that poses risk, that can be addressed through preventive control measures, such as the industry itself is implementing, then we are empowered in that specific case to establish enforceable standards but it's not a broad preventive control mandate. >> it seems to me the chairmans pointed out it's not the farmer crop it's the supply chain elsewhere in the processing or transportation or what have you. not with -- you know, that's my concern. the farmer knows how to produce his crop and let's not overregulate this guy who's producing the food and let's not make it difficult for the mom and pop who are setting up the wagon and selling sweet corn to the neighbors and to the neighborhood. but we just know how government works.

look, we were told last year that we're going to just have one small little bailout. we promise it will be one little bailout. and this thing won't grow and, you know, we don't want to get in the private sector -- well, we've seen what happened in the last year just in the financial industry alone, let alone the financial industry. we know the pattern of government and what typically happens so that's my concern. i think, frankly, it's in large degree it's the chairman's concern and certainly lots of folks in agriculture their concern because they just know the nature of government. it's tough enough many times for folks in agriculture to deal with the state department of agriculture and other regulatory agencies at the state level let alone big brother in washington telling them how to run their farm and business. so that's my big concern. and we'll continue to watch this whole process relative to the bill and the issue we're addressing here in the committee. with that i would yield back.

>> we'll go to one more round here before we get to the next panel. miss pegg, here's another example of something farmers have a problem with. calgama identifies a number of sources of potential pathogens that must be avoided for certification. these includes birds, ferrell pigs and wildlife and cattle. farmers are paying for measures such as the building of large measures but the sooipsz hardly concludes it, miss pegg. the wildlife was a likely source of contamination -- let me go over that again. the science is hard to conclude that wildlife was a likely source of contamination in the 2006 spinach contamination. isn't that so? >> well, in the 2006 -- actually in the outbreak, there was maybe fda can speak to this. there was concern about wildlife in that outbreak that did occur. wild pigs was the wildlife in

question. >> are you saying there was concern or is that evidence-based or conjectural. what's the basis of that concern was it conclusive or science-based? >> maybe you can speak to the investigation. if you've been to the salinas valley and that region -- >> i've been to salinas valley. >> okay. there is that area -- there is known some wildlife activity. now, the california leafy greens marketing agreement does look at other potential risks, and they also do rank wildlife as high risk or low risk. >> i would -- in order to facilitate this hearing, i'd like you to supply to this committee the information about the basis of your statement that wildlife was somehow connected with this. i would like to see some scientific backup of that, okay?

>> okay. i will get it for -- now, for the 2006. >> right. exactly. >> outbreak. >> a leafy greens field proximity to cattle is a high risk circumstance for e. coli contamination. does calgama make distinctions between high risk circumstances and lower risk circumstances such as the presence of frogs or other wildlife -- does calgama prioritize in other words high risk circumstances while deprioritizing low risk circumstances? >> i believe it does. >> and isn't it true that all farms have to eliminate repairing areas, hedgerows if if they are along a crop edge? >> i'm not --. >> i want to you look at this slide on the screen. the staff put the slide up. okay. the aerial photo above was taken

before calgama. you can plainly see a strip of green between several fields where trees and hedges are and where birds and wildlife can take shelter. look at the aerial photo taken after calgamma. >> i don't know if i can speak to that because i don't know if they are calgma buyers. we've discussed this since 2006 is that how do you deal with -- are there real risks or not? and i was talking to california fish and game this week about it. it's a big issue. >> you're the nation's advocate for farmers. does it make sense for the usda to advocate for a processor-based framework that requires all farmers to spend heavily to prevent low risk events such as contamination of wildlife but the higher risk but

proximity of cattle and known risk of processing and packaging leafy greens are more significant contributors to the problems calgma intends to address? any program needs to address the risks and look at high risks versus low risks. i think what we're looking at in terms of any program is looking at all chains in the process and how to reduce the risks. >> so who should pay for compliance with calgma? the farmer, the processing industry? should the cost be shared? >> under the marketing agreement, i believe they propose a per carton assessment that the handler pays to cover the cost of the marketing agreement. >> so who currently pays for the measures adopted to comply with calgma? >> i think for the california leafy green marketing agreement, that's a per-carton assessment that pays for it. >> farmers? >> well, their handlers

signatories so handlers pay for it it. >> farmers. okay. i think we're -- i think we're completed with questioning of the first panel. we will be in touch with you regarding the follow-up on questions that we've asked and we appreciate your cooperation with the committee and your presence here today. those buzzers that you heard are the reason why i'm going to have to recess this meeting until after votes. how many votes? [inaudible] >> there are three votes. and so i'd like to take a half hour break. and then we're going to come back for the second panel and we'll take testimony from those who are here to talk about their experience. i want to thank the representatives of the fda and the usda for being here. we'll look forward to working with you on these issues so that

we can consumers across america have more confidence in the safety of our leafy green packaged foods. thank you very much. >> thank you, mr. chairman. >> and the committee stands in recess for a half hour. i'm going to vote and i'll be back in about a half hour. [inaudible conversations] [inaudible conversations] >> before we begin, i just want

to acknowledge the work of our staff on both sides who have helped with this hearing. we appreciate your work and to make it known that we have one of our staffers, charity, who has done a lot of work on this. she could not be here today because of an illness. we look forward to her return but she did a lot of great research and i just want to acknowledge that for the record, actually. thank you. and we're going to go to our second panel of witnesses and i would like to introduce them. we'll start with ms. kelly cobb. welcome, ms. cobb. kelly cobb is a survivor of e. coli poisoning and has come here today to share her story with us. her husband, matt cobb, serves in the united states marines. and they're parents of two young children.

mr. scott horse mr. horsfall has served as chairman of the united states agriculture export development council, was a member of the agriculture trade advisory committee for fruits and vegetables and is past chairman of the produce marketing association's international trade conference. mr. dale koch, welcome mr. horsfall, mr. koch welcome. mr. koch is a farmer and a member of the community alliance for farmers. mr. koch is the president and founder of koch farm a produce, storage and shipping company located in san^juan bautista, california, which represents local organic growers and

selling throughout the u.s. and candidatee he's also a partner a diversified growing operation growing on 500 acres in the california counties. the sectionsth generation of his family born in california to work in agriculture, he pioneered spring mix lettuce and was instrumental in developing its market. miss caroline smith-dewall, is that the right pronunciation? welcome. miss dewall is at the center of science and she's a former analysts governing food safety. since 1999 she's maintained an annually published list of food-borne illness outbreaks organized by food source that now contain over 15 years of outbreak reports. and as presented at numerous conferences.

she's a co-author of the book "is our food safe: a consumer's guide to protecting your health and environment" and has published several papers on food safety. i want to thank the witnesses for their presence here today. it's the policy of our committee on oversight and government reform to swear in all witnesses before they testify. i would ask that you rise, raise your right hand. do you solemnly swear to affirm to tell the truth and nothing but the truth. thank you very much. let the record reflect each of the witnesses have answered in the affirmative. as with panel one i ask that each witness give an oral summary of his or her testimony. i'd like to keep the summary a maximum of five minutes in duration. any testimony that you want to

add beyond that, your entire statement will be in the record and anything you want to send to this committee in the next few days we'll get that in the record as well. your complete written statement will be in the record. miss cobb, welcome. i'd like you to be our first witness and would you please begin -- and before you start, just pull that microphone a little bit closer because we want to make sure we hear everything that you say. thank you. >> in may, 2008, i was a stay-at-home mom to my two children liberty who was 3 and another who was 1 at the time. we were visiting a family from -- >> i'm going to interrupt you and ask staff to take the responsibility of making sure that the microphone is closer enough so that the witnesses can be heard. and, frankly, i don't have to bring that up in a hearing again.

>> do you want me to start over? >> just please speak -- you have a very soft voice but it's really important that we need to hear what you're saying so why don't you begin at the top. >> okay. in may, 2008, i was busy stay stay-at-home mom who was racing my two children. we were visiting family in washington from california. we were there without my husband because he was serving as a marine in iraq for the second time. on may 10th, my mom invited me to go to a banquet dinner. little did i know by accepting her invitation i would be changing my life forever. that night i ate a salad that was contaminated that was e. coli, my mom and my children and her friends who were there with us happened to sit at the same table. i just happened to pick the seat that was contaminated. my children were there with us. my son was on my lap but luckily he didn't eat greens at the

time. on may 10th i was getting ready for a drive back to california. i went to bed that night with a stomachache and woke up on may 16th with diarrhea and the most painful stomach cramps that occurred every 10 minutes until my stool turned to blood at about 5:00. i then proceeded to go to the e.r. where they just said that i had a bacterial infection. i went home and was unable to hold down water, the medicine that they gave me, and i returned to the hospital. two days later i was told i had the e. coli and that was the -- that was the cause of the illness. it wasn't the bacterial -- well, it was bacteria but not what they thought. i was discharged from the hospital only to return a couple days later because i developed a condition of h.u.s. and was told at that time that my kidneys were only functioning at only 50%. i was then started on plasma

where they cycled out my blood and they put in the new stuff. over the time that i was in the hospital, i had over 50 blood draws, two ultrasounds, a cat scan, a colon scopy, several ivs a central line in my neck and 80 units of plasma. both my husband and my father were in iraq at the time. i had to send a red cross to my husband to let him know what was going on. he was unable to come home. i had the kids. i was the only care-taker with him being gone. so my mom took over that responsibility and set up child care for them while she was at work. they came to see me at the hospital every day and they didn't understand why i wasn't able to go home with them. why they couldn't stay with me. they were so young that they don't -- they didn't understand what was going on.

there were several times that i didn't think i was going to make it because how sick i was. i remember on one day -- i think it was the 28th, i had an allergic reaction to some pain medication that i was given and i got intense chest pain, and i remember blacking out and not knowing what was going on and i honestly thought i was going to die right there at the hospital bed. my husband was in iraq. my father was in iraq. the kids weren't home and i wouldn't be there with them anymore. and with that i was able to really focus on what the nurses were telling me. they gave me another medication to help with the reaction. from that incident -- from the e. coli i no longer eat any produce that i can't see being washed myself. i have gone to restaurants and asked them how they prepare their salads.

i cut everything -- or i clean everything from a bag of lettuce to a watermelon 'cause when you cut through it it's going to hit your fruit. the time i had with my family means so much more to me now because i know that any time it can be taken away from you. i'm honestly surprised with how sick that i got that i'm here today. if anything, i would want the parties that at fault in my particular case to know that, you know, they took me away from my kids for two weeks and that's a time that they'll never get back. my son was 1. you know, he developed every day that i was gone. he came to the hospital saying new words every day, doing new things. i felt the pain -- i can't describe to you the pain that i was in because i don't have a comparison that i could give to you. i would rather -- i said i would rather break bones than to go

through that. i would rather have a broken arm than the pain that i had with e. coli because i don't have a comparison to actually give to you on what i felt. and, you know, it could be their family. it could have just as easily been one of my kids and it had been, it would have been devastating to them what i went through. >> thank you very much for coming here to testify. we're certainly going to be having some questions of you when we go to that phase of this hearing. at this point i would like mr. horsfall to proceed for five minutes. thank you very much. before you proceed, i want to welcome some of our visitors here from china and macau. thank you for being here. so please proceed. >> thank you. and good afternoon, chairman kucinich and ranking member jordan. i'm happy to be here.

i am always happy to talk about our program. i'll get to my statement. i would express to ms. cobb that what she went through does not fall on deaf ears in our industry. shortly after i started this job, the "usa today" ran a recap, it was a year after the original outbreak. and they presented the stories of the four or five people who had died because they ate spinach. and, you know, i know because i work with this industry that they -- that they take that to heart. they are trying to do everything they can do so that there aren't more victims so that we can reduce that risk as much as possible. i've used part of my time. the leafy greens marketing agreement was established in 2007. it is a mechanism quite simply for verifying mandatory

governments that a program of leafy greens followed a rigorous set of food standards. we are a instrumentality of the state of california and we operate from the oversight from the california and the department of agriculture. although the leafy greens industry had always prioritized food safety in the aftermath of that outbreak in 2006, farmers and shippers and processors recognized more effort was needed to protect public health. the question is how to do it and a lot of different approaches were looked at including regulation at both the state and national level, marketing orders and marketing agreement and the decision was ultimately made to go with the tool that was most readily available which was a marketing agreement. it is a voluntary organization but it does have the force of government behind it. our members, they do join, it is mandatory that they follow the rules of the program. and the idea was to use this

marketing agreement also as a flexibility to change and amend the program as we get new research. as you talked a lot of research early this morning we're keenly aware of research so we can make the program better. it's one of the key benefits of the structure. our program is focused on prevention, on preventing the introduction of pathogens. we applaud the obama administration and the president's food safety working fwrup for their focus on prevention and their approach to improving food safety. on july 7th in their press conference we're happy to hear vice president biden and health and human services secretary sebelius talk about prevention as job number one. i was asked to talk about where our metrics came from, there was a parallel effort to create a set of food safety practices and standards. sometimes referred to as good ag practices or metrics. they were developed by university industry scientists as well as other food safety

experts, farmers and shippers. those standards were reviewed by fda and the usda and other state and federal health agencies. they cover the major risk areas that have been identified by fda and other food safety experts. practices include careful attention to sight selection for growing fields based on farm history and proximity to annual operations, appropriate standards for irrigation, water and other sources of water. prohibition of raw manure and the use of only certified safe fertilizers and, of course, good employee hygiene in fields and harvesting. our members are subject to mandatory audits by the california department of food and agcultures. they are usda trained and the process we use is a usda-audit process. our members face penalties if they are not in compliance up to and including decertification

from the program, which can lead to serious significant economic repercussions for the company. from july 23rd of 2007 we've done several audits of our members and those continue today even as we speak. we all know that maintaining food safety vigilance is crucial to the future of the produce industry and while there is still very much to do and we're not done, i believe that the leafy greens industry is doing a safe, wholesome product than they've ever had before. thank you very much. >> mr. koch, you may proceed for five minutes. thank you. >> good afternoon, chairman kucinich and ranking member jordan. thank you for inviting me here today. i've been asked to address the

metrics on leafy greens products. it's estimated that the economic impacts are on the order of about $18,000 per year on average per farm. it would be higher for larger farms and possibly less for smaller farms. growers have to, of course, do testing of water and fertilizer, soil amendments and anything else that goes on to the crop. they have to document all of this. they have to be aware of animal incursions, pay attention to vegetation. and also provide some kind of traceability. traceability is not such an issue for a grower like ourselves. organic growers have to be able to trace product for years. there's also been prohibitions against manure use for organic

production. for years in composts there's no sewage sludge or other kinds of toxic chemicals to use but ornic growers are facing significant issues with the push for the regulators to have -- to ban, you know, wildlife and noncrop vegetation, things like wind-breaks and habitat, which are things that are supposed to be encouraged by organic laws that pertain to maintaining your certification. environmental impacts often vary depending on the inspector and his interpretation of the metrics. there are certain companies that use their own metrics, which are called super-metrics in the industry, wildlife, noncrop vegetation and water bodies are known as food safety risks.

a lot of environmentally positive projects have been abandoned by growers who have been threatened with the loss of the ability to sell their crops. wind-breaks water strips, grass roadways, vejtated ditches have been removed to comply with, you know, the inspectors that come out to check on the crop. many fields have deer and pig fencing. some also have frog and rodent fencing even though those haven't been found to be a source of pathogens. some use poison traps for rodent, secondary poisoning of raptors and owls can occur with this. and a lot of these practices are

more based on the processors having problems pulling them out of the harvested crop because of the nature of the harvest of the crop than it is -- it has to do with it being a food safety issue. practically, this has been a big step backwards from environmental protection. it was just starting to move forward on farms. there's a lot more money on farms trying to comply with these metrics and document this. the majority of the disease-related outbreaks, that are associated with leafy greens come from precut, processed products. there's some kind of failure during that process to make it ready to eat or to make it clean enough that you don't have the pathogens. salad processors tend to point to the fields as being an issue. it's very difficult for farmers

to grow a sterile crop in an open field. you do have -- you know, we have always had employee hygiene, we're concerned about our compost and we don't use manure. we test our water and our fertilizer as many farmers do just to make sure that you're not part of the problem. leafy green farmers are now in the position of having to pay for and comply with a roster of unproven safety metrics in an attempt -- in attempting to grow pathogen-free crops, and being held potentially liable for them. the california leafy green marketing agreement is made steps in the right direction, i think, for the processed product it should be representing. i don't know that marketing agreements are an appropriate way to provide food safety or whether they be a state or

national, they are in my mind they are something that focuses on a marketing product than on actual conditions of growing product. this being said, if this were to be moved in that direction, if the focus was just on processed food, you would reduce a lot of impact on -- there are a lot of farmers that don't grow leafy greens that go into bags. and they would be -- you know, if the focus was just on the process arena, you could exempt them. right now -- and i was there when they started having the meetings to decide about leafy greens in california, they included specific vegetables. and i asked why those -- why they were just including a few vegetables, there was no answer because they didn't differentiate whether it was a

whole head or a bunch product. it was just we're going to include these vegetables and the only reason i can come up with it's something to enhance their competitive edge because it gives them a marketing advantage if you need to adhere to these metrics and you kind of raise the bar and a lot of farmers might not be able to make that. >> i want to thank the gentleman for his testimony. your entire statement will be included in the record. >> okay. >> as someone who has been so involved in the development of this industry, we appreciate your presence here. >> thank you. >> the chair recognizes miss smith-dewall for five minutes and after your testimony, we're going to go to a round of questions of the panel. you may proceed. >> thank you very much, chairman kucinich. and also representative jordan. my name is caroline smith-de-waal i have the food safety product for the center of

science and the public interest. cspi has concerns about the increasing use of marketing orders as a vehicle for regulating safety. 15 different agencies administer 30 different walls that regulate food safety in the u.s. today and marketing orders really represent a further fractioning of this already widely fractured system. food-borne illness outbreaks linked to fresh produce are among the major public health problems when it comes to food safety and leafy greens and salads are among the top food categories along with beef, poultry and seafood that cause both outbreaks and illnesses. in addition, the average size of outbreaks linked to produce tends to be larger so they tend to affect more people. the importance of robust and reliable food safety practices

on the farm cannot be understated. leafy greens, once contaminated, can support, grow, and spread pathogens until they're consumed. and there are controls that can help prevent cross-contamination between different lots of salads but they don't make contaminated products truly safe to eat. in fact, scientists have shown how bacteria can be in the washing habits. from a contaminated lot really until a full day's production of leafy greens of salads. while fda has jurisdiction over on farm-food safety it has really not acted as an effective regulator. and they've been using for at least the past 10 to 15 years the concept of guidance,

unenforceable guidance to the industry instead of regulations. but the absence of enforceable rules leaves a significant hole in the fabric of food safety allowing and even encouraging the industry to weave standards of its own design. the agricultural marketing service has served as a friendly regulator of choice when food safety problems arise. at ams, the food industry can draft their own rules called marketing orders or agreements to best suit their needs. but ams is not equipped to monitor the safety of food. the primary focus with ams with with the promotion of food products. and the mechanisms that it uses are limited in terms of their geographic scope and often their completely voluntary -- these are voluntary systems. and farmers have to agree and the handlers have to agree to

comply. so they're limited to u.s. companies. sometimes they're limited to companies just in the state of california. and this is particularly troubling when you consider that consumers -- 13% of our diet is from imported produce. so a huge amount of produce is never going to be subject to these marketing orders. ams oversees marketing orders for 22 different commodities including things like almonds and shell eggs. and these programs can really instill a false sense of security, both for the industries involved and for consumers. because they really are quality programs. they're not based on safety. but given the absence of rule-making at fda, it's not really surprising that in the aftermath of the 2006 spinach outbreak, the leafy green industry turned to ams to create

these stronger rules. i just want to note that these standards really do create uncertainty. and they give rise to the private standards which are actually the complaint of many of the growers today. they are saying these standards are too burdensome. these aren't mandatory standards. they're not fda standards. they don't apply to imports so it's critically important that we actually get a system in place that will protect the public. the food safety enhancement act, which is before the house of representatives addresses this issue head on. it requires fda to consider both the food safety and the environmental impacts when promulgating regulations for food production. it requires the standards to take into account small scale and diversified farming,

wildlife habitat, conservation practices, watershed protection and organic production methods. this is all in the legislation that's before the house. this provides an appropriate focus on public safety, it gives the farmers and consumers both an opportunity to weigh in these -- on these standards which we don't have today with the ams standards. and it would protect the sustainable and organic farming communities that we all value. these are the type of standards that consumers cannot live without. thank you. thank you. .. it will go back for work and some of the concerns that were expressed by members that voted against it is that they were concerned about the effect of

the bill on small farmers and organic farmers. so i think the center which endorsed the bill, needs to take we can see it passed. thank you. that means we will have five minutes, each of us, for questions. hold on a minute. >> 4:24 p.m. advise members they have 15 minutes to record their votes, suspending the role of passing age are 3457 on the highway trust fund, this is a fifteen million quarter problem followed by -- >> that really does mean we should move this along. i just want to thank miss cobb. how are you feeling?

>> i am fine. it was may of 2008. >> have you found any aftereffects other than the fact that you are never keen on eating? >> i am at a higher risk of cardiovascular disease later in life and urinal type issues, but as of right now i have had none of that since that same summer. >> we are glad you are -- there needs to be a public face of somebody who has dealt with this, you have dealt with it. you had the courage to come before a congressional committee, we appreciate that you are a year. the other thing i want to know is, when mr. hortwell began his

testimony you said it does not fall on deaf years. what i saw today, the unrehearsed response, i appreciate that because sometimes people come in with a story that can be very difficult and the individuals who may have some responsibility in that area generally seem to be in passive about it, you showed some concern, and i think that speaks well. i would like you to address the concern about the metrics, the arbitrariness of them. the adjacent land of a field of green must be free of compost operations within 450 feet. and domestic animals, 30 feet of the crop edge, what is the justification for allowing domestic animals, the animal

waste products of which are a component of compost, up because of compost operation? >> the metrics are based on risk assessments. that is in keeping with fda guidance. the compost operations are considered to be a very high risk situation in terms of pathogens. we also have significant buffers zones. there is a confined animal feeding operation, a large number of animals at risk in a field. >> you have the best animals closer to the operation. >> the risk assessment tells us that there is a lower risk involved if you have animals on a farm. >> isn't it true that the field

identified as the source of contaminated spinach was less than a couple feet from where domestic animals graze? >> i don't know that for sure. >> let's check it out and look at that, come to some kind of conclusion. isn't it true how auditors would not find any problem growing spinach intended for the ready-to-eat market a couple hundred feet from the land where cattle graze? exactly the conditions present in a 2006 incident? >> it would depend on the number of cattle that were there. i don't have those numbers in front of me. in that particular case, the final report, as i recall, the feces was a mile away. >> can't we be tougher on the process? >> processors, if i could address that, processors are

under the jurisdiction of fda. >> we're looking at nationalization of this. should we be tougher on these processes? what do you think? >> that cattle -- >> should how deng be tougher on the process? >> i am not used to that. >> i think it should be a to the fda. >> you are the father of spring mix. you are a critic of the ready-to-eat leafy green industry. in your opinion is their way put the american public to get the

convenience and health benefits of pre cut package vegetables without the harm to farmers you mention in your testimony? >> as a point of clarification, the concept of spring mix, never put it in bags, never ready to eat, it was a field run product, watch, cool, dry, and packed into three pound boxes, always had serious reservations about how that product was displayed. ed for when the going to -- >> what would be the long-term results, in your opinion, on the environment if cow dung is nationalized in its current form? >> it will affect too many growers, lettuce and cabbage, things that are traditionally harvested for bunched items because they don't make a

differentiation, those things haven't had offerings associated with them. they often have other things associated because people come up before they eat, steam them and boil them. >> some follow-up questions, we are going to put them in writing, and mr. jordan. >> i will be brief as well. two things about being here. are the little ones doing fine? >> oh, yes. mathew doesn't remember, he was too young. liberty still remembers and will talk about when i got sick. she would tell people to be afraid of blood machines, having a transfusion dung, but overall they are doing well. >> that will be awesome. thank your family for their service to our country, thank you or being with us. what is your home state? >> my home state is washington.

>> the program is completely voluntary, is that right? 140 people represent 90% of the volume? that came off of the web site, 120 handlers, they are all voluntary. and what is the assessment? how is that determined? >> we assess our members based on the volume they ship, and -- >> are big producers part of it? these are the people -- are farmers part of the organization or just folks who take the farm products and take it? >> our members are handlers, they put the product into commerce -- [talking over each other] >> they are growers as well. >> some of them produced product? >> absolutely. >> from the field to the operation? >> they sell to each other.

and they sell to we tether as well. >> since you have come into existence -- >> 2007. >> have there been any outbreaks? >> there have been outbreaks that have been reported. i don't believe the health authorities have conclusively finished their investigations yet to say where product got contaminated. there is a small outbreak in washington state that this cobblers affected by. there was an outbreak in michigan. >> have we seen an improvement in that there have been less problems since the organization was formed? >> your people have gone sick than in the years before that,

but i don't take that as a metric. if anybody is getting sick, we have to make the program better. that is where the research comes in. >> are you part of this operation? >> i am not. we have a sales, shipping, cooling company and a farming co. the farming co. contracts with a handler that is signatory to that and we grow some crops. for inclusion in salad, that they want to be grown under those metrics. we do that part. otherwise we have a diverse crowd makes. there are only a few things that would be considered leafy greens and i have resisted because i

think it is -- the principle is wrong. it has cost me the ability to sell into canada because they won't accept product, we are organic and we test soil and water, they won't accept product that is not signatory to the leafy green market. i prefer not to go there. i was hoping somebody would be more logical to focus on that. >> a country boy from western ohio, didn't grow up on a farm, we live on my wife's family's farm. it seemed to me, think about where the product is grown, close to composts, i remember spreading manure on the field, seems to be the problem has to be after the product is taken out of the field.

>> the product has got issues that you showed. it is a great concept to give people something ready-to-eat, it is the perfect incubator. if you can't sterilize it, if you have a pathogen, a customer taking it to the car or driving at home, potentially it is a difficult issue to get to market. >> thank you for coming. >> i want to thank mr. jordan and the witnesses for being here. i'm the chairman of the domestic policy subcommittee. mr. jordan is the ranking member. hour hearing today has been ready to meet or not, examining the impact of the greens marketing agreements. we have had two panels, the testimony has been important, we appreciate your participation. this committee stands adjourned, thank you.

[inaudible conversations] [inaudible conversations] >> in a few moments an oversight hearing looking at the small business administration, and the senate is back in session at 9:30 eastern to continue the agriculture spending bill.

>> more coverage this morning of the continuing health care debate in congress as the house energy and commerce committee worked on its version of health-care legislation. live on c-span3 at 10:00 a.m. eastern. >> join the conversation on civil-rights and race relations with m p r and fox news analyst juan williams sunday at noon eastern on book tv ads in depth on c-span2. >> how is c-span funded? >> publicly funded. >> donations? have no idea. >> government? >> it gets funded for taxes. >> federal funding. >> public funding. >> i don't know. >> how is c-span funded? america's cable companies created c-span as a public service, private business initiative, no government mandate, no government money. >> an oversight hearing on the small business administration including the agency's use of

funds from a $787 billion economic stimulus package. this is a little more than an hour. >> this hearing is called to order. house adopted rule 11 which requires quarterly hearings on waste, fraud, abuse on mismanagement, programs under the community's jurisdiction. in the last six months we have held 13 oversight hearings on a broad range of issues. to day we will continue that track record of up holding transparency. our discussion will include an examination of programs and an evaluation of steps the agency has taken so far. in recent months americans have been reminded of the important role in our economy. the recovery act alone contains several provisions designed to help small businesses and the

majority of those fall under the sba umbrella. that is why it is important to assess the agency's progress. even as our economy starts to rebound small firms are facing excess capital. the recovery act fails to address those obstacles, it increases loan guarantees given by greater incentive to lend. any policy that puts it back in the hands -- is critical. fda has not implemented this provision as quickly as we would have hoped. when the measures are vital, we need to be sure fda has the direction to put them in place. those that have been undercommitted for some time, fda has history of struggles with lending. the most salient example will be the disaster program. which face significant

challenges following hurricane katrina. we asked fda to take a look at initiative and fda's response to the hurricane. the resulting report led to the passage of the disaster response and learning improvement act, leader in this hearing, we are going to hear from g a 0 about what the fda has accomplished since the act was passed. we will discuss areas in which work is yet to be done. that way we can be sure the agency is full be prime, fully prepared the next time around. in addition to that, fda has grappled with contracting issues, most notably embattled programs, it is important we have an idea where the initiative stands. the primary focus of our oversight hearing in may, it is this committee's hope that the abuse has been stemmed and rooted out.

oversight is a critical part of the legislative process. for federal agencies it provides honest analysis of care and programs and an opportunity to change direction. that is the primary purpose of gao, the investigative arm of the united states congress. it does not back out wrongs. the ultimate goal is to provide objective recommendations for efficiency and improvement. in examining the current state of the fda, it is clear that there is significant work to be done. the stakes could not be higher. our economy, while recovering, as a way to go. more than ever, we are counting on experience to drive rolls and create jobs. making sure they are able to do that, we need an fda that can step up to the plate and fulfil its role as a champion of small business. we have renewed focus and a fresh direction.

i feel confident that the fda can play that role. i look forward to seeing progress in the months ahead. i would like to thank both administrator mills, congratulations on your appointment, welcome to this committee, this is your first appearance, and mr. shearer for being here for the discussion. we look forward to hearing what they have to say. with that, i yield to the ranking member for his opening remarks. >> i also want to thank administrator mills for being here, we appreciate you coming in, we look forward to hearing what you have to say about the many different programs. small business administration is tasked with a great responsibility, providing all the necessary tools for on to the doors to start and gross small-businesses. the fda employs a number of programs including the zone

program, disaster loan program, seven they program, to name a few. the responsibility of the committee on small business is to ensure it operates effectively. when it is apparent that is not serving its purpose is the duty of this committee to evaluate the program and get back on track to continue to serve america's entrepreneurs. in the wakes of hurricanes katrina and rita it was apparent that the small business administration was not equipped to carry out the responsibilities of the disaster loan program. as a result, requirements for putting place to strengthen the program and make sure it was as efficient and helpful to victims as possible in the event of an emergency. similarly, the other program was designed to bring businesses to areas that have been traditionally underserved and correctly identify and enforce those eligible to participate in the program. and recommendations were made to remedy the problem.

this provides an opportunity to examine these programs. small-business of america played a crucial role in maintaining a healthy economy. consequently the manner in which the small business administration has a direct result on health of the american economy. this is an important hearing taking place. we will have a direct impact on the -- i want to thank you for being here. >> thank you, mr. graves. with a to welcome the hon. karen mills, miss mills was sworn in on april 6, 2009, the twenty-third administrator of the united states small business administration. prior to being confirmed as fda administrator, most recently ms. mills served in a group in brunswick, maine.

the fda helps small business owners and entrepreneurs that you are financing technical assistance training. welcome. >> thank you very much. chairwoman velazquez, ranking member graves, members of the committee, it is a great honor to testify before you as my first time as fda administrator. given the obama administration's mandate to us to eliminate and prevent waste, fraud and abuse in government programs i am pleased to testify this is my first of these regularly scheduled hearings on this topic. i consider is this to be one of my most important responsibilities. some of you know, as you mentioned, small businesses account for 60% to 80% of the new jobs that are created. over half of americans who work

alone or work for small business. small-businesses are going to continue to be the foundation of innovation and competitiveness and the creation of our 20 first century jobs. but we know that these are difficult times for small businesses, making the fda's mission more important than ever. we maintain a lending portfolio at the fda that supports nearly ninety billion, mostly in loan guarantees. we are charged with making sure that 23% of federal government contracts are given to small businesses. we have a strong network of over 14,000 affiliated counselors that help small business owners grow their businesses and we currently have on call more than 2,000 employees who stand ready to help in cases of a disaster. we are committed to integrity, accountability and effectiveness in all of these programs.

these principles are at the core of what we do as an agency and at the core of who we are. the recovery act, which was passed with all of your help in creation, is a great example of this commitment. since the act passed, the fda has supported nearly seven billion in lending approvals to small business, weekly volumes are up 45% in the weeks before the recovery act, and most importantly, more than 750 lenders who had not made a loan since october when the lending markets rose, are back in the program, making loans, some of them had not made a loan since 2007. we have a chart here in the green of where we are in the recovery act program. the light green is when it was in the planning phase and in the dark green is in the market. i will be happy to take questions on that as well.

one of the first actions i took on becoming administrator was implementing these recovery act programs to make sure there was a senior level risk-management team in place to oversee the rollout. we work closely with the inspector general in terms of risk mitigation and small teams in each individual program to build them. i want to mention the mark loan program, america's recovery act, how this risk-management worked. this is a new program for a specific purpose at a unique time. it is a bridge over troubled water for viable but struggling small businesses. this is not in our traditional risk profile. we are charged with creating a program that was 100% guaranteed by the fda, 0 interest costs for the bar hours. we knew we would have a considerably higher default rate. we also knew we would have to do

extensive lender education and i am happy to say we trained 1300 institutions in the weeks following the rollout. as a result, we have 47 states where the loans have been made, and twenty-six million in the hands of small business owners. the level of discipline that we are putting forth in the recovery act, it is modeled that we are transferring to the core programs at the fda. we are optimizing operations in areas such as disaster assistance where we have added to the on call employees, we have added search space in case of a catastrophic disaster, and we are doing marketing and out reach in order to prepare areas to know what it is they need to do in a disaster and we have instituted a electronic loan processing which now accounts for 1 third of the applications we received.

but overall there are a number of issues that need to be addressed. many of these problems have built over a number of years, they will not be solved in days or weeks, but they will indeed be solved. i look forward to working with distinguished members of the committee to make that happen and i look forward to your questions. thank you. >> thank you, miss mills. our next witness is mr. bill shearer, of the accountability office of financial markets of community investment. the financial markets being worked to improve effectiveness of regulatory oversight. it also oversees the management of community development programs. mr. shearer? >> thank you. madam chair, representative gray and members of the committee, it

is a pleasure to be here today to discuss our work at the small business administration. my statement is based on our report, small-business administration, additional steps should be taken to address reform in the disaster loan program to improve the application process for future disasters. this report is being released at today's hearing. this is a general oversight hearing, i also look forward to contributing to the discussion at the hearing on other programs. after the 2005 gulf coast hurricanes, many deficiencies were exposed in the agency's, and demonstrated reform. for example cobb as we stated in february 2007, the fda did not engage in complete comprehensive disaster plans before the gulf coast hurricanes. since then, the fda has taken steps to reform its disaster loan program which includes creating an on-line at loan

application and increasing capacity of its disaster credit management system. in june of 2008, congress enacted the small business disaster improvement act to expand steps taken by fda and require new measures to insure the fda is prepared for future catastrophic disasters. in my statement today i will summarize the extent to which the fda addressed requirements of the act and how the response following major disasters of 2008 allied with key components of its june 2007 disaster recovery plan. first with respect to addressing the requirements of the act, as of june 2009, sp a net 26 requirements of the act, partially addressed, and did not address those that were not applicable at this time.

officials say they have not that the regulations because it would require extensive changes to certain programs or implement the programs. for two requirements that will involve private lenders, spa plans to implement high as before summarizing regulations. it has not addressed specific outreach, nor has it ensure disaster loan program information is readily available to regional entities. such small-business development centers. by doing so, spa could leverage the efforts and capacity of local resources and the emergency management group's and it could better ensure that it and they will be that it prepared for future disasters. as of june 2009, spa has not met deadlines to issue an annual report to congress by of dating disaster response plans.

failure to do so can wait for lack of transparency on an agency's progress and reforming the program and limit its ability to adequately prepare for and respond to disasters. furthermore, spa did not have an implementation plan for addressing the remaining requirements. with respect to spa's response to major disasters in 2008, spa's initial response after the 2008 midwest floods and hurricane ike, lined with 7 components of initial disaster recovery plans, technology and outreach to ensure timely assistance, the individuals interviewed and results from spa's 2008 disaster loan program customer satisfaction survey, provided positive feedback about deployments following these recent disasters. but interviewees and survey results indicated areas for improvement, in particular, both

indicated application paperwork was burdensome and the application process needed improvement. spa officials said they had been taking steps to improve the application process but did not provide documentation. as a result, it did not appear to have that spa has formal process for identifying problems in the application process and making needed improvements. in our report we make five recommendations we think will facilitate spa's progress in meeting the requirements to improve the disaster loan program. madame chairwoman, it is a privilege to testify before this committee. i would be pleased to answer any questions on this work and other recent work we have conducted in spa. >> thank you, mr. shear.

gao has recommended the fda announced side visits on insurance. as you are aware, gao conducted an investigation. a great message from the government to taxpayers, agencies regarding the responsibility of making sure taxpayers safeguards are in place to make sure people are playing by the rules. how many has your agency conducted since gao made this recommendation in march? >> yes, we are making announcements, in this time until the last hearing in march when the report was released, there had been only seven visits

in six months. since that time, we have done over 600 in the last week for months. we are building data from that message to build risk-based mechanism -- we will continue to work on this mechanism. i believe you are referring to the march 2009 gao report which was very helpful. i wanted to report back on what has been done. there were 19 firms cited. two had already been certified when we got the report, one actually was okay. of the remaining 16 -- >> i want to deal with that specific issue later. allow me to follow my train of thought here. mr. shear, in your report you

said fda failed to meet certain deadlines. what were spa's explanation for meeting deadlines and how has this affected the agency's preparedness to large-scale disasters? >> the reason for not meeting deadlines fall into a few different categories. the first that i will mention is coordination with fema. we have regulations to be coordinated between the agencies and we were told that that was a fairly extensive, cumbersome process. that was the reason for that. another one, another category, this is a place, one area where we disagree with spa, we think that the act is clear in calling for regional marketing plans, to have plans that are specific to the types of disasters that can

occur in specific parts of the country. that is where it seems like there is some disagreement over whether what is already there at the national level meet the requirements of at act. that is one where we have a fundamental disagreement. some of the others, such as having programs that involve traffic lenders, those -- those programs, spa wants to conduct pilots before firming on an actual program to get the experience of the program. that is one where even though spa has not met the requirements in terms of deadlines, we are fairly sympathetic to because the general work dealing with insurance and guarantee programs, sometimes will be going to a new type of venture. pilots could be very effective.

those are the examples as far as why there have been delays. one of the reasons we may recommendation that spa should come up with time frames for the implementation of completing the requirements of the act is we think that will help facilitate a certain discipline in terms of getting to where it should be. >> miss mills, one of the most surprising findings of the report is the fact that nearly four years since hurricane katrina, the agency is still struggling to develop a disaster response plan. as we enter the peak of hurricane season next month, will be spa continue to rely on a disaster plan that is over two years old and contains absolute

information? >> i presume that you are talking about our annual disaster plan. we submit monthly plans to congress and assessments of where we are, but we will complete this annual plan, we agree that it is dramatically important and overdue and we will complete it. >> do you have a timeline? my next question is will that disaster plan, comprehensive plan, will have the components to by the law? >> many of these components are in place and i think we need to get you the plan. >> when do you think it will be effective? i mentioned hurricanes season -- >> i will get back to you with an exact date. we promise that we will look to do it as soon as possible because i want to say we want to thank mr. shear because these have been very helpful templates

for us to go through and execute these things so we are poised to bring you this report. >> you understand the urgency of having this plan in place before the hurricane season is over us? >> yes, we do. we have the capacity in place. it is a matter of the report which we will get to you. >> this committee has asked on a number of occasions if you have the resources and control necessary to prevent contract and fraud. in the past, the agency have said that they have the resources necessary to prevent fraud in the program, only to have the gao to find otherwise. let me ask you today, do you have sufficient resources and internal controls to prevent

fraud in the program? >> thank you, madam chair. the program is for small businesses, not for big businesses masquerading as small businesses. this has been a concern about this program. we have done a number of things to begin to make sure that we eliminate fraud and abuse and address the issues that have been raised. the first is that we have a strong up front certification program and a formal certification done in two geographic areas specializing in this, philadelphia and san francisco. in addition, we have done some things since our last visit to you to specifically invest in this activity. the first is leveraging technology. we have added to our business development management information system in order to

be able to better track these companies through their nine year cycle. we are mandated to invest in business development. >> excuse me, since we have -- a lot of other questions. i want to make sure, our committee, that you understand you have the resources and controls in place, necessary to prevent fraud in the program. >> we are making investments now in those things. we have put in the 2010 budget summit this and resources that would be very helpful, we are working on a package of regulatory changes that will soon be brought before you. >> the same with the service disabled by the program? >> the service disabled veteran program is extremely important.

that is slightly different because we need to work in conjunction with the veterans administration. we have a very important report coming from the gao to help us work with them. i have a meeting with the veterans administration to work on the issue of their data base which is the database that is the governing database on who is a service disabled veteran. that is critical for this program to only be able to deliver to certain disabled veterans. >> mr. shear, given everything you have reviewed in putting together this report, are you comfortable that the fda is prepared to meet the challenges of another major disaster on the scale of hurricane katrina? >> i wish i could give another answer but the answer, do i and do we feel comfortable about the question you posed, the answer

is no. these are some of the reasons -- and there are certain parts of the requirement that haven't been matched. among them, let me go back to the disaster recovery plan from 2007. at the time it was provided to us, the administrator proposed a conceptual approach, and part of the planning, and our recommendations to the administrator, and also in the act itself, strategic planning should be a living documents. for example, there have been disaster simulation that have occurred, yet we don't know, the best thing to simulate disasters

the size of katrina -- >> that was under the previous administration. >> yes. but now -- yes, from the previous administrator, thank you. in terms of the disaster simulations, we know the disaster simulations, the agency used in 2008, they are catastrophic disasters, but what we don't know and what this committee does not know, what were the result of those simulations? in terms of the capacity of the agency to deal with a disaster the size of another hurricane katrina, lessons have been learned from those simulations. in the absence of some evidence that the agency is in a position of responding even on a simulation type basis, causes us to answer -- that answer, that

question in the way we do. >> ms. mills, i hope you understand that we are here fulfilling our role and our duty of overseeing, making sure things that are in place are in place. hurricane katrina was a disaster of major proportions where people lost their lives, lost their businesses. four years later after that, we need to hear that the gao feels that you have something in place where we can feel comfortable. >> thank you, madam chair. i am very much listening to this issue that you raised about the plan. i would like to mention that we have tactically added, before hurricane katrina, we had 880 trained staff. we now have 2,400 staff and

reservists and our reservists are ready to go across the country anyplace that there is a disaster. we also used to have 366 workstations, and one of the things we took from this review that you did which was very helpful, we now have 2,100, from 366 to 2,000 one hundred workstations in our disaster areas of fort worth and sacramento. we upgraded our management information systems so that we could do 12,000 concurrent users. in terms of fixed infrastructure, trained people, we are very different. we also reengineered our loan processing system. in the middle of katrina it took 85 days to process the loan. we now in any disaster due 14

days for holmes, 18 days for business, and we are piloting some additional programs. >> do you have any comments? >> we acknowledge in our report that a lot of progress has been made. the types of problems in this program, many of them have been addressed including the expansion in d.c. greater availability of reserves and the types of things the administrator is talking about. will acknowledge these improvements and the program has improved. the response to the 2008 disasters which were much smaller than any thing on this scale, katrina, where at least somewhat positive. we are pointing out, do we feel comfortable yet? there are no other pieces that are related to other provisions

in the act, in particular the lessons learned from having gone through simulations and other types of exercises that we think are very important to demonstrate the type of preparedness we are looking for. >> thank you. mr. graves? >> madam chair, mr. mills, the office of chief counsel for advocacy is recovered by statute to monitor agency compliance for the regulatory flexibility act. given the amount of increase legislation that may come from health care reform and a reduction in greenhouse gases, the responsibility is going to get even greater. my question is, do you expect, is the council going to monitor agency compliance with the regulatory flexibility act to the same extent it did under president clinton administration and president bush's administration? >> absolutely yes. this issue of excess regulation,

cutting costs to small business, is a critical mandate not only for the office of advocacy of but for all of sba including the omnibus profits. this is one of the number-1 concern for small business. it will be a priority. >> mr. shear rom, other federal agencies and -- adopt gao recommendations to the other agencies, you have to deal with? >> that is a difficult question. i'm trying to come up with a tactical answer. over the years it has been an agency that has been relatively slow to implement recommendations. i think that the recommendations in the disaster loan program from our work back

then, there is a way to go. but i felt expanding the disaster credit management system and those recommendations, that was a priority and i think those were implemented over the course of a number of years. there are still remaining recommendations cobb and many that seemed to, what i will call linger for longer periods of time. >> we are going to have to change that and get into a the top end of the performance -- of rego to create a culture where there's real responsiveness on these reports, we find them very

helpful. they are a strong road map and we know we can approve these on an ongoing basis. so we went to be able to change that answers. >> miss clark? >> thank you, madam chair and ranking member graves, thanks to you, administrator mills and shear, for your testimony in. waste, fraud, mismanagement and abuse are reduce and ultimately eliminated, while this is being done, we want to be able to maximize on the effectiveness of sba's fantastic program which serves america's economic engine for small businesses. administrator mills, my first question is for you, i have long

been a supporter of the fda's efforts to create opportunities for women and minorities, i would like to focus on women and minority businesses and their ability to access credit. typically women and minority-owned businesses tend to employ a more diverse work force. this is especially an issue today in minority employment, that high level relative to the rest of the country. in this vein i would like to ensure that existing programs like the women's business centers and other technical assistance programs, have the capacity and capability to assist minority women owned businesses in identifying finance opportunities. i think is vital that they have the tools they need to serve this important segment of the business population. we must maximize the existing resources to ensure the wbc has worked a niece to enforce our

economic recovery. has there been progress in grant disbursement by wbc? will you commit to working with discover methods to increase access to credit for women and minority-owned small businesses right away? >> yes, i would be delighted to commit to you to do that. the sba has as part of its core mission, three to five times more likely than a conventional lender to lend to women and minority-owned businesses. this is what we do, the essence of what we do. i am pleased to report to you that in the recovery act funding, 20% of the loans have gone to minority-owned businesses, 19 to women owned businesses, we have over a hundred women owned business centers in our network, we currently have a new and very talented and energetic person who has conducted regional meetings and visited -- coming

back with a lot of ways to improve and help this important constituency and we are going to execute on that. i look forward to working with everyone. >> thank you. i want to draw your attention to the help zone program. we are well that encourages small businesses to locate in an and hire from the nation's communities given that the focus of this hearing is exploring ways to address the management, i would be remiss if i didn't ask about the progress in areas of certification of hub zone firms. in a hearing before this committee in march, gao testified the sba is so short in removing fraudulent companies from hubs own participation, this oversight resulted in a nut -- another $7.2 million in a contract being awarded to those same firms. i want to be sure there is no

place in this economic climate for a fraudulent firm to take opportunities that the long to more deserving entities. would you please comment on the progress in the oversight of hub so in the certification -- decertification process? this is a program and should not suffer due to the shortcomings such as the ones i have described. >> thank you, yes. we are, at this moment, have initiated a business process re-engineering. that is a fool, start to finiul re-engineering with an outside firm -- -- we have tended up, we are going to do a business process in the engineering of it. in addition, on the certification side, continued eligibility that i have responded to the chairwoman, that is where we did the extra 600 visits and we are conducting

the risk-based analysis to try to find out how to indicate where there are issues of fraud or mismanagement. we went after the 19 that were cited in the gao report. five voluntarily withdrew, number six, decertified, we are in the process of certification to -- one is actually a okay. >> thank you very much, madam chair. i yield back. >> senator buchanan. >> thank you, madam chair for this hearing and congratulations on your new opportunity for big jobs. i want to mention, small-businesses are getting literally kills. when i look at what we have done with t.a.r.p. this is not a republican/democrat thing, this

is the country, all the big banks, a ig, everybody got a lot of money. small-business was supposed to get something, it was supposed to be more credit available, there is no credit. i did a small -- a meeting with small-business, 30 businesses, some in southwest florida we had sba there, they did a good job answering questions. how many people can't get credit, have access to credit, don't work with banks, how many people change their credit, everyone in the room raised their hand? i have been in business 30 years, i have been on bank boards 20 years ago -- every region is different, there is no credit. they might say there is credit but the reality is, put up but $1 million cd, they will lend you $1 million. small businesses today, in florida, we have 137,000 small

businesses, they create 75% of the jobs. we talk a good game. the president is committed to small-business. i talked to him personally about that. we are not doing anything -- they have no money, they have access to no capital. i want to say that in general banks will tell you that they're all under pressure, they're all capital base themselves, they're trying to survive. small banks, little banks are not lending any money. what do you say to these small businesses in my community and communities across the country about credit? we are going to lose a third of them, a big number of them. >> well, congressman, i also have been traveling and hearing these issues and i know the chairwoman has mentioned to me as well some of these places she has gone. we are all hearing that small businesses are suffering and one of the things i have to thank you for is the recovery as an