because the ai virus the cause of the disease is highly contagious and will multiply to enormous concentrations in poultry and spread via the air and by off-farm movement of infected infected poultry, human carriers and contaminated farm equipment. all normal farm activities must cease immediately when ai strikes and the farm must be prepared to implement an emergency biosecurity plan. part of the emergency plan is that infected flocks must be depopulated, ideally within

farmers to respond to avian influenza on their facilities. biosecurity is a term that describes every day and emergency disease processes a farmer uses to prevent and control diseases. it is probably the single greatest weapon that we have against avian influenza. unfortunately, biosecurity is not consistently applied by all farmers and all poultry companies. we need to look at, as far as number two is concerned, a few aspects of our current emergency

response plan so we can respond more quickly, more rapidly to an incident. we can get into that a little bit later. number three, provide an insurance program for poultry farmers who contract with poultry companies to raise their flocks. dr. clifford mentioned indemocrat any fictionindem ni indemocrat fictions that have been paved. that's very important. they may or may not receive those indemnification. i think we should look into this seriously. vascy nation for controlling avian influenza in poultry requires very serious consideration.

i'm talking specifically not for humans for but for poultry. there are limitations to vaccines. vaccines have limit ef faficacy. we need more research on poultry vaccines vaccines but vakcy naigz sivaccination is a sliply slope and we need to determine whether or not we're going to go down this road. the affect on trade. fact these vaccines aren't particularly effective can push the virus and push it to further mutations. lastly, there's a growing body of evidence that terrestrial wild birds may be playing a role in the transmission of avian influenza. we've known for years are the main reservoirs are avian influenza resides on a long-term

basis. we heard earlier from dr. clifford, they are the primary source for introduction into the united states. we've known this for years. these ter restial birds, why this-r they important? they could be so-called bridge vectors, carrying viruses not only to poultry, many times you see finches and sparrows but also to humans. i would like to thank senator carper and johnson for their invitation to be here today and i want to thank senator bradley for reaching out to me about this opportunity. thank you. >> thank you professor geld. because senator carper i got one from wisconsin. it's unfortunate we have scott schneider here because you lost your flock. you're lug a lot of money in

this process. our next witness is mr. scott schneider, owner of nature link farms in jefferson county wisconsin. unfortunately, his 200,000 chicken farm was the first egg-laying operation to be hit by the 55n2 strain that ravaged other chicken farms across the midwest. president of wisconsin poultry and egg industry association. we're very glad you could come here and provide your testimony. >> chairman johnson, ranking member

rules and tried to eb sure pristine conditions for my employees and birds. i have done my part to keep the american egg industry competitive. as producers from around the world know all too well, hard work and strictly following regulations does not nothing to protect against ai. my flock of 200,000 egg-playing hens has been reduced to zero in the face of the ai outbreak. the middle and long-term prospects are challenges. although containment and biosecurity efforts have been admirable, survival of my family farm and the american egg industry at large depends upon meaningful protection against future outbreaks. ai will cost my farm a minimum of $500,000 in refuse news before this year is over. that's a sizeable blow for any operation but almost an unimaginable financial hit for a smaller producer such as myself.

my farm will be completely out of productions for four months. my current plans call for gradual repopulation over the four months to follow building my flock back towards it's previous ai size. under a best case scenario, i'm facing a minimum of eight months with either zero or heavily reduced revenues and surviving by using my life's savings. in addition to the direct loss of revenue, i'm also fronting payment for some of the cost of remediation and containment efforts until the usda is able to reimburse me. of course, my farm is just one of the many operations devastated by ai. to date more than 48 million birds have been infected by the disease and 220 operations in 20 different states. ai has killed more birds in the egg sector than in any other to this point. the reported loss from the current outbreak has set egg layer inventories back more than a decade.

prior to the current outbreak of ai, there were over 300 million egg-laying hens in the united states. 35 million of those have been lost. that loss is hurting american egg supplies and driving up prices as indicating by the reduction of forecasted egg production for 2015. it is even led to the importation of shell eggs from europe. this is an extreme situation that very seldom is seen in our industry. consumers are also hurt. we have seen significant increases in the prices of eggs and products made with dry and liquid eggs do to the ai outbreak. in dollars and cents, current table egg prices are up. u.s. consumers could pay $8 billion more to buy eggs which is an increase of at least 75% from last year. the importance of usda's response cannot be overstated nor can my gratitude.

usda resources have been integral. the teams i have worked with on the ground have been highly professional and courteous. people who have the best intentions and a true desire to help and i appreciate that help very much. despite the progress being made, the sheer bureaucracy of doing is challenging family farmers who like me do not interact with government bodies every day. i do not have administrative staff to keep up with the changing lands escape of rules, work plans compliance agreement and it is rotating staff inherent to such a recovery process. the red tape is daunting, frustrateing and financially draining. we must push on and work within the framework for the benefit of me and those like me. in today's landscape a response plan must be comprehensive. biosecurity and containment are indispensable parts that much plan but they're simply not

enough. we need to stop ai and prevent future outbreaks. the fact ai is considering the use of a vaccine as component of a comprehensive response strategy is encouraging. for producers like me it is difficult to imagine investing the time and money necessary to repopulate our flocks without the assurance provided by an availability of an effective vaccine. this fact is made even truer in the face of upcoming bird migrations this fall which threat ton reintroduce outbreaks all over this country. without the long-term protection granted by an eradication approach with the targeted use of a safe and tested vaccine. i am proud to be an american egg producer. i am proud to be part of an industry that's done its part to feed our nation to support thousands of jobs and keep small towns vibrant. if there's one message i hope this committee takes from my testimony, it is this, the threat of ai can take all of that away in one fell swoop if we fail to adopt a response plan

that both addresses the current outbreak and prevent future outbreaks. i thank for your time and the opportunity to talk with you today. i look forward to answering your questions. thank you, mr. chairman. >> thank you, mr. schneider. i think i'll start with you. i think your testimony -- first of all, thank you for your testimony. we are obviously sorry for your loss. what i find interesting about your testimony is you share my perspective. i have been impressed with the quality of the workforce. dedicated individuals doing a great job, which is exactly what you experienced as well. that's a good thing. but frustrated by the problems you encounter based on the bure bureaucracy bureaucracy, the rules, what they're trying to follow. i want to follow up on that. first of all, you're a contract producer correct? somebody else owns the chickens and you run the operation. >> yes that's correct. >> when we met yesterday, and i appreciate you coming in early,

you described the process, it took four to six weeks for them to be indemnified against the loss of the chickens? >> that's my understanding. >> but no business interruption assurance. this is only provided, it's a good thing we have this in indemocrat anity. as well as trying to recover and doing what you're trying to do to remake your farm. can you describe how much you've spent and what your frustration is in terms of being indemnified as the operator? >> one of the situations i'm running into, i'll be fronting close to $150,000 in terms of depopulation, clean-up and disinfecting before i'm able to start repopulating my complex. it's difficult to come up with that kind of cash. it's difficult to try to make sure that i am dolting all the

is and crossing all the ts when it comes to the for mats the usda will require me to do when it comes to expenses and identifying which expenses are recoverable for me. every day goes by i became a little more concerned that some of those expenses might be left out or forgotten or somehow not covered. i stand to lose ace lot more money on top of what i'm already losing. >> if you're not able to repopulate your operation for eight months i mean are you going to be able to start generating revenue soon or not generate for eight months? >> when i start repopulating it will be an incremental process. i'll start incrementally adding flocks to the tune of about 45,000 birds every month, starting in august and october. >> now, we buy those as egg-laying chickens right off the bat? >> they're ready to lay, yes. >> you'll started generating revenue revenue? >> that's correct. >> dr. clifford, in the private insurance market, up you get an

insurance adjuster coming out on site assessing it, verifying the claim, writing a check sometimes that day. or within days or certainly a week or two. to me this is a pretty simple claim to adjudicate, especially the chickens. here's the program. it is federal law that the chickens have to be destroyed. it's federal law that you know, indemocrat in indemnifiction, it's ai the chickens are destroyed. i don't know why the government can't write a check within a day or two. can you tell me why it would take four to six weeks for owners of the chickens to be indemnified? >> first with regards to indemocrat indemocratnifiction, we can do that within a week or less. >> but that's not the

indication. >> no. we require a flock plan to be signed. until that flock plan is signed, we don't pay indemocrat anity. what the flock plan is a strategy and plan for that location specific to that location with regards to buy yoe biosecurity and restocking to ensure we're all doing as much as we can to prevent reinfection. if there's not a signed flock plan before we pay indemocrat anity and they get reinfected after they repopulate we don't pay indemocrat anity a second time. so i think there's things we can do together to make that a lot quicker process. my heart goes out to scott and his issues. we've heard this from many producers. some of these things are complex because they don't -- they've never dealt with them so one of the things we're doing to combat this in the future is assigning one person to that facility from the beginning to the end to work with the producer and help them

get through these things. >> you're learning from that. mr. schneider, real quick, how long did it take usda to get out to your operation to inspect and really order the destruction of the flock? >> i think the usda needs to wait until the presumptive positive is kublgted by the national laboratory in iowa before they're able to do anything. in my case we had a presumptive positive, i think it was on maybe a thursday of the week and on saturday evening, it was confirmed by the national laboratory in ames iowa and i think it was on that monday, then, that we had usda people -- >> how quickly was your flock destroyed? so thursday it was infected. you saw chickens dying right? >> right. >> they die quickly. so that was thursday. you started destroying your flock when? >> it was probably the following thursday or friday possibly. >> so, professor gelb in your

testimony you said that process should be 24 hours. that's a pretty big gap. there's a fair amount of continuous improvement required here, correct? >> yes, ideally. in delaware back in 2004 or goal was 24 to 48 hours, in that window. in fact, that hinges on the identification of the virus. going back to scott's point, that's a very very important one, is the process. the presumptive positive is made by a local or regional laboratory, a national animal health laboratory network member laboratory. it's a mouthful but it's a usda, very important -- very highly regarded usda network system we have here nationally. they are based in ames, iowa. the confirmation must come, this is a very important point, from the national laboratory in ames before it's actually a done deal, so to speak. >> let me just say in the

current structure we have these sites. best case f you restructured the process, i mean because sometimes tests take a while. >> sure. >> sometimes they have to incubate. what is best case? if you could design the structure, what was the best case in terms of mr. schneider calling somebody you collect a sample, how quickly could you have that confirmed? against, best case. not -- i guess, with current structure, but if you really redesign this thing. >> once the samples are submitted to the local regional laboratory, those results are basically molecular types of tests that can be completed in about three hours. then those same samples it's not dated must be sent to the central lab in ames for confirmational testing. at the local lab they're presumptive and we're waiting for that confirmational testing. frequently, they'll be sent by overnight delivery. it might be another 24 hours. you're basically waiting then,

that additional 4 hours before you can take action in terms of initiating flock depopulation. >> i want to stay on this. i want my committee members to indulge me a little bit. in your experience -- i'll go to dr. clifford. if your experience, how often do you have the initial result different from the confirmation result? >> are there instances of that? the question i'm asking could we rely on the initial result it would be destroying a flock of chickens and, oh, that really wasn't avian flu? >> these regional nom laboratories are basically laboratories of the nom. they are many times if not at all accredited laboratories with very high-quality staff. i'm not getting -- i'm giving you a little more background. all of the members that run these molecular tests take proficiency panels once a year.

that come from usda. we're talking about highly qualified laboratories. >> sew theo the point is, we could improve this model. we could have destroyed that flock of chickens within a day or two, within your guidelines, 24 to 48 hours, rather than seven days. again, just increases the likelihood these outbreaks won't be contained. from my standpoint from the usdaf we have to write a law or improve regulation, there's a real top priority of what we ought to do as federal government to speed that process to limit the damage. would you agree with that? >> yes i would. >> i have plenty of other questions but i'll turn it over to senator carper. >> you'll see our colleagues are coming and going. we serve on three four five committees and others have hearings going on as well. i'll be slipping in and out today. senator tester from montana has asked to use a little of my

time. i'll yield to him and recover my time. >> appreciate that. very quickly dr. clifford, is there a vaccine for the avian flu? >> yes, sir, there's -- >> how cost effective is it? what does it cost a bird? >> well, let me if i may, there's a -- there's not a well-matched vaccine available today. and we're working on well-matched vaccines for the fall. but you're usually talking pennies per bird as far as the cost of vaccine. >> but wire still researching the potential of a matched vaccine, okay. >> there is work ongoing. and i believe that we will have -- >> one by fall. >> -- vaccines available by faw or late fall. >> mr. schneider, thanks for raising cage-free chickens number one. number two, i'm sorry for your loss. i deal with plants but i want to try to figure out where we're

going here with grains and with lenles, we buy insurance. do you pay a premium for the insurance or part of a disaster program for the usda? >> part of the disaster program for the usda. >> okay. that's important to know. we buy insurance that is heavily subsidized, i might add, by the taxpayers so it's not totally private sector. what do have you to do to be able to raise chickens? can you givemy four or five things have you to do on your place so you can guarantee the avian flu won't come back? >> sure. we have to follow protocol set in place by the usda, for depopulating cleaning and for disinfecting. >> are there time elements to those protocols? >> not necessarily. up until the time which you're completed with disinfecting then required for 21-day rest period in which time you're doing sampling. >> they are still continuing to do test -- >> they're doing testing during that 21-day period.

>> very good. you're in the middle of that process right now? >> i'm completing the disinfecting hopefully this week. >> is it up to you to destroy the chickens or does the usda do it? >> it's a reimbursable expense. >> yeah, but do you actually do the job or does the usda people do it? >> it depends on whether or not there's a contracted company to come in and do it or we can as a farm, we can contract -- >> in your particular case -- >> we assisted the contracted company. >> okay, good. >> mr. currie you talked about foot and mouth disease. i thn is about avian flu, but how serious is foot and mouth? >> it's a very serious disease. >> we're free of that disease in this country is that correct? >> that's probably a question better targeted to mr. clifford. >> that's good. he's next on my list anyway. we're free in this country of foot and mouth? >> yes, sir, we are. >> the usda just opened up -- authorized inputs from a number of countries brazil, uruguay

argentina, that are not free of foot and mouth countries. mr. currie said it was very serious. do you talk before you open it up to countries -- >> do i talk to gao -- >> do you talk to mr. currie's office? >> no. why would i talk to mr. currie's office about disease mitigation? they're not veterinarians. we do risk assessments. >> so that's fine. my brother's a veterinarian, so don't take this personal -- >> i know he is. >> the fact is, is that why did we open up trade with countries that have foot and mouth disease? >> because they are free with vaccination. what that means is they have not had cases -- an active outbreak of foot and mouth for years. >> in regions of those countries. >> no in the entire country. there has not been a verified

case of foot and mouth disease in entire of south america for over two years. >> why is not uruguay considered a certified free foot and mouth disease -- >> they still vakcy senate. that's why. you can ship boneless beef safely if you vaccinate and you're free. we've been doing that for years. we did it from argentina years before they had an additional case quite a few years ago. >> let's go the other direction nen. you're saying if when he an instance of foot and mouth disease in this country, it would not hurt our export business. >> i didn't say that, sir. of course it would. >> we vaccinate. >> we base trade on risk mitigation. we don't vaccinate for foot and mouth disease, nor will we vaccinate for foot and mouth disease unless we get the disease. they vaccinate routinely to make sure that they don't have the disease. one of these days, i think

north america will probably -- or the region of americas will probably be the first continent free of foot and mouth disease within the next five to ten years. >> that would be good. my concern is it stays that way. from what i hear you say f we had foot and mouth disease in this country and we were vaccinating, we would be in better shape for exports of meat than if we did not have foot and mouth disease and not vaccinate. >> no, sir, that's not correct. >> well, come on -- >> i said boneless beef. boneless. from areas of the world that have foot and mouth -- >> here's my concern. >> free with vaccination, boneless beef -- >> you're the doc and i just raise the animals. my concern is, is what happens if we get foot and mouth disease in this country? and you said it would have impacts on our exports. >> it would. >> but you also believe strongly that the chance of transferring that foot and mouth disease from a country like uruguay is zero. >> i didn't say it was zero. i said it was extremely low risk. >> what would it be? less than 10%? >> it's a lot lower than that.

>> less than 1%? >> yes. so nearly zero? >> as close to zero as you can get without saying zero. >> perfect. thank you very much. >> senator ernst. >> thank you chairman johnson, ranking member carper and to our witnesses today. thanks so much. i spent some time with dr. clifford yesterday as we met in the agricultural committee and discussed a number of these issues as well. we have a turkey producer in our audience today. mr. moline thanks for joining us again today. nice to have you here. iowa was hit extremely hard. if you look, a number of us here up at the die yos have a map here up. can't see iowa too well because out of the -- out of the

millions and millions of birds that have been infected and destroyed, two-thirds of those birds were from iowa. so, our poultry our turkeys have been infected quite heavily. this has been a big concern for us for a number of months now. and the economic impact to iowa will be about $1 billion. very significant. so, mr. schneider, i sympathize with you very much. a number of our producers have gone through the exact same thing. and i just want to impa-emphasize it is not only devastating for these producers but their employees, those employees' families and the communities that are supported by these producers. so, thank you for being here today and sharing your story. i appreciate that very much. dr. clifford, i would like to go back and visit a little more about the vaccination process. we talked about it a little bit yesterday.

is the usda working on the vaccination process? if you could explain a little about the process where we are with that. i know a number of different groups will support vaccinations, some will not. what we want to do is ensure we're working with trade partners as well. if you could talk about our trade partners, that would be very helpful. >> thank you senator ernst. yes, what we're doing is developing actually a vaccine bank. we intend to go out for requests for proposals soon to ask companies to bid on that. we have several companies that are in process of developing vaccines. and we believe that we will have a vaccine bank available some time this fall. it may be late fall, depending upon the company's ability to get that vaccine manufactured. it's a tool in the tool box, as

dr. gelb said, that we really need to have to use if we decide it's the right thing to do in a particular situation. so, we're working on those protocols protocols. then we'll be reaching out this summer to our trading partners to try to encourage our trading partners under these conditions to not shut off trade. and if we are successful then that will help us to be able to utilize that one tool because right now if we use that tool in our tool box, they will shut us off and we will lose potentially up to $3 or $4 billion additionally in trade. they're not talking about a partial shutoff. they're talking about an entire country shutoff. so, that's why we have the different -- i understand the turksy and turkey production and use in wanting to use those. i can understand the layers and

especially outdoor or cage-free birds. have you these different groups from the broilers to genetics groups that don't want it used because of the impact on trade. so we're trying to balance all this. we're trying to get our trading partners to support its use in a limited way where it makes sense. an example of use would be in, for example turkey flock negotiation minnesota that have a very close proximity to a lot of lakes and a lot of potential wild waterfowl. >> very good. i appreciate that very much. dr. gelb, you had mentioned that, of course, the growers. there is an indemocrat -- indemocratfy fund. we want to make sure if the

growers are entitled to a portion of that indemnity payment, they're receiving that. do you know of any mechanism we might be able to engage for follow-up? >> this is a little out of my area but working with our local trade association, delmarva incorporated, and speekting with the director of that organization, i think he for example, could give you a better answer on this. but my understanding, as i indicated earlier the indemocratindem indemnities for contract growers. they provide the facilities, the heat, the ventilation basically to grow them, but the birds themselves belong to a poultry company. frequently those indemnitie sechlt go to the poultry

company. some share the funds with the contract grower. this is kind of a contract grower issue. i mentioned also the interest and current proceedings in thinking about moving forward with an insurance program that growers could purchase, where those funds would go directly to them rather than to the company. yeah, senator, you bring up an excellent question. i'm not sure i'm the best one to address it. thank you. >> thank you for raising the issue. one parting point. and i know mr. currie, you work with emergency management. as we discussed yesterday in agricultural committee iowa did have plans in place should have happen, we had a number of landfills willing to accept the carcasses of the birds after they were virus-free. even the best laid plans can go

awry. we had tind of an uprising of the people around those landfills and along those routes that said, how do we know that our birds won't be hit by this virus by moving those birds to these landfills? so it was a great concern with the people of iowa that we weren't infecting additional farms out there. even the best laid plans cannot go the way they are intended. thank you very much to our panel for being here today. we appreciate it. thank you, chairman. >> thank you. senator peters. >> thank you, chairman. thank you to the panelists for your testimony. this is certainly an issue that is somewhat frightening to a lot of folks to think influenza could hit the poultry industry and so quickly. so many birds die and have such a massive impact on egg production. we think about certainly, other produce as well and how these

biothreats are so significant. michigan, the state i'm blessed to represent, became the 21st state to confirm avian flu in wild birds, some geese where it showed up. i think that's possibly where it all started. i think we're still trying to figure that out. but i guess that leads to my question for you, dr. clifford, how closely are you working with the fish and wildlife service? are they involved in monitoring what's happening with wild birds and the impact it could have on our agricultural sector? we'll have fall migrations involved with some of these wild birds. do you work with the fish and wildlife service? if so, what are you doing? >> yes, sir, we do. we work directly afic and our wildlife division leads this effort for us. they work directly with the state departments of national resources, the u.s. fish and wildlife service and other entities with regards to wild bird surveillance. we've actually been doing wild bird surveillance for a long

time. we began doing a lot more surveillance during the h5m1 occurrence quite a few years ago in asia when it became a human health issue and concern as well. and we increased our surveillance. as that became a less of a concern for the u.s. from the flyways, and we did a lot of testing and monitoring and no cases were found of that h5n1 then we reduced the level of monitoring because of the lack of threat from that particular agent. based upon recent findings we increased that and we actually have plans out there available that includes fish and wildlife dnr ace collection of these samples and it will occur across all four flyways. in addition, we take samples from up north of alaska, there in the bering strait area where

these birds are to see what's happening right now, to date. >> very good. the thing is as i looked at the spread of this and looked at the industry and the concentration of the industry, which i think is very interesting. i want to direct this question to dr. clifford and dr. gelb. the statistic that i think is very interesting is that there are 56 privately held farms that account for about 90% of all of the egg production in the united states. 90 farms. so, we do have -- we have some small family farms but there aren't many small family farms. that's faded away. we have large family farms and large corporate farms. now we have just 56 farms that have 90% of the production. that's an incredible concentration of animals. i want to get your sense. we have a very large amount of birds in a very small space. this is not just in poultry.

it's in other typesing a cultural production as well. if you could address that for me in terms of what we're looking at in terms of our challenge. >> i can comment from the human health perspective. we need biosecurity to be strong at every level. one level is really what's the geographic location of the establishments. but we need within any establishment concentrated or not the right kind of procedures and protocols and the workforce practicing those because there's risk of you know spread between the facilities. so, the specifics cultureale -- the workers on those premises and contractors and so forth who help with remediation really need to be tracked to make sure

they're okay following their exposures and that they don't develop illness that could be a human case of avian influenza. >> so, with regards to issues of whether you have intensive farming practices or less so, this virus really doesn't care -- granted the more birds you have in a location the more virus production, the wider the spread can occur. what we need to be thinking about in the way of biosecurity and why this is different than what it has been prior, this is the first time in north america that we've had a high path a.i. virus travel from wild birds through europe and asia to north america. the first time. and it's because it's adapted itself to these dabbling ducks and has moved across the bering strait. it never happened before in a high path.

low path maybe, but not high path. so, what is different now is that we have to consider biosecurity where it was fine and well and good for what we were dealing with prior to this. we have to consider this now different. have you to look where there's wild waterfowl as the entire environment being effected potentially. doesn't mean it is but have you to consider that as a potential. every single house that a bird exists in, or every single location, you have to think in ways of trying to protect house to house to house. and that is -- and it's not about the facility being safe. it's only the safety within each of those houses where those birds are kept. they have to be looked at as single biosecurity entities which is much different than what we had to do prior. >> it is better to have a few large concentrations or -- >> it's really more about the

biosecurity. but, obviously, in any viral infection, the more birds you have, the more virus the easier the virus can spread, the more virus production. that's why it's critically important to get birds put down quickly. >> right. especially when you have 56 operations that are 09% of all the eggs in america. >> it's a highly integrated operation. >> dr. gelb? >> i'll kind of answer this from the broiler, meat type chicken perspective in delaware, where as senator carper indicated was the birth place of the modern broiler meat in the united states. it's continued to be very productive there. we often brag about the efficiency of our poultry production in delaware and delmarva. but this concept of having highlyhigh li highly density of poultry within a given house but even more importantly the densecy of farms

in that area that does facilitate the potential for more rapid transmission. we're dealing with a very contagious virus. we're dealing with a situation where the ventilation, fans used to maintain the proper environment of the chickens are turned on virtually all the time. and material, dust, other material that is coming out of the air in those barns will have virus. that virus will travel, to some degree. not miles and miles but in delaware within a one square mile area we might have four five farms. and each of those farms might have 60 to 80,000 chickens on them. they're all contract growers. and those contracts are probably with -- four different integrated operations four different companies. so, you have a situation, as

dr. clifford indicated, where you may have these very large single farms, layer operations, for example, but on some other areas of the country you have independent facilities owned by different countries. it's essentially the same thing. even though maybe the travel on and off those particular farms is different. you know when birds are taken to market, they're caught put in cages. those trucks take them to what we call processing plants or slaughterhouses. and they may go by 15 different other farmsz and the dust and the feathers are coming from these live haul trucks, as they're called. there's a lot of complexities. that's why in delaware we are -- concerned is not the right word, thinking about what might happen here this fall. >> thank you senator peters. real quick point of clarification for dr. clifford.

there may be 56 different poultry companies but a lot of locations, right? i mean -- >> sure. i mean, there's 20 states that we would consider to be major poultry producing states across the united states. >> that's what i'm talking about, 56 locations. we're talking about thousands of locations. >> correct. but there are areas across the country where there's higher concentrations than others. >> got you. great. senator baldwin. >> thank you, mr. chairman. so, this year's avian flu outbreak has had a deep impact as i'm sure you've already talked about in my home state of wisconsin. the outbreak has reeked havoc on our farms where producers have faced the did he have stating -- devastating reality of sick and dying birds. i'm so pleased we were able to be joivenned today by mr. schneider of lake mills, wisconsin to share his story, of his farm and his livelihood.

the impacts, as we've discussed of avian flu, are broad on farm worriers, individuals working at processing and packing plants, whose jobs depends on those lines running. as well as on the broader farm community, which depends upon demand for grain, supplies and servicings from our poultry growers. so this avian flu crisis is also a community crisis. wisconsin is proud to play a host to research labs that are laser focused on key questions in front of us. questions about how the virus mutates, how it's harbored in wild birds as well as diagnostic labs that help us track its spread and track viral strains as they emerge. dr. clifford producers in my state have relied on the tireless work that you do and your team has put in lots of

time and energy into addressing this crisis over the past many months. so i want to just thank you for your leadership. we know that research labs responding to this virus spend several different federal agencies and are supported also by state labs. madison, wisconsin, is home to the usgs national wildlife health center. and conducts research to determine which wild bird species might carry and spread various viral strains. i want to just note parenthetically that i'm quite concerned the lab's aging infrastructure is not allowing it to fully perform as needed during this crisis. and it's something that i paid great attention to. dr. clifford as you know, this wildlife health center conducts research that supports the

industry focused research at usda. i'm wondering if you could share some general comments about the importance of interagency collaboration and research investments and coordination on this crisis. >> i think interagency across agencies, across states in the industry, the collaboration across all of them is extremely important. i think that was well stated earlier by the testimony of chris currie with regards to the importance of collaboration. we actually collaborate on an ongoing basis with cdc. we work very closely with usgs. we work very closely with the department of interior as a whole. the money and funding we provide for wild bird surveillance, some of that money would get to help support that testing that usgs and others would be doing, and collection and testing of those samples. we work with customs and border

patrol, the dhs the food and drug administration. i mean a whole host of food safety inspection service within our own agency. we have an internal group within the department ofculture that stood up that brings across all agencies to help address this issue as well as state agencies. it's critically important for all of this, because every piece of this, as senator ernst was talking about the landfills there's issues with epa, issues with transportation, issues with a lot of these things that have to be coordinated across. there could be issues with availability of water. these foamers that we use for depopulation of birds requires a water source for foaming. you wouldn't think you would run out of water in certain areas, but it's certainly in small rural areas, you very well may not have an effective water source. you can't take it out of the lake because it has to be filtered water, otherwise it shuts down your machines.

you have to have carbon sources for composting and things that -- so this really is a massive effort that requires coordination a lot. >> the university of wisconsin hosts a large team of researchers studying pathogens. we have pioneers in developing research efforts that could potentially help us understand or treat avian influenza viruses. however, these -- some of these efforts have been put on hold by a federal pause on gain of function research. this continued research pause is delaying the potential benefits of studying these viruses including research that could protect human, animal and

economic health. when does the cdc plan to issue final guidance on this research to be able to end the pause? >> yeah, i'll need to get need to get back with you with the specifics on that. but what i'd like to say is that the public safety is really important. and public support for research is very important. and we take very seriously the need to make sure that the scientific experiments that cdc or research partners are doing are done in the safest possible way. influenza virus research is critical to make sure that we have safe treatments and effective vaccines and really get ahead of these viruses before we get the kind of problem that we're seeing right now with the avian outbreaks here. and so i know that across government with nih, cdc, fda, the question of the moratorium is important and we can get back with you with the specifics of timing.

>> i would appreciate that. and then, dr. clifford i understand that state veterinarians are considering restrictions on the movement of birds and poultry. i know that i've heard from farmers in my state who have contracts to deliver birds across state lines. containing and eradicating this viral outbreak. but our producers, as you've heard are -- as you know are facing substantial economic strain. these uncertainties, of course, make things even more difficult to conduct business when it is safe to do so. so i'm asking dr. clifford, what steps does the usda taking to ensure that quarantine and shipping practices are safe and

effect if effective. >> thank you, senator. within our approach, we have what we call an effective zone and a control zone. the control zone, around an infected flock. it goes out 10 kilometers. basically, products that are negative in that area are tested regularly. and so, we -- nothing can move out of that -- those zones unless we permit that product to move. and there is regular testing requirements for those products within that to be able to be safely moved in and out of those zones. so that occurs ongoing. we issue actually thousands of permits out of those zones to allow that safe movement. we share that, we have weekly calls with the industry and the states across the entire u.s. and we explain these things to them they know how it's happening. some states have taken

additional action because of, for example, because of the bird marketing systems we have in the u.s. and some of those have caused some issues. we intervene on behalf of states such as wisconsin, iowa minnesota in that area to try to help facilitate into those states. and we do the best we can. but, as you know, the states do have often times rights to go above and beyond our requirements. and so we try to work through that with the industry. >> senator carper. >> thanks. thanks so much. it's a great hearing. and really appreciate you being here. and your participation. i want to come back and revisit the issue of crop insurance. we have had a crop insurance program. in the country for a long time. and it's a shared partnership between the federal government which helps unsubsidize the crop

insurance. we change it in the farm bill, the last farm bill we passed. we changed it up some so it would cover. it would cover fruits and vegetables if farmers want to participate in that. and my colleague offered an amendment adopted included in the bill that called for maybe trying a demonstration program with respect to insurance for poultry growers, and other livestock growers. that was in the bill, i think we adopted a year or so ago. i don't know if we haven't had enough time to get it up and running. is that something you're familiar with. >> i'm aware of the discussions but i'm not involved in the specifics of those. that's kind of outside of my range of area. >> well, i'll ask you for the record. we'll ask you to respond for the record. maybe some of your colleagues can give us an update to let us know. >> okay.

>> in our experience with contract growers and broilers on the peninsula, is if there's an avian influenza outbreak, the chickens are owned by the integrators. companies like that. but, yeah, as he said, some real cost to bear. and i want to go back to something you said, and i'll bounce it over to mr. clifford. you mentioned you're very gracious in your comments about the support you've gotten from we'll say federal government, department of ag and others. and we're very encouraged to hear that. you indicated there's a lot of bureaucracy, red tape, and it can be frustrating and time consuming. i thought i heard you say there's an effort to try to identify one person, like a go-to person for mr. schneider or anybody else that might be affected. minnesota, iowa, wisconsin, or delaware. and is that something you're

actually doing now? it's a great idea. >> it's actually in effect, not in the way we want it to be finalized for the following spring. and that is, right now, it's one person but because of our rotations of personnel in and out of those areas because most of these people come from different parts of the u.s. and we have them on a three or four-week rotation so they can go back home for a period of time before they're redeployed. >> we will assign a single person that will stay with that producer for the period. >> one of my favorite sayings, if it isn't perfect, make it better. >> yes, sir. >> i think you took a good idea and made it better. i'd like to ask you a question

about lessons learned. is it dr. clifford or mr. clifford. a lot of doctors here. i want to ask can you take a minute, i'll call you dr. schneider. >> i've been called worse. >> i'm sure. so have we. so have we. the three of you take a minute and share with us one key lesson. one key lesson that can better prepare us for further infections should they occur later this year. and would you go first? >> thank you. i have not had direct experiences in this current outbreak. so i have had -- we've had some people, experts from the university of delaware travel and participate in depopulation efforts because that happens to be one of our real strains we help develop that technology

years ago. so i get stories and reports from other individuals. you know, i really feel that biosecurity is really a key issue. i think that's been repeated several times today. an area that biosecurity's not sexy. it's not something that is easily accomplished. it's that challenge, and you sometimes don't see results from it. but certainly we know it's not the entire answer as mr. schneider indicated. you can do biosecurity almost everything right, really. and sometimes it's maybe it's an act of god, you know. if you have the introduction of the virus here. but i still think biosecurity is a really key weapon in this process. >> okay. thanks. dr. clifford. >> senator, if i may expand on that for more than one.

first and foremost, the questions that senator johnson, chairman was asking earlier about the time frame of depopulation due to positive testing at our national veterinary services lab, the confirmcon confirmatory testing. base the deep population, based on presumptive positives by the nonlaboratory that it was taken. so we don't require confirmation anymore. so that's one lesson learned, and one action we've taken. and in addition, one of the things we'll be looking at in the future is clinical signs where we already have -- know we have virus in the area. not even waiting necessarily on presumptive positive. on the area of disposal, we need state, local plans in place that we know will work before -- before they occur. biosecurity, it's based upon new biosecurity, air filtration systems.

these air handling systems in these facilities have to have some type of filtration to reduce the amount of dust and potential for virus particles to enter through the ventilation system itself. those are just some. but there's others. >> good thanks. mr. schneider, very briefly give us one good take away. one lesson learned we ought to share with the country. >> well, in addition to all of the biosecurity efforts we've been talking about i would suggest that the increase of funding for agricultural research service to identify areas that those specific biosecurity protocols need to be implemented to help us prevent this from happening again would be a wonderful place to start. >> okay. good. my time's expired. i hope we'll have a chance to ask a few more. thank you all. >> mr. clifford, real quick. i want to get into the insurance or the emergency funding. is there a program in place to

en indemnify mr. schneider as an operator? >> there is a program in place that pays right now for the owner of the birds. so if mr. schneider is a contract grower, what we have been doing is working with the companies to make sure that payments do go to the contract growers or contract raisers. >> that's something you try and do working with the law that does not contemplate indemnifying the operator. >> well, actually, sir, what we did in the low path a.i. situation quite a few years ago in virginia, it's part of our regulations on low path. it requires the contract growers to be paid. the problem is it's with this particular path that particular regulation is written into the a.i. rules for low path, not for high path. and so, we paid the owner of the

birds. >> correct. well, so you got a problem there, and we need to work through a ranking member to figure out to address that. that's obviously devastating for the operator when it's just the owner being paid. you made this agreement between the owner versus the operator. but that's something that needs to be addressed. dr. clifford, you talked about personnel rotation. how many usda offices do we have around the country? >> veterinary services office or usda offices? >> where you can have qualified personnel to respond to this. >> well -- >> i'm surprised we're rotating personnel versus just having -- >> we don't have that many trained people to do this. you're talking about animal health technicians and veterinary medical officers. i've got about 1,800 people that serve in veterinary services. i'm not talking about just any usda person. >> but again, if you're talking about a point person to manage a

case, you really need someone who is skilled in management, not necessarily in the hard science. >> no, sir. they need to understand the science, as well. in this case, when they're working with them and helping them develop a flock plan and a compliance agreement, they not only need to understand the red tape, as you call it, but also the science. >> well again, and that could be an interesting discussion to have in terms of again the whole purpose of this is to coordinate an effort with one point person that an owner or an operator's dealing with. i think you could certainly have an interesting discussion. >> it's -- >> as opposed to just train and managing and coordinating the different expertises. but let me move on doctor i want to talk about virus itself. and you know potentially, and vaccinations. first of all how robust is the flu virus? how long can it survive? if it gets on a dust particle and gets blown into other farms?

is this virus going to last days, weeks, months? is this pretty fragile? >> the virus won't last that long. but the conditions are quite important. so the colder weather and the drier weather permits -- is favorable to the virus. right now, we're in sort of a quiet period. >> talking to mr. schneider, said the virus can be in a snowflake, as well. but are we talking days then? that the virus will last? >> yeah, i think the issue with the disinfection is to make sure it's not, that you've breached everything and it's not coming back. >> in terms of the vaccines. we're concerned about trade, the implications of that. i think as the professor was talking about, the potential mutation of the virus with vaccines can you speak to that a little bit? >> influenza changes constantly, and that's why it's so difficult. it can mutate, and it can also reassort. swap parts of its genes with

other influenza viruses. and 2 of the 3 h-5 strains we're dealing with, the avian strains in the u.s. are these. where we had high pathogenic h-5 influenza from eurasia that swapped out parts of the genes with the low pathogenic avian influenzas we had in the u.s. already. so the virus is just constantly changing, which makes vaccine development difficult. the vaccines we have for humans as well as for animals are not as highly effective as some of the other vaccines and the virus can mutate away from or escape from the vaccines. there's a lot of balance about the avian vaccines and the human vaccines we do work to prepare. and against the original h-5 strains from asia. but those are really preparing for pandemic readiness rather

than vaccines we're using every day. >> you know we're always expecting just a technological miracle to save us from these things. but what you're talking about with the vaccine only a certain percentage affected to begin with. plus, we've got a real problem with vaccine production in this country. do we not? we have a hard time producing enough vaccines sometimes for human flu. would we have -- if we start trying to vaccinate 300 million chickens couple hundred million turkeys, do we even have the -- even close the capacity for that? and can we ramp it up quickly enough to respond to the changing virus? >> let me answer about the human vaccines and dr. clifford respond about avian vaccines. the u.s. has invested an enormous amount in expanding our manufacturing base. and the investment in influenza vaccine production and distribution. we actually have had an 80%

increase in the flu vaccines produced and distributed annually in the past decade as well as a much stronger infrastructure for pandemic vaccine production for humans. but the animal vaccine production works differently. >> let me quick say on the human vaccine. i think this is important. we had a pretty robust vaccine production capability, correct? but then it was reduced dramatically, a lot of those lawsuits, that type of thing. it was not an attractive business to be in so they exited the business, correct? we had to have government intervention to try to boost that production in case of a pandemic or in reaction to some of these outbreaks, correct? >> that's right. there's been a lot of u.s. government investment in stimulating the vaccine industry, both for influenza vaccines and then, actually, for routine vaccines we have a very strong public/private partnership right now where vaccine companies are making pretty good profits. >> again, i want to go back to

the root cause of why we didn't have the amount of capacity we really needed the vaccine. it was because it was a very unattractive business. people were being sued and people just exited the business correct? >> well i think it was less the suits than the issue of the profitability. because when you're producing drugs, you know, people will take medicines for their whole life and successful vaccines you know, you need a couple of doses of, perhaps, forever, to prevent diseases from occurring. flu vaccines you have to give every year right now. but the market wasn't that favorable. but things have changed a bit. and we're in much better shape for pandemic readiness right now. >> is the manufacturing capacity different for animals versus humans? dr. clifford, answer that. >> yes, it is. and our centers for veterinary buy biologics works. i'm not concerned about capacity. it's more economics with the companies knowing that we would use the vaccine. >> it's still the same production technique, though, correct?

by and large? >> by and large, but there's new techniques being used, as well, that -- >> speed the production of development? >> yes. >> there's more capacity available for animal vaccines because you just don't really risk the liability problem? why do we have so much more capacity for animal vaccines versus human? >> i really can't say that from a standpoint of the human side. but i -- we have a lot of companies that are both domestic and international that have, if they don't have the capacity here that they have a -- can have approved products they can move here. if they can't be produced here, can be produced somewhere else. and so the capacity is there to produce the vaccine. >> just quick question for you and mr. curry. you're going to have a gao audit on this. how do you think it's going to fair in that audit? i realize a little unfair.

i have a general sense of this is going to be a good one or i might have problems. >> i think they'll find some good things. >> i think you often times find that kind of situation and some of those lessons learned we are definitely taking those and working with the industry and states. >> do you think you'll see improvement from the last time you've looked at this thing? they've learned from lessons implemented things? what's your general sense? >> well we know for instance we should report on the potential response to an outbreak like this in 2007 and made a number of recommendations that touched on almost to a "t" all of these challenges we're facing. i don't know if any of us expected it to be this big and this bad. usda addressed all of those recommendations. and so, they're being tested now. in any emergency, whether it's a natural disaster, outbreak like this, there's going to be challenges and lessons learned.

>> there's been a good reaction. >> we talked about this a couple of times. how do we mitigate? when we have a farm that goes down in delmarva because of avian influenza, a lot of times countries around the world will say, they're not going to take any of our chickens. and we also -- is the use of vaccinations in livestock. or birds. to what extent does that impact our ability to sell to different countries? some countries don't want to

have animals imported into the countries that have been vaccinated. you know how it is. how can we mitigate the impact of vaccine related export bans imposed on the u.s.? dr. clifford? >> so, i think one of the ways to do that is to have the plans available to share with certain countries so they can see those firsthand, how we would use it. and they would have the knowledge that we're not just going to rely on vaccine. in other words, they would be an end game so you're not continuing to use vaccine. because as already stated these -- the virus mutates. these vaccines don't remain highly effective for long periods of time. other countries will see that as a weakness to control or eradicate the disease. they've got to understand that we're using it only as a tool. and if we can convince them to do that, that would be a first

step. if i may just expand on this. >> just briefly. >> just to senator tester's questions earlier. >> yeah, a lot of questions, didn't he? >> yes. we would take no action to put our industry at risk. we care about our mission and american agriculture. and we wouldn't do that. but the fact is there's a lot of concern out there about the use of vaccine in a country that's free of fmd with vaccination. it's the same thing with high path a.i. so we can't go around the world and say one thing to one country because of our position and do something different to somebody else. >> all right. thanks. >> thank you, sir. >> y'all heard the term this is not our first rodeo, not my first rodeo. and when it comes to avian influenza, this is not our first rodeo this year. this one, we see from time to time probably a lot more than we -- one of the things we try

to focus on in this committee is not dealing with symptoms of problems but how do we deal with root causes of the problems? an example, people always trying to get in our country from latin america and how do we deal with not just symptoms of problems on the border, but the root causes of their migration. just talk to us about root causes here. is there any way to address this challenge, this problem with avian influenza by addressing not just the symptoms of the problems, but by addressing root causes, or is that just not possible? and i'll start -- lead off and we'll just ask. >> yeah, thank you, senator. >> be brief if you will. >> i think if you consider the root cause the introduction from wild bird populations, it's a -- it's a new normal for us. as dr. clifford mentioned earlier on. we've not seen this. so this is a new situation and what we need to do, if possible, is to institute the biosecurity

at the farm level, for example. and this not only commercial farms, but backyard farmers, which are increasingly important in our country and numerous, as well. so on several fronts this is very important. >> one of the things we've done in delmarva, we found some of our earlier avian influenza outbreaks came from wild birds but literally from live bird auctions in places like new york. >> yeah. >> they've been cleaned up. >> usda has done a wonderful job along with the state of new york, the state of new jersey. because that metropolitan new york area was once a very heavily involved with certain h-7 types of avian influenza viruses. >> probably not a fair question for you if you wanted to jump in, please do. >> sir, as i said we haven't evaluated the current response. but, you know, we're very aware of the new challenges. and i think there are going to be new challenges identified monitoring wild birds is the challenge. and i know that usda last week issued a couple new strategies

to help determine how these how this should actually be done and wild birds and water fowl. it's a new element to be addressed. >> thank you. has your name ever been mispronounced? >> once or twice. >> what is the wildest mispronunciation you recall? >> i'm not really sure. >> you don't want to go there, huh? >> i didn't prepare for that question. i'm sorry. we'll hold that to the next hearing. >> thank you. >> you know, i think to step back and generalize a little bit, we think of this as an emerging infection where global threats are local threats and where the human animal interface is very important. with influenza we're always worried because the virus is constantly changing. and we very much are worried about what's happening in the rest of the world with avian influenza, we obviously are very keen to know what's going on in the animal surveillance as well as human surveillance. >> thank you. dr. clifford. very briefly.

>> yes, senator. i think it's important to make one critical point here. >> okay. >> this virus came from virus that was found in 1997 in china. and h-5 n-1 outbreak in europe and asia. when there was a concern about the human pandemic. we put money around the world into that area. we didn't put enough. and we didn't do the job. if we would've eradicated h5n1 from europe, this would not have happened today. >> i'm going to call you doctor one more time. dr. schneider. >> i like it. if i can learn one thing, i think i'm going to be rethinking my entire biosecurity plan on my farm. i'm going to be reallocating funds towards increasing the structural operational and cultural protocols i have in place for my farm. ultimately, it's my problem, and it's my farm, and i need to do something about it. i'm going to be training my employees a little bit better.

i'm going to be controlling traffic on and off my farm. and i'm going to take steps to try to control dust. and i would love to include the use of a vaccine in my tool box when i come to biosecurity efforts on my farm. >> that was a great response. i'll just close with this thought. i'm no navy guy in terms of nautical terms. in the navy, a challenge like all hands on deck. and this is all hands on deck. and i'm pleased to see the hands and the minds that are represented here today are focused big time on this. and i think working collaboratively together, and i commend you for that. i appreciate very much what you said about taking responsibility yourself. and that's clearly what needs to be done. but i like to say at home depot. i don't know if home depot in minnesota if you have the ad campaign that says you can do it, we can help.

this applies to you can do it, but you can help. we all have a role and responsibility to play. it's going to come again. it's going to come again maybe different mutations may come again this fall. and we have to learn from our mistakes and stuff that works figure out what works, do more of that. that doesn't work, do less of that. great hearing. thank you very, very much. >> thanks, senator carper. and one thing we like to do is offer the witnesses one last comment. but i have to first go to dr. clifford. how would we have wiped out that virus in euroasia? >> we talk about one world, one health in global health security. we've got to be able to address these issues and make sure that they're done. we addressed the human pandemic concern, but we basically reduced the funding and support necessary to -- >> but would we have done it? >> how? >> how when you have migratory birds? >> it was in the poultry.

it was killing the wild birds, but what happened because of its allowance to continue and the continual lineage. when it became an h5n8 it adapted and wouldn't kill some of these ducks, that's the problem. so we had to get rid of it in the poultry so you would stop this exchange of virus back and forth. >> so, you know are the protocols in other countries not as rigorous as ours? they don't destroy flocks? that type of thing? >> it depends on the country. >> okay. >> and in asia and parts of asia, people will actually sleep with their birds and may have pigs outside. and it's a whole different world. >> yeah. but if we don't help in those cases, many of those kind of diseases may come back to this country. >> that's my point. you're saying we didn't spend enough money to eradicate it. i'm not sure we could. that was my only question. but anyway. again, closing comments.

>> well, we could've tried. >> i understand. but, we'll start with you, dr. clifford. >> again, just thank you. and i think that you know, we've learned lessons and we want this process to be faster. it's critical we get in there, kill birds quickly and get the producers on their feet faster. and that's something we take to heart. >> thank you. one of the reasons that senator carper talked about the pronunciation, i had a phonetic pronunciation, but we don't have a good track record ourselves. so if there's a bad pronunciation, probably came from this committee. >> influenza has been around for a really long time and continues to be a major challenge. i think that the big picture here is continued investment in improved vaccines including the so-called universal influenza vaccine is really important to get ahead of these kinds of problems for the future. >> mr. curry? >> yes, sir. i talked about in my opening

statement how important coordination and plans are and it's easy to sit here and talk about those types of things. it's difficult to address a real life situation like this. this is somewhat unique and we've had an outbreak seems to be somewhat slowing but we expect and we're worried about the next outbreak. we can actually learn many lessons learned, coordination lessons learned now. and figure out what our capabilities need to be in other parts of the country that may be impacted by this. we can potentially learn from this quickly and be ready for what we think might be coming in the fall. >> professor? >> thank you, senator. i think we need to help and protect mr. schneiders of our country. these, we've seen the number of people involved directly in agriculture fall for many, many years. we have these large highly efficient means of producing food and poultry. but, i think really the producers and the farmers the family farmers need -- this is a

wake-up call for us, i think. because we have enjoyed the best quality food safest food supply in the world. now we're importing some shell eggs here from other countries. what's wrong with that picture? and we sometimes get into problem when we have to import food. not to mention some other kinds of materials, drugs, et cetera. thank you. >> well, first of all, let me say, you took the words out of my mouth. my own background, my parents were raised on small dairy farms. that tradition of the family farm is dwindling. and we can't allow that to happen. and can't allow people like mr. schneider to remain exposed. in this hearing i have learned he is exposed. i thought he had coverage. i thought he was having a hard time obtaining that coverage. i'm afraid he's completely exposed. i think both senator carper and i will certainly work together to see what we can do to help those in mr. schneider's position and not just mr.

schneider and everybody affected. now and in the future. that's a real commitment of this committee. it's not necessarily in our jurisdiction. but this is certainly you know, our ability to hold an oversight hearing, to expose the particular problem. the panel sat down. this is about getting people to admit we have a problem. i think this is a real problem that needs to be addressed urgently. mr. schneider? >> one of the things i think might be able to help people like me is just in the indemnity payment formula and one of those things is specific to egg laying farms, but it could be based on the future value of the eggs that are supposed to be produced. that's where the egg industry is just a little bit different than the broilers and turkeys. over a period of weeks, those animals are raised and sent to market. and the egg industry those animals are in my facility for over a year. sometimes even two years. as the value of those eggs that are going to be produced. that's where if there was an indemnity payment based on that future value that would help me

out an awful lot. >> as we discuss there's got to be something like in my business. if you have a catastrophic loss, let's face it you destroy your flock, that's a catastrophic loss. we've got to do something. there's got to be some in indemnification, some insurance that will keep you in business. honestly, i'm shocked we don't have that, you know, either as a government program or as an in private insurance for that capability. again, that's, to me a real take away of this hearing. so, yeah i want to thank all the witnesses for your testimony, i'll state again, you know, this committee you know, really does have a great deal of sympathy for your loss, mr. schneider, and we're dedicated to doing what we can to help you out of your predicament. but this hearing record will remain open for 15 days until july 23rd at 5:00 p.m. for the submission of statements and questions for the record. this hearing is adjourned.

and scheduled to start in a few minutes on c-span 3, a senate hearing on rules that have been proposed to deal with conflicts of interest with financial advisers. live to the hearing. labor secretary tom perez will be one of the witnesses. and c-span 3 will also be live on thursday when secretary of state john kerry energy secretary ernest moniz and jack lew testify before the senate foreign relations committee.

10:00 a.m. eastern, 7:00 pacific on thursday. here's a look at what's ahead this week on c-span's q & a. >> it's almost as if they were matter and anti-matter. >> freedom breeds inequality. i'll say it a third time. >> twice is enough. >> always to the right. almost always in the wrong. >> i confess anything complicated -- a. >> the film makers talk about "best of enemies" on the 1968 debates between conservative and liberal over war politics god and sex. >> there's not someone in their ear, very unlike today. you know, today i believe there's someone saying, you know, the numbers are dwindling, talk about you know hot topic, hot salacious topic number two. whereas then i don't think that

was the norm in tv at the time. and i don't think these guys needed as morgan said. the moderator, who i think was embarrassed by this. he was moderating, but disappears for sometimes five or more minutes at a time. so, i think really everybody at abc stood back and let the fire burn. >> sunday night at 8:00 eastern and pacific -- >> when congress is in session, more of the best access to congress with live coverage of hearings, news conferences and key public affairs events. and every weekend, it's american history tv. traveling to historic sites. discussions with authors and historians and eyewitness accounts of events that define

the nation. c-span 3 coverage of congress and american history tv. >> live now to a senate hearing on a proposed rule aimed at eliminating conflicts of interest for retirement advisers. on conflict of interest rules and how this new rule would strengthen the existing rules. financial industry representatives say the new rule would increase costs for financial services. there's also a second panel scheduled to testify at this hearing being held by a subcommittee of the senate health, education, labor and pensions subcommittee.

welcome all our visitors secretary labor, secretary perez, other members that will testify in a little bit. and certainly always glad to

have my ranking member frank in here. he keeps me straight all the time. if not straight, at least he keeps me laughing. >> you keep me laughing, too. is that the proper thing to say? >> that sounds good. >> no we're good friends. we are. and you're the co-sponsor of my very first bill. >> that's right. i wanted to mention it on television. >> i appreciate it. >> it was the second comment i didn't like. we'll talk about that later. >> we're going to not rehash our personal history. >> only good friends talk like this. let me welcome all of you now. a comfortable retirement is a part of the american dream. unfortunately, the fine print included in hundreds of pages of department labor regulations, which seek to redefine a single word fiduciary would deny millions of americans a chance to plan for one. limit access to investment advice for the families who need

it most. and in my opinion is a solution in search of a problem. by way of example in terms of that one word being defined by pages of regulation that's the regulation and the comments of the department of labor on fiduciary rule change. just to give you an idea of the paperwork it took to explain it. >> is that a gift for me? >> i'm going to let you take that home and read it tonight. or do whatever else you'd like to do with it. the regulation intentions are commendable to ensure that low and middle income families receive the same quality of advice about their investments as wealthy people do. under the proposal, people who provide investment advice must act in the best interest of the investors or forfeit their fees. under the new rule, providers of retirement savings vehicle such as i.r.a.s and 401(k)s must either enter into a contract that says it will act as a fiduciary and benefit the investor. the problem is that the

regulations that govern the advisers would limit retirement accounts and increase fees so much so that low and moderate income people would be more low income, more moderate income and less informed. also requires disclosure of more information that is reasonable or often times possible to provide. advisers must estimate the cost level of fees investor to pay over multiple years. because fees often fluctuate as do rates and return, such estimates are inevitably wrong. for that reason, they are considered misleading and actually banned by the securities and exchange commission. in my private life of 33 years i dealt with regulation z in terms of disclosure of real estate and mortgage information and expressing annual percentage rates and other rates of return at any one point in time can by it's very nature be wrong the next day because of changes in markets. and you can penalize people for something that was no fault of their own. the regulation would also restrict i.r.a. investors to a list of products that the department of labor deems

appropriate. while the labor department should meddle in decision defies all logic. yet, there is a one size fits all open approach would prevent investors from diversifying and ways to protect from the downside risk. the hundreds of investment options that retirement savers would have would be reduced to a mere handful for most americans. this seems entirely koumpbt lyly counterintuitive of increasing planned participation for all citizens of our country. worse because investors must have a contract with their head advisers to receive recommendations about which to put in their investment counts. the millions of existing i.r.a.s and 401(k)s would be blocked from getting ongoing advice because those contracts weren't in place when the accounts were created. millions of people will receive letters from the brokerage firm telling them they'll no longer be able to get personalized assistance. by one estimate, a third of the financial representatives would be forced to leave the business because they couldn't be properly licensed. and having a personal representative matters. according to the 2012 study, 3/4

of nonretired consumers contributed to an i.r.a. plan, retirement plan or i.r.a. while fewer than half of the consumers that don't have advisers save for retirement. in other words many working families will not be able to get the advice they need to feel comfortable about decisions that are made. studies have shown that losing -- that losing personnel -- personal assistance for retirement savings could produce about 40% the amount of savings saved by low and moderate income people. as i told secretary perez on the phone, i'm as interested as he is to seeing people get quality advice, those that advise him are responsible and accountable for that advice and do everything we can to prevent the access low and moderate income families have. the matter is not the goal. it's how you get to the goal and how you define it. in my judgment that many pages of regulation and that much explanation of a single goal is entirely too much and too restrictive on the access to free advice that these people need to get. with that said, i'll turn it

over to our ranking member from minnesota. >> thank you, senator, isaacson. this is my first hearing as ranking member of the employment and workplace safety subcommittee. and i look forward to working with my friend, chairman isaacson and members of the committee on the important role of the subcommittee plays with jurisdiction over a variety of employment issues, including workforce education and training, the health and safety of america's workforce, and workplace flexibility. in today's hearing we are discussing another important issue, protecting america's workers retirement savings. and in particular, a review of the department of labor's proposed rule to resolve conflicts of interests when managing the retirement nest

eggs. we have read the headline time and time again that americans are not saving enough for retirement. i have heard it many times from hard working minnesotans about how hard they're working just to keep up. and provide for their families let alone save for retirement. saving for retirement is hard. and investing can be intimidating for those without any experience, leaving many to rely on advisers to help guide them through their retirement planning. now, most advisers and brokers put the interests of their clients first. and i have heard from a number of them who have sent me letters recently in support of the department of labor's proposed rule. including -- i'm going to mispronounce charlie's name. but it's something like -- bolignino. i think it means meat sauce in -- in some language.

but he is of side by side financial planning in plymouth, minnesota. and the best meat sauce comes from the western suburbs of minneapolis. charles buck of buck financial advisers in woodbury, minnesota and other minnesota financial adviser who has gotten ahold of me and in support of this rule. we will also hear from scott piritz later today. the managing director of rebalance ira and he'll be testifying. he offers his client's asset management and custom investment portfolios for iras and offers one-on-one consultation. and he charges some of the lowest fees in the industry. but there are also those who charge much higher fees.

and sometimes even lower returns for the retirees. and when that happens, it's hard for working americans who are planning for retirement. and they pay the price. these hardworking people shouldn't have to worry about the fact that some advisers don't have their best interests in mind. i think we can all agree to that. the department of labor's proposed conflict of interest rule seeks to address this issue. many groups are supportive of dol's role. but there are also those that believe the rule will result in unintended consequences. and that's what this hearing is about. and it's why it's so important. this is a process. and we will hear from a range of perspectives today to help us understand the benefits and short comings of the proposed rule. that's why i was a little taken aback by the title of today's hearing, which is restricting

advice in education d.o.l.'s unworkable proposal for american families and retirees. if i'd been naming it i could have named it d.o.l.'s fiduciary proposal. what a great rule. but that -- i don't think that would've helped much. right? no. of course not. see, you're in agreement. i think that the department's intent with proposed rule is very clear to help american investors keep more of their hard-earned money for retirement, but as the saying goes, the devil is in the details and that 400 plus pages gift wrapped beautifully. there are many details in this rule. i look forward to hearing from secretary perez to better understand how this proposed rule will work and from other witnesses on how we can make this rule even better. thank you, mr. chairman.

>> thank you senator, franken. we'll now turn to secretary perez, the department of labor. secretary perez? >> thank you, mr. chairman. >> if you could hold your remarks, we'd appreciate it. >> i'll do my best. >> thank you. members of the committee, it's an honor to be here with you. i want to start by talking about a real person. behind every regulation or proposed regulation is a real person. a navy veteran and electrician did everything right. he and his wife raised four kids in suburban chicago. they built a solid middle class life. they saved their money. they built up an impressive portfolio with vanguard. and when he was stricken with alzheimer's and could no longer manage the finances, she made an appointment at the bank. the bank's investment broker told her to liquidate the vanguard portfolio and sold them a very complex, variable annuity to the tune of $650,000.

merlin was something like 75 or 78 years old at the time of the sale. of this variable annuity. elaine trusted this advice thought it was in their best interest. the annual fee on that variable annuity. the annual fee was $26,000. and if needed to access the money right away, a 7% surrender charge would cost them more than $45,000. in the end, the broker's conflicted advice cost a hard working family more than $50 thourkds. $50,000. this story is tragic but not unique. also not illegal because someone concluded that the advice was suitable. conservative estimates by the counsel of economic advisers placed the cost of conflicted advice at more than $17 billion annually. arissa is over four decades old. in my parents' generation, when you retired, you got a pension, pen, a party. and that pension was a defined

benefit pension. today, we have an $11 trillion market of defined contributions of 401(k)s and iras. $11 trillion. times have changed. consumers now have to make critical decisions about how to invest these funds that they have so hard-earned. when you go to a doctor or lawyer they have a medical legal obligation. it's about making sure the same set of rules, best interest of the consumer apply to when you are getting help in retirement. and that is indeed the case for many advisers like the one my wife and i use who is a fiduciary. and he puts our best interest first. the majority who operate under this commitment who operate in

this space are under no such commitment, although in many cases, their market actually suggests they are. it's important to make one thing clear and senator franken alluded to this. while there are undeniably bad apples, this is not a case about bad people doing bad things. trying to do the right thing every day. the nub of the problem is good people operating within a structurally flawed system. a market that sees personal financial interests of the adviser and the firm all too frequently misaligned from the best interest of the customer. our goal in this proposed rule making is straightforward. to align the best interest of the customer with those of the adviser and the firm. this has been the product of a significant amount of outreach to a wide array of stake holders. i appreciate the support we've

gotten from so many in the industry. people like brian moynihan, the ceo of bank of america who says we believe doing the best interest for our customers is absolutely the right thing to do. the founder of to do. jack vogle, the founder of vanguard supporter of the rule we'll hear from a witness shortly who plays in this space every day as a fiduciary, who said when you put your customers first it is great for your business. and a transcript from the house shows there is an interesting thing happening right now. the conversation is shifting from whether to have a best-interest standard to ensuring that a best interest standard can be implemented. i'm heartened by that shift and we welcome any and all suggestions on how to improve the proposed rule to make sure

it can be implemented. we heard and understand concerns such as point of sail disclosure, date after tension and the mechanics of impleaing the best -- implementing the best interest standard. and as far as we don't lose sight of our bright star we can get it done. this is providing guard rails and not straight jackets. and it is important as we remember going through the rule making that a subset of the add vissers operate nor a fiduciary model and serve a wide array of customers and serve small investors and they do it well. we know it can be done because it is being done by so many businesses. a number of folks have raised concerns that the proposed rule will shut out the small saver from investment advice. entities such as the consumer federation of america, aarp, they take a backseat to no one

and they are concerned about small investors and they strongly support this rule. and we've consulted with several profitable firms whose business model is all about working with the little guy. and there was an investment firm in palo alto called well front as they cite their success as living proof not only is it possible to provide fiduciary service at low cost to small investors nationwide but the market greatly rewards this effort. and when i talk to firms like this and tell them about the argument on the other side that our rule making will make it impossible to serve the small saver the most frequent advice i get is give them my phone number and my e-mail because i'll take their business any day of the week. i know that the industry can adopt to serve this $11 trillion market and i'm confident that we can work with them. we've reached out in addition to small savers to small businesses who want to ensure that their employees have access to retirement plans to recruit the

best and the brightest. our proposed rule has a number of safeguards and safety valves to access retirement plan options for employees. as carry conklin a small business owner from new jersey told us, i am all for this proposal. i don't have a big firm with our own in-house financial team that can advice me, i want the financial advisers i work with be required to represent my interest. and we want to build a big table and invite everyone up. when you are building a rule, you have a big table and listen and have a healthy dose of humility the and that is our faith. humility and a keen mind and ear. our best interest is in the line of ronald reagan, trust but verify. the marketing material said you look out for your customer's

best interest and this is memorializing what is in those interests and we look forward to continue to hear from as many voices as possible. we've extended the comment period. we're convening three days of public hearing next month and then we'll reopen comment after we publish the transcript of those hearings. we look forward to the engagement and we have gotten so much good feedback from so many businesses that have come in with a get to-yes attitude and they have challenges and questions and concerns but they have a get to-yes attitude and they recognize like jack vogelsong said it is great for your customer and great for business. this is about middle class security and one of the pillars is retirement security and i look forward to working with this committee and the stakeholders to continue the process of producing a rule that will work for american savers

and will work for american business and work for all stakeholders. so mr. chairman, thank you for your time. >> thank you secretary perez. we appreciate your attendance and service to the country. what -- if your rule was implemented as it is currently con nand this stack of papers, what would have happened differently to marilyn tofl and his wife that they cashed in at vanguard and bought an annuity. what would your rule do with the $26,000 fee or the 7% early withdrawal fee or anything else you might have determined what was wrong. >> that person advicing them -- advising them would have to look out to what are is in their best interest. >> excuse me. i understand what they went to is a bank is that correct. >> yes. >> would that -- would a bank be considered to meet the fiduciary standard you require. >> they went to a broker dealer at a bank to a broker dealer has

an obligation -- had a suitability obligation which is less -- which creates part of the challenges that we have in this situation. so the broker-dealer under the proposed rule would have an obligation to look out for the best interest of the consumer. and the challenge that we see, and the $17 billion annual cost of conflicted advice is born out of the fact that there are multiple products that can be suitable and that broker-dealer is totally within his or her bounds to then take four or five suitable products and steer the customer to the product that generates morphys for him or her at the expense of the customer and that isn't right and we think that should be changed. >> in your vision, how could they remedy the situation with the broker dealer. what would be the broker dealer's obligation to the ladies and gentlemen who bought

the variable annuity. >> to put the customer's best interest first. >> how do you do that? what if he said that was the best interest of the customer? what penalty is there? what do you do to the broker dealer or the person offering the advice for what you consider is bad advice. >> you would file a claim for excessive fees to recover the losses incurred as a result of conflicted advice. >> so it basically creates a cause of action for an individual, if they feel like they have been aggrieved to file for a remedy, is that right. >> right. and it has a provision in an individual claim like this that the particular bank could have an arbitration clause and they require if there is any claim that arises out of the service we provide it would be resolved through arbitration. that is one of the proposals in the rule that is in the red -- >> so the adviser would do that or the individual would -- >> no, the institution that is

working with this individual could, as part of the agreement working with that individual, would be able to include an arbitration clause. so in other words, if we have a problem, you can't go and file a claim in state or federal court you have to go through arbitration. >> i understand. >> and that is a proposal that is taken from -- we spoke to a lot of other agencies that are involved in this issue, s.e.c. and other regulators and that is basically parallel to the procedures used in other agencies. >> it is a merit orus move. you said the -- i wrote fast so if i missed it tell me. you said the rub of the problem is, quote good people

return has a fraction of those fees, you have perverse incentive to steer them to the product that generates the most fees. and again, that is totally permissible so i'm not casting aspersions on the person that does it but i'm saying that is not right. and we can device a system and i under score what i said in my testimony there is a substantial number of people, including one of the witnesses from the next panel that operate under a fiduciary model already and demonstrated this can be done and this is being done. >> senator franken. >> thank you mr. chairman. secretary perez, i know today is the last day of the official comment period.

and next month a public hearing is scheduled followed by a second comment period. i've heard from stakeholders who said they are participating in this process and are thankful for the department -- that the department has provided opportunities for feedback. can you share with us how the department has incorporated this feedback in the rule that we have before us today. >> well, i can talk about the feedback that we have gotten. we haven't made any decisions yet senatorer -- senator on what to do, and because the comment section period is still open and we want to take all of the comments we get during that period. what i can say to you with confidence is wreef gotten some -- we've gotten some great advice. and again, there have been a number of people who have come in from industry who dauked about -- talked about how we agree there should be