Testimony Before the United States House of Representatives 
Committee on Energy and Commerce: 
Subcommittee on Oversight and Investigations 
 
 
 
 
Continuing Concerns with the Federal Select Agent Program:  
Department of Defense Shipments of Live Anthrax  
 
Testimony of: 
 
Gregory E. Demske 
Chief Counsel to the Inspector General  
Office of Counsel to the Inspector General 
Office of Inspector General  
Department of Health and Human Services 
 
 
 
 
July 28, 2015 
10 a.m. 
Location:  Rayburn House Office Building, Room 2123 
   
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  Testimony of: 
Gregory E. Demske 
Chief Counsel to the Inspector General 
Office of Inspector General, U.S. Department of Health and Human Services 
 
Good morning, Chairman Murphy, Ranking Member DeGette, and members of the 
Subcommittee.  I am Gregory Demske, Chief Counsel to the Inspector General for the 
Office of Inspector General (OIG), U.S. Department of Health and Human Services 
(HHS).  I appreciate the opportunity to appear before you to discuss the Federal Select 
Agent Program (FSAP). 
 
The Public Health Security and Bioterrorism Preparedness and Response Act of 2002 
(Bioterrorism Act of 2002) established FSAP.  FSAP is administered by the Centers for 
Disease Control and Prevention (CDC) and the Agricultural Select Agent Program within 
the Animal and Plant Health Inspection Service (APHIS) of the U.S. Department of 
Agriculture.  OIG is authorized to conduct investigations and to impose civil money 
penalties (CMPs) against an individual or entity that has violated FSAP regulations.  OIG 
recognizes the importance of FSAP in promoting public health and safety.  
 
This testimony discusses:  (1) OIGs FSAP enforcement, (2) OIGs review of violations 
at the Department of Defenses Dugway Proving Ground Life Science Test Facility in 
Utah (Dugway), (3) OIGs audits of FSAP, and (4) opportunities to strengthen FSAP.   
 
OIG Involvement in FSAP Enforcement  
 
When CDCs Division of Select Agents and Toxins (DSAT) identifies a potential FSAP 
violation, it must first assess whether a potential crime, or a suspicious person or activity 
is involved.  In those urgent situations, DSAT coordinates with the Federal Bureau of 
Investigation.  With respect to FSAP matters, DSAT has broad authority to deny, 
suspend, or revoke an entitys registration, and may require an entity to enter into a 
Performance Improvement Plan.  When DSAT identifies potential misconduct by an 
HHS employee, it coordinates with OIG to gather facts.  OIG presents its findings to the 
appropriate agency so that it can determine whether any disciplinary action is warranted.   
 
If, after DSATs investigation, it concludes that a civil violation might have occurred, 
DSAT refers the case to OIG for potential enforcement.  OIG evaluates the case and, if 
OIG concludes there is a violation, determines the appropriate disposition of the case. 
 
OIGs Approach to Case Resolution 
 
Since passage of the Bioterrorism Act of 2002, OIG has received 68 referrals involving 
53 unique entities from DSAT for potential FSAP enforcement.  OIG resolves each 
referral from DSAT in one of three ways:  (1) imposing a CMP, (2) issuing a Notice of 
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  Violation letter; or (3) closing the case.  OIG found violations in 30 of the 68 referrals.  
OIG has imposed CMPs on 20 entities totaling $2,414,000 and issued 10 Notice of 
Violation letters to parties OIG determined violated FSAP regulations.  OIG has closed 
32 cases and has six referrals pending. 
 
Given the seriousness of any FSAP violation, OIG carefully evaluates its enforcement 
options for each referral, by analyzing the facts and circumstances of the alleged 
violations.  OIG considers the seriousness of the conduct, the security risk posed by the 
violation, the evidentiary strength of the case, the entitys response to the violation 
(including whether the conduct was self-disclosed), the number of violations, and any 
other relevant factors.  Rather than applying a formula, OIG relies on its experience and 
exercises judgment to determine how to resolve a referral and to ensure consistency in 
our approach.   
 
OIG has observed that violations pose variable levels of risk to the nations security and 
the overall safety of entities and individuals possessing, using, or transferring select 
agents and toxins.  In the referrals OIG has reviewed, we have considered the most 
serious or significant violations to include:  actual or potential human exposure to a select 
agent or toxin, theft or loss of a select agent or toxin, performance of unapproved 
restricted experiments, and access to select agents or toxins by a restricted person.  Other 
serious violations for which OIG has imposed penalties include:  unauthorized transfers 
of a select agent or toxin, unauthorized access to a select agent or toxin, failure to 
maintain accurate inventory, and failure to have a biosafety and security plan 
commensurate with the risks associated with a particular select agent or toxin. 
 
Civil Money Penalties:  When OIG imposes CMPs, regulations require OIG to conduct a 
case-specific analysis to determine the appropriate penalty.  OIG does not assign a dollar 
value to a specific regulatory provision, but rather evaluates factors outlined in the 
regulations, including:  (1) the nature of the wrongdoing, including the length of 
noncompliance and whether the evidence demonstrates a pattern of noncompliance; (2) 
the entitys degree of culpability; (3) the entitys history of any prior offenses; (4) the 
entitys financial condition; and (5) other matters as justice may require. 
 
Notice of Violation Letters:  OIG has issued Notice of Violation letters when it has 
concluded that a violation of FSAP regulations occurred but we decided to exercise our 
discretion not to impose CMPs.  In general, Notice of Violation letters describe the 
violation(s) and direct the entity to examine its current practices and policies governing 
select agents, and to implement corrective actions and safeguards to prevent future 
violations.  A copy of each Notice of Violation letter is sent to DSAT.  OIG has issued 
five Notice of Violation letters to Federal entities, three to universities, and two to other 
private entities. 
 
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  Referral Closed:  If OIG concludes the case does not merit a CMP or Notice of Violation 
letter, OIG closes the case and informs DSAT of the closure. 
 
Approach to Federal Entities 
 
In FSAP referrals involving violations by Federal entities, OIG has resolved matters by 
issuing Notice of Violation letters to high-ranking officials with oversight responsibility 
for the entities.  While we believe OIG has the authority to impose a CMP on a Federal 
entity, we have not done so in prior cases on the basis of several considerations.  Any 
money paid by a Federal entity would simply be moved from a Federal agencys budget 
to the General Fund of the Treasury.  Although there would be no net receipt of money 
for the Federal Government, the Government would incur the cost of negotiating or 
disputing the CMP.  CMP payments from Federal agencies are unlikely to promote better 
future compliance and, in fact, may reduce resources for the Federal entitys future 
compliance efforts.  OIGs approach is consistent with other Federal agencies that issue 
letters, or take other nonmonetary action, in similar situations involving violations by 
Federal agencies.  Since passage of the Bioterrorism Act of 2002, OIG has received 16 
referrals regarding Federal entities and sent five Notice of Violation letters. 
 
Dugway:  2007 Anthrax Violation  
 
In April 2007, Dugway shipped anthrax to a research facility.  The shipment included a 
certification that the anthrax was nonviable.  The research facility tested the material 
upon receipt and found the presence of a low concentration of viable anthrax. 
 
DSAT investigated and concluded that Dugway used a scientifically acceptable 
inactivation method to kill the anthrax, but that method was not part of Dugways 
Standard Operating Procedures.  DSAT also found that Dugway used a scientifically 
acceptable viability test, but that Dugway ignored the outcome of the test, which showed 
that viable anthrax was still present. 
 
DSAT referred the potential violation to OIG for review on November 16, 2007.  After 
considering all the evidence, OIG concluded that Dugway shipped viable anthrax without 
obtaining prior DSAT approval.  On December 2, 2009, OIG issued a Notice of Violation 
letter to Dugway stating that OIG had determined Dugway had violated FSAP by making 
an unauthorized transfer of anthrax.  The letter also stated that Dugway should examine 
its current policies and practices, take corrective action, and monitor its safeguards on an 
ongoing basis. 
   
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  Dugway:  2008 & 2010 Botulinum Neurotoxin Violations 
 
On November 18, 2010, a Government laboratory received a shipment from Dugway that 
included a vial of Botulinum neurotoxin.  The packing slip indicated that the vial 
contained a small amount of Botulinum neurotoxin that would be exempt from FSAP 
regulations.  However, when the Government laboratory sought to use the Botulinum 
neurotoxin, it determined that the vial actually contained a greater amount of Botulinum 
neurotoxin that is not exempt from FSAP regulations.  On April 29, 2011, the 
Government laboratory reported the unauthorized transfer to DSAT.  DSAT concluded 
that Dugway had shipped Botulinum neurotoxin without obtaining the required DSAT 
prior authorization.  Dugway also self-reported to DSAT two additional unauthorized 
shipments of Botulinum neurotoxin that occurred in 2008.   
 
DSAT referred this case to OIG on June 16, 2011.  OIG concluded that Dugway shipped 
Botulinum neurotoxin in amounts that were not exempt under FSAP regulations without 
obtaining prior DSAT approval.  Based on these facts, including Dugways corrective 
action and Dugways status as a Federal entity, on November 3, 2011, OIG issued a 
Notice of Violation letter stating that OIG had determined Dugway had violated FSAP by 
making three unauthorized transfers of Botulinum neurotoxin.  The letter also stated 
Dugway should examine its current policies and practices, take corrective action, and 
monitor its safeguards on an ongoing basis. 
 
To date, OIG has not received a referral for any more recent potential violations 
involving Dugway. 
 
OIG Audits 
 
Over the years, in addition to our enforcement efforts, OIG has audited Government and 
private entities for FSAP compliance.  For example, OIG audited six Federal 
laboratories FSAP regulatory compliance.  The audit results were provided to the head 
of the relevant Federal agency, putting it on notice of deficiencies and non-compliance.  
In 2011, OIG issued a report summarizing these audits.  OIG found that DSAT did not 
effectively monitor and enforce certain FSAP regulatory provisions, resulting in 
violations that were not identified by DSAT.  CDC concurred with OIGs 
recommendations for improvements to its FSAP oversight.  OIG also audited transfers of 
select agents and found a high incidence of access by unapproved persons, typically at 
the point of delivery.  CDC concurred with OIGs recommendations for enhancing 
controls on shipping and receipt of select agent packages. 
 
Future OIG Work 
 
OIG is expanding its audit and evaluation assessments of select agent management.  
Collaborative efforts are underway to define the scope and methodology of this work.  
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  OIG will target its initial efforts on CDCs oversight of FSAP, which will shed light on 
the scope, magnitude, and potential implications of recent biosecurity breaches, and on 
HHS agencies (e.g., National Institutes of Health, Food and Drug Administration) 
operation of laboratories that handle select agents.  Related efforts under active 
consideration are HHS agencies decision-making processes and protocols; risk 
assessments, tracking, and monitoring; the volume, frequency, and nature of laboratory 
enforcement actions; and the development and implementation of corrective actions.  
OIG takes a risk-based approach to identify areas for audit or evaluation, so our efforts 
may be redirected to other areas, as warranted.  OIG understands that CDC recently 
announced plans to conduct a comprehensive review of laboratory safety.  OIG will 
coordinate with CDC and other HHS agencies to ensure that our work complements and 
advances effective oversight of FSAP through objective assessments and 
recommendations. 
 
Opportunities to Strengthen FSAP 
 
Through this testimony, OIG offers the following opportunities to strengthen and 
improve the Governments ability to administer FSAP and improve its ability to enforce 
violations of the regulations.  OIG has identified these opportunities through our 
investigative and enforcement experience.  
 
FSAP regulations should: 
 
  require laboratories to document inactivation procedures, validation and 
safety/sterility testing procedures, and outcomes to ensure that a select agent or 
toxin is rendered nonvirulent; 
   
  require registered entities to video entry/exit points and video specific laboratory 
select agent and toxin work; 
 
  require registered entities to maintain additional records, including all documents 
created or maintained in the ordinary course of working with a select agent and 
toxin; 
 
  expressly prohibit the destruction or alteration of any document that is required to 
be maintained under the regulations; and 
  
  expand the document retention period for registered entities from three to six years 
to match the CMP statute of limitation period. 
   
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  In addition, Federal inspectors ability to conduct effective and meaningful oversight 
should be strengthened by: 
 
  requiring any registered entity to make available for interview upon reasonable 
request by inspectors any individual who has accessed, possessed, used, or 
transferred a select agent or toxin;  
 
  allowing inspectors to physically inspect, handle, or test material that is believed 
to be a select agent or toxin, when appropriate (consideration should be given to 
DSATs ability to immediately transfer material, in accordance with the 
regulations, so that independent testing can be performed to determine whether 
particular material is covered by the regulations); and 
 
  considering the viability of independent third-party testing of select agent or toxin 
material.   
 
Conclusion 
 
On the basis of our enforcement work, OIG has identified opportunities to strengthen 
FSAP that CDC should consider as it reviews how FSAP can be improved.  In addition, 
OIG will continue to provide oversight through audits and evaluations of FSAP and use 
our CMP authority to take enforcement actions. 
 
Thank you again for inviting me to speak about OIGs role in FSAP.  I would be happy to 
answer your questions. 
 
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