GRAIN INSPECTION TUESDAY, MARCH 16, 1976 U.S. SENATE, SUBCOMMITTEE ON FOREIGN AGRICULTURAL POLICY, The subcommittees met at 9:40 a.m., in room 324, Russell Senate Office Building, Hon. Hubert H. Humphrey (chairman of the Subcommittee on Foreign Agricultural Policy), presiding. Present: Senators Humphrey, Clark, and Bellmon. STATEMENT OF HON. HUBERT H. HUMPHREY, A U.S. SENATOR FROM MINNESOTA Senator HUMPHREY. We will open our hearings; some of our colleagues will be here in a little while. I want the witnesses to know we are continuing our hearings today under the Subcommittee on Foreign Agricultural Policy and the Subcommittee on Agricultural Production, Marketing, and Stabilization of Prices, it is our hope to conclude these sessions very shortly. These sessions began in June of 1975. These two subcommittees heard testimony on March 11 relating mainly to inspection and weighing practices at export points. The following day we received additional information regarding the recent Cook shipment of corn to Poland. Our task today is to look at some other areas. One major issue is how we should deal with the question of major interior points as compared to the port export points. The answer to that question will have a bearing on our rural country elevators. Our farmers are naturally concerned that the fees charged are not significantly or unfairly altered by the legislation which we hope to develop. One area where we need additional recommendations is in weighing, and how our legislation can best deal with this issue. I am pleased that there are a number of witnesses here today with knowledge in this area. This will become important as we decide in this subcommittee, and ultimately in the full committee, as to which direction to go. I have to say quite honestly that there are some very perplexing problems which do not always appear on the surface. We started these hearings looking at the issue of inspection relating to grains. We find that we also have a problem that relates to weighing, because (1) there have been some examples brought to our attention of short weighing, and then how do you fit in a Federal system or a part Federal, part State, whatever we ultimately resolve, to cover both areas of the inspection as it relates to grades and weighing as well? We need to give some thought to staffing and the impact of our legislation on both State and privately employed individuals. The committee staff has prepared summaries of the bills that are before us, in order to help us focus on the issues at hand. These capsule summaries should be helpful to members in reaching judgment on specific issues. At this point in the record we will insert copies of S. 2256, S. 2297, S. 2326, and S. 3055 along with reports from the Department of Agriculture concerning the legislation. [The bills and reports follow:] [S. 2256, 94th Cong., 1st sess.] A BILL To amend the United States Grain Standards Act in order to establish a Federal Grain Inspection Agency, to require that inspections made under such Act be made by Federal employees, and for other purposes Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act may be cited as the "Federal Grain Inspection Act of 1975”. SEC. 2. (a) Section 3 (a) and (b) of the United States Grain Standards Act are amended to read as follows: "(a) The term 'Director' means the Director of the Federal Grain Inspection Agency established by section 3A of this Act. "(b) The term 'Agency' means the Federal Grain Inspection Agency established by section 3A of this Act.". (b) Section 3(j) is amended to read as follows: "(j) The term 'official inspection personnel' means employees of the Agency who are authorized by the Director to perform specified functions involved in official inspection activities under this Act.". (c) Section 3 (m) is amended to read as follows: "(m) The term 'official inspection agency' means the official inspection personnel located at an inspection point designated by the Director for the conduct of official inspection under this Act;". (d) Section 3(u) is amended by striking out "deceptive loading, handling, or sampling' means any manner of loading, handling, or sampling" and inserting in lieu thereof 'deceptive loading, handling, sampling, or weighing' means any manner of loading, handling, sampling, or weighing". 66 (e) Section 3 is amended further by adding at the end thereof the following new subsection: "(v) The term 'dockage item' means material not used in determining the net weight of grain for purposes of buying and selling.". (f) The United States Grain Standards Act is further amended by (1) striking out the words "Department of Agriculture" each time they appear and inserting in lieu thereof "Agency"; and (2) striking out "Secretary" each time it appears and inserting in lieu thereof "Director". SEC. 3. The United State Grain Standards Act is amended by inserting after section 3 the following new sections: "ESTABLISHMENT OF FEDERAL GRAIN INSPECTION AGENCY “SEC. 3A. (a) There is established in the Department of Agriculture an agency to be known as the Federal Grain Inspection Agency. "(b) The Agency shall be headed by a Director to be appointed by the President by and with the advice and consent of the Senate. The Director shall be responsible for the administration of this Act. "DUTIES OF THE DIRECTOR "SEC. 3B. (a) It shall be the duty of the Director to establish the policies, guidelines, and regulations by which the Agency is to carry out the administration of this Act. "(b) The Director shall be responsible for inspecting, monitoring, and standardizing all equipment used in connection with the grading of grain under this Act. "(c) Notwithstanding any other provision of law, the Director shall be responsible for the inspection and testing of all weights and scales used in the weighing of grain sold, offered for sale, or shipped in interstate or foreign commerce, including all weights and scales used for the weighing of grain stored in warehouses licensed under the United States Warehouse Act.". SEC. 4. (a) Section 4(a) of the United States Grain Standards Act is amended by striking out "is authorized to" and inserting in lieu thereof "shall". (b) Section 4(a) is further amended by striking out "handling" and inserting in lieu thereof "handling (including weighing)". SEC. 5. Section 5 of the United States Grain Standards Act is amended to read as follows: "SEC. 5. (a) Whenever standards are effective under section 4 of this Act for any grain "(1) no person shall ship from the United States to any place outside thereof any lot of such grain unless such lot is officially inspected in accordance with such standards on the basis of such samples taken after final elevation as the grain is being loaded aboard, or while it is in the final carrier in which it is to be transported from the United States, and unless a valid official certificate showing the official grade designation of the lot of grain is promptly furnished by the shipper, or his agent, to the consignee with the bill of lading or other shipping documents covering the shipment; and "(2) any lot of such grain shipped from the United States to any place outside thereof shall be officially inspected upon its entry into the foreign port of its destination for the purpose of determining whether such lot of grain is of the same kind, class, quality, and condition that it was certified to be upon official inspection in the United States, unless the country in which the port of destination is located prohibits such inspection. "(b) All inspections of export grain required under this section shall be performed by employees of the Agency authorized by the Director to perform inspections under this Act. "(c) The Director may waive any requirement of this section with respect to shipments from or to any area or any other class of shipments when in his judgment it is impracticable to provide official inspection with respect to such shipments.". SEC. 6. (a) The heading of section 7 of the United States Grain Standards Act is amended to read as follows: "OFFICIAL INSPECTION AUTHORITY FOR CERTAIN EXPORT GRAIN AND CERTAIN OTHER GRAIN; FUNDING" (b) Subsections (a) and (b) of section 7 are amended by striking out "is authorized to" and inserting in lieu thereof "shall”. (c) Section 7(e) is amended (1) by striking out "except when" and all that follows through "inspection agency" in the first sentence; (2) by striking out the second sentence and inserting in lieu thereof the following: "The fees authorized by this paragraph shall, as nearly as practicable and after taking into consideration any proceeds from the sale of samples, cover the costs of the Agency incident to the performance of its duties in a normal year under this Act."; and (3) by inserting the following immediately before the period at the end of the third sentence; ", including the salaries of Federal personnel engaged in duties authorized under this Act". (d) Section 7(f) is amended to read as follows: "(f) Unless otherwise agreed, the costs of official inspection performed under subsections (a) and (b) of this section shall be borne by the buyer.". (e) Section 7 is amended by adding at the end thereof a new subsection (g) as follows: “(g) The Director may adopt rules and regulations to provide for the periodic rotation of official inspection personnel.". SEC. 7. Section 8 of the United States Grain Standards Act is amended to read as follows: "SEC. 8. (a) The Director shall, whenever he determines it necessary in order to administer the provisions of this Act, issue a license to any individual employed by the Agency or to any individual who is to be so employed as a result of being licensed under this section, upon presentation to the Director of satisfactory evidence that such individual is competent to perform all or specified functions involved in official inspection. The Director may authorize any competent employee of the Agency to perform all or specified functions involved in supervisory or appeal inspection or initial inspection of United States grain in Canadian ports. No person shall perform any official inspection functions for purposes of this Act unless he holds an unsuspended and unrevoked license or authorization from the Director under this Act. "(b) The Director may require such examinations and reexaminations as he may deem warranted to determine the competence of any individual to perform any official inspection function under this Act.". SEC. 8. Section 11 and the heading thereto of the United States Grain Standards Act is repealed. SEC. 9. The United States Grain Standards Act is amended by redesignating sections 9 and 10 as sections 10 and 11, respectively, and by adding after section 8 a new section 9 as follows: "PROHIBITION OF CERTAIN CONFLICTS OF INTEREST "SEC. 9. No official inspection personnel shall "(1) be financially interested (directly or otherwise) in any business entity owning or operating any grain elevator or warehouse or engaged in the merchandising of grain; or "(2) be in the employment of, or accept gratuities from, any such entity; "(3) be engaged in any other kind of activity specified by regulation by the Director as involving a conflict of interest.". SEC. 10. (a) Section 12(a) of the United States Grain Standards Act is amended by striking out "and every person licensed to perform any official inspection function under this Act". (b) Section 12(c) of such Act is repealed. SEC. 11. Section 13(a)(3) of the United States Grain Standards Act is amended by striking out "or sampling", and "or sampled" and inserting in lieu thereof “sampling, or weighing" and "sampled, or weighed", respectively. (b) Section 13(a) of such Act is amended by striking out "or" at the end of clause (10), by striking out the period at the end of clause (11) and inserting in lieu thereof a semicolon, and by adding at the end thereof the following new clause: "(12) engage in the falsifying of the weight of any grain shipped in interstate or foreign commerce; "(13) adding to any grain shipment, after its purchase from the original producer, or after acceptance of such grain for storage or handling, any foreign material which would change the character or test weight of that grain from the test weight or character prevailing at time of first purchase; but the foregoing provision of this clause shall not prohibit any grain from being fumigated to preserve its quality, or separate lots of grain of the same kind from being blended; "(14) give, pay, or offer, directly or indirectly, to any official inspection personnel as defined by section 3 (j) of this Act or to any officer or employee of the Agency authorized to perform any of the duties prescribed by this Act, or by the rules and regulations of the Director, any money or other thing of value, with intent to influence such official inspection personnel, officer, or employee of the Agency in the discharge of any duty provided for in this Act, or by rules and regulations of the Director; or "(15) fail to comply with the provisions or section 18 of this Act.". (c) Section 13(a) (11) is amended by striking out "8, 11" and inserting in lieu thereof "9". (d) Section 13(a) (1), (2), (3), (5), (6), and (b) (2), (3) are amended by striking "knowingly" wherever it appears. (e) Section 13 (c) is repealed. SEC. 12. Section 14 of the United States Grain Standards Act is amended to read as follows: "SEC. 14. (a) Any person who knowingly or intentionally commits any offense prohibited by section 13 shall be guilty of a felony and shall, on conviction thereof, be subject to imprisonment for not more than five years, a fine of not more than $10,000, or both. "(b) Any person who recklessly commits any offense prohibited by section 13 shall be guilty of a misdemeanor and shall upon conviction thereof, be subject to imprisonment for not more than one year, a fine of not more than $5,000, or both. "(c) Any person who negligently commits any offense prohibited by section 13 shall be guilty of a misdemeanor and shall, on conviction thereof, be subject to imprisonment for not more than six months, a fine of not more than $3,000, or both.". SEC. 13. Section 16 of the United States Grain Standards Act is amended by(1) inserting "(a)" after "SEC. 16."; (2) inserting "for suspension or revocation of a certificate of registration issued in accordance with section 18 of this Act" immediately after “Act” in the last sentence of such section; and (3) adding at the end thereof a new subsection as follows: "(b) The Director shall investigate the cancellation of any contract for the sale of grain required to be inspected under this Act or of any complaint regarding the operation or administration of this Act or any official transaction with which this Act is concerned.". SEC. 14. Section 17 (g) of the United States Grain Standards Act is amended by striking out all that follows "be subject to" and inserting in lieu thereof "imprisonment for not more than six months, a fine of not more than $3,000, or both.". SEC. 15. The United States Grain Standards Act is further amended by redesignating sections 18 and 19 as sections 21 and 22, respectively, and by inserting after section 17 the following new sections: "REGISTRATION "SEC. 18. (a) The Director shall provide, under such regulations as he may prescribe, for the registration of all persons engaged in the business of buying grain for sale in interstate or foreign commerce, or in the business of handling, weighing, or transporting of grain for sale in interstate or foreign commerce. No such person shall engage in any such business in intertate or foreign commerce unless he has registered with the Director and has an unsuspended or unrevoked certificate of registration; however, this subsection shall not apply to "(1) any person who only incidentally or occasionally buys for sale, or handles, weighs, or transports grain for sale and is not engaged in the regular business of buying grain for sale, or handling, weighing, or transporting grain for sale; or "(2) any producer of grain who only incidentally or occassionally sells or transports grain which such person has purchased; or "(3) any person who transports grain for hire and does not own a financial interest in such grain other than as a producer, feeder, or processor; or "(4) any person who buys grain for feeding or processing and not for the purpose of reselling and only incidentally or occasionally sells such grain as grain. "(b) The Director shall charge and collect fees from any person registered pursuant to subsection (a) and a certificate of registration shall be issued to all persons who have registered. The amount of such fees shall be determined on the basis of the costs of the Director in administering the registration directed by subsection (a). Such fees shall be deposited in, and used as part of, the funds described in the third sentence of section 7(e). "(c) (1) Any certificate of registration issued in accordance with this section shall contain "(A) the name and principal address of the business, "(C) the names of the principal officers of such business, |