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were separated from AMS, it would be necessary to develop a field staff for AMS grain activities as well as one for activities to be administered by the new Agency. Thus, the establishment of a separate agency would create needless overhead and duplicate numerous support activities. Furthermore, the appointment of an Administrator of such an agency for a fixed term to a purely executive-type agency sets a bad precedent and would seriously erode accountability to the President of the United States.

(2) Federal Inspection at Major Inland Locations.-S. 3055 goes beyond S. 2297 and requires Federal original inspection and weighing at major inland locations (25 elevators have been identified as major inland locations). The Department strongly opposes Federal involvement in the inspection and weighing process to the magnitude specified in S. 3055. Federal involvement to this extent is not necessary to restore confidence in the U.S. grain inspection system, neither domestically or for foreign commerce purposes.

Problems currently surfacing in the grain inspection system have been focused at export locations. We have not had evidence presented that major malfeasance has occurred at inland points. Our position continues to be that the most effective and efficiently operated grain inspection and weighing system is one which encompasses the State and private sector which is supervised by Federal inspectors. Any potential for operating deficiencies at major inland locations is currently being addressed by the hiring of additional supervisors with funds recently provided by Congress. To federalize inspection and weighing at major inland locations at this time would be a premature action on the part of Congress. The Department continues to believe that the availability of adequate resources, through increased supervision, will obviate the necessity for action on the part of Congress with respect to major inland terminals.

(3) Registration.-The bill would require the registration of all persons or firms engaged in the business of buying grain for sale in interstate or foreign commerce and those handling, weighing, or transporting grain for sale. The Department strongly opposes added requirements which will not result in increasing the efficient and effective marketing, handling, inspection and weighing of grain in the United States. Authorities provided in S. 3055 for recordkeeping, Federal access to records, investigation of foreign complaints, withholding of services, increased penalties, and prohibitions of conflicts of interest are sufficient to minimize violations of this Act. Registration provisions in Section 24 would cost $1.6 mllion and require 87 man-years. Such further proliferation of costs and manpower is unnecessary in view of the authorities already provided in S. 3055 for enforcing the grain inspection and weighing system.

(4) Grandfather Clause for Hiring State Employees.-Authority is provided in S. 3055 to hire (without regard to the provisions of Title 5, United States Code, governing appointments in the competitive service) any individual who is presently licensed, or authorized, or otherwise properly certified by a State or political subdivision thereof, to perform the inspection functions to be assumed by the Federal Grain Inspection Agency if the Administrator determines such individuals are technically and professionally qualified for the duties for which they will be assigned. The Department strongly recommends that the established Civil Service Commission regulations governing conversions, as they apply to tenure and probationary periods, be applied in lieu of this provision in S. 3055. The Department strongly opposes this provision of S. 3055 as well as those provisions relating to fringe benefits, including retirement, since they would be contrary to the basic merit principles governing Federal employment and to the policy that Federal retirement and other pay benefits apply only to Federal Service. These provisions would have a disastrous effect on the morale of our current employees. To include these provisions would discriminate to the benefit of one group of individuals, and thus create inequities as compared with normal procedures in Federal takeover of positions.

(5) General Authorities.-It would be difficult for the Department to respond effectively to Section 21 (b) (2) of the bill (report of cancellation of contracts) due to the kind of data available or required for the fulfillment of grain inspection and weighing functions. Such a reporting requirement would require additional resources over and above those normally required for inspection and weighing or supervision thereof particularly in the attempt to monitor the cancellation of contracts of certain export grain.

The Department, therefore, strongly recommends that this provision be deleted from the bill.

The Department concurs in the basic concepts of certain provisions of S. 3055 with respect to:

(1) An aggressive program of investigation, development and implementation of the U.S. grain standards;

(2) Increased levels of monitoring export shipments at destination; (3) Increased Departmental capability to revoke authority of non-Federal agencies to officially inspect and weigh grain;

(4) The partial funding of Federal supervision and certain administrative functions through users fees;

(5) Amended renewal provisions for licensing and non-Federal authority to inspect and weight grain;

(6) New Federal authority for the Secretary of Agriculture to be responsible for, and to cause, supervision of weighing and the testing and inspection of scales at export port locations;

(7) Federal authority to perform original inspection and supervisory weighing functions when required;

(8) Broadened Federal authority to withhold official inspection and weighing services under specific conditions;

(9) Increased prohibitions against certain conflicts-of-interest;

(10) The requirement of inspection and weighing agencies and other participants in the marketing system to keep and maintain appropriate records; (11) Amendment of list of prohibited acts; and (12) Increased penalty provisions.

While it will be necessary for the Department to develop and maintain an aggressive Federal supervision program and to continually improve upon supervision techniques, the Department is confident that under S. 2297 such positive actions can bring about the same basic results in grain inspection as have been claimed for an all-Federal or predominately Federal system. Although the Department has not submitted weighing legislation to the Congress, we are responding to the GAO report on this matter endorsing weight supervision at export port elevators only, utilizing the Federal-State-private concept.

The Department estimates the total cost of S. 3055, including State and private agency costs, to be $121 million requiring 6,090 man-years for the first year, $127 million the second year, $134 million the third year, $143 million the fourth year, and $153 million the fifth year. The number of man-years required should remain relatively constant throughout the 5-year period. Time constraints prevent the calculation of possible additional costs that would be incurred by the transition of State and private employees to the Federal service.

In accordance with the provisions of Public Law 91-190, Section 102(2)(C), this legislation would have no significant impact on the quality of the environment.

The Office of Management and Budget advises that there is no objection to the presentation of this report from the standpoint of the Administration's program. Sincerely,

JOHN A. KNEBEL, Acting Secretary.

Senator HUMPHREY. Now, we have a large number of witnesses today, and I just said to the staff that they must have gone through the Census, and we have most of the American community here. [Laughter.]

We will start off with Mr. William F. Brooks, who is president of the National Grain Trade Council of Washington, D.C.

I understand and I hate to say this, but I understand that each of you have been advised we would like to keep your testimony to 10 minutes.

STATEMENT OF WILLIAM F. BROOKS, PRESIDENT, NATIONAL GRAIN TRADE COUNCIL

Mr. BROOKS. Sir, I have been advised; I will try to do that.

I must say I was requested to yield to the gentlemen from Kansas. I would just as soon go ahead, but I believe they are waiting on Senator Bellmon.

Senator HUMPHREY. Yes, Senator Bellmon is going to be here. Would you like to wait then?

Thank you, Mr. Brooks. We welcome you.

We know you well and respect you highly.
Mr. BROOKS. Thank you, sir.

Senator HUMPHREY. So you are surely needed here.

Mr. BROOKS. I was not aware of the frame of reference that you gave this morning, limiting, the extension of the hearings to weights as well as grades.

Senator HUMPHREY. As I said, as we went along with our testimony, we found out that there were problems in weighing as well as in inspection relating to grades and we are trying to put the two together now.

We may not be too successful, but we thought we would take a look at it.

Mr. BROOKS. I think in my testimony here on July 8th, I commented on the complexity of weights and weighing practices.

Senator HUMPHREY. That is correct.

Mr. BROOKS. As distinct from grades and suggested this is an area where caution must be observed as far as quick action.

Senator HUMPHREY. Exactly right; we are aware of that, that is why we said it is a complex one and we want to hear what you have

to say.

You go right ahead, Mr. Brooks.

Mr. BROOKS. I have a prepared statement which, because of the time limit of 10 minutes, I will submit for the record if I may.* Senator HUMPHREY. Yes, indeed.

Mr. BROOKS. And have it published in full.

Attached to it are three letters which I want to be part of the record, one is a letter from Donald Mennel, who is president of the Mennel Milling Co. This was sent to the House Committee on Agriculture.

Two other letters are: One from the Houston Merchants Exchange, the second from the Baltimore Chamber of Commerce. These were sent to the House Committee on Agriculture and I request they be part of the record.

Senator HUMPHREY. Yes, sir.

Mr. BROOKS. In my statement I refer to a study recently concluded at the University of Illinois, a letter to the grain trade in Illinois and the extension service advisory, dated March 1st. This has been Xeroxed along with the report that is in it. This has been submitted to the clerk and some 15 or 16 copies for the committee.

Senator HUMPHREY. Yes.

Mr. BROOKS. And I did not want to make mistakes, it has a lot of figures in it, I wanted to be sure it was accurate, it is Xeroxed and I would like that to be part of my statement.

Senator HUMPHREY. We will include that as well.

The staff will be sure all of these inserts are available.

Let me know when the 10 minutes are up.

Mr. BROOKS. The letters are attached. This study was not attached. I would like it to be part of the record.**

*See p. 45. **See p. 53.

Senator HUMPHREY. Very good.

Mr. BROOKS. I comment in my statement and would like to have part of the record the AAR documents which now govern weighing at interior points. These are in now I believe a state of substantial revision, I am not certain of this, by either the Weighmasters Association or Association of American Railroads or both, but these are the fairly simple documents that cover the weighing at interior points, describing the various classes 1, 2, 3, 4, 5 of markets.

I will run through my statement if I may briefly.

Senator HUMPHREY. You also wish that to be made part of the record?

Mr. BROOKS. Yes, I do.*

Senator HUMPHREY. Thank you.

Mr. BROOKS. These documents have the virtue of simplicity. There are four pages; gives the oath, things people do, I can describe them or other witnesses will describe them, including Mr. Donahoo.

Senator HUMPHREY. Thank you.

Mr. BROOKS. I would like also to have in the record or have considered by the committee the statements we prepared and submitted, testified to in the House Committee on Agriculture.

I would like to leave them here.

Senator HUMPHREY. We will make note of them and have them available for committee use.

Mr. BROOKS. I used up a couple minutes of my time with record insertions.

Senator HUMPHREY. That is fine.

Mr. BROOKS. Referring a little bit to our organization which is a voluntary, unincorporated organization whose policymaking members are grain exchanges or boards of trade and national grain marketing associations. They all work under the United States Grain Standards Act and are required to abide by its regulations.

The business and commercial activities of the members of the North American Export Grain Association and of the Terminal Elevator Merchants Association will be substantially affected and adversely so, if some of the provisions of the pending bills become law.

I have already commented on the AAR.

All our grain exchange members in one way or another are involved in running inspection departments or in weighing departments. Some run one, some run another. Some run neither. These are services they render. All of our members perform a number of functions leading to and connected with the orderly marketing of grain and oilseeds, all for the benefit of grain producers and the public generally. In the areas served by their members, these would include the publication of market information and news, the operation of traffic departments or of weighing departments or both, and lectures or seminars or classes on marketing, grain grades, and grain-grading procedures.

These are services rendered without charge, with a portion of the fees received for sampling, grading, and supervising weighing used in part to defray the cost of a number of public service programs. These include, and are not limited to, the promotion of research and

*See p. 59.

scholarships at land grant colleges and programs carried on jointly with local high school agricultural groups.

Generally they are of a nonprofit nature, that is these organizations

are.

We feel that inspection departments and weighing departments are not unlike, on a continuing basis, the independent disinterested member of an arbitration board or an arbitration panel. Personnel of inspection departments, within the limits of available equipment, make an independent judgment or judgments on the grain or oilseeds they are to grade. Weighing department personnel, depending on the AAR classification assigned to that market, supervise weighing activities.

Now, we have read the report of the Comptroller General and on two occasions have heard representatives of his office comment on that report and its recommendations. We continue to be convinced that the weighing and grading procedures should not be federalized to the extent recommended in the Comptroller's report.

We regard the pending proposals as one which would remove much of the flexibility required in the orderly marketing of grain, both domestically and internationally.

Then I go on to talk about our concern for the certificate final system, to question the elimination of the word "knowingly" and the adoption of language is one bill which has recently become the subject of severe criticism, both in the press and I believe by Members of the Senate, people who have had a chance to look at it.

I quote in my statement, and I direct this particularly to your attention, Mr. Mennel's letter; then I review activities of each of our exchange members to the extent they operate inspection departments, to the extent they operate weighing departments, and I point out that many of these institutions are over 100 years old.

Baltimore Chamber of Commerce, 1853; Chicago Board of Trade, better than 100 years; Denver Grain Exchange Association, since 1912; Fort Worth Grain Exchange, since 1920; Houston 1920; and the daddy of them all probably is Milwaukee, established in 1849.

These are institutions that have been existing a long time in their own localities. They are regarded as substantial commercial institutions and their people certainly are regarded as substantial citizens as are their employees.

I would like to comment a bit, if I may, on this March 1 report of the extension economist in grain marketing of the Cooperative Extension Service at the University of Illinois, which has been made part of the record and Xeroxed copies available to you.

Senator HUMPHREY. Yes.

Mr. BROOKS. This is with particular reference to some of the observations in the Comptroller General's report as to the dissatisfaction of foreign buyers.

Before I go into that, I would say this morning coming in in my car, I heard on the radio that the Italian lira had fallen 25 percent on the opening of markets this morning. We know that the pound has fallen. We know that the franc has fallen. And I would merely point out that the depreciation of those currencies, making our dollar that much more valuable, is a reverse situation from what we had in 1972 when we devalued the dollar.

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