tend to render inaccurate weights when the belt is not carrying a full load. This often happens when a bin is almost empty. The barges, unlike rail cars, often are not sealed and even when sealed they can be unloaded without breaking the seals. No liability is assumed by the barge line for loss of weight in transit. Receiving barges and loading ships at port elevators Weighing at port elevators is under the direction of a weighmaster employed by an independent supervisory agency. There is no foolproof way to check weights once grain is aboard a ship. Draught (or dead weight) of the ship or barge is one possible way of checking but this could be influenced by the amount of fuel oil in the fuel tank or the water in the bilges. There are a number of factors or events that could influence the inbound and outbound weights at port elevators. 1. Some grain can be removed from the barge enroute and never reach the scale. 2. A quantity of grain in a barge can be left in the barge until the last draught has been weighed. 3. Since the grain will travel over belts in the elevator basement to the upleg, grain can be diverted off the belt to a cross belt. 4. A belt could be stopped just as the last of the grain goes into the dump. This will leave a belt full of grain to be run up later. 5. A weigher might close the garner above the scale on the last draught before the garner has cleaned out. 6. The weigher can close the shipping bins below the scale on the last draught before the bin has cleaned out. U.S. Warehouse Act Approximately 40 percent of the grain elevators in the country are licensed under the U.S. Warehouse Act. The act is not mandatory and applies only to warehousemen who voluntarily apply and who qualify. Among other things, the act requires that inbound and outbound grain be weighed and inspected by inspectors and weighers licensed under the act. The weighers and inspectors usually are employees of the warehousemen, but they can be employees of independent supervisory agencies. Licenses are now in effect for 7,570 inspectors and weighers. These service licenses are valid only for duties performed at the facilities of licensed warehouses. No direct supervision is made of their daily operations by USDA personnel. The certificates they issue are valid only for the purposes of the U.S. Warehouse Act. However, many of such inspectors are also licensed under the U.S. Grain Standards Act and their certificates are acceptable for trading purposes. Applicants for service licenses are required to furnish five character references, a 10-year work résumé and must demonstrate their ability to properly inspect and/or weigh. Inspection of grain under the U.S. Warehouse Act is significant mostly at country elevators since terminals have official inspections under the U.S. Grain Standards Act. The licensing of inspectors and weighers is only one of the functions of the U.S. Warehouse Act. As these functions should be understood in relation to other aspects, there is attached a copy of a background statement describing the pertinent features of that act and a copy of the regulations for grain warehouses licensed under the act. 1B. Persons performing weighing and inspection functions.-Question 1B concerns persons who perform the functions of inspection, grading, sampling and weighing. The answer to that question with respect to weighing of grain and for inspection of grain for purposes of the U.S. Warehouse Act has been covered under question 1A. In summary, weighers and inspectors licensed under the U.S. Warehouse Act usually are employees of the warehouse but they may be employed by independent supervisory agencies. Applicants are required to give five character references, a 10-year work résumé and must demonstrate their ability to properly inspect and weigh. No direct supervision is made of their daily operations by USDA personnel. 1C. Authority and responsibility.-It is a violation of the U.S. Warehouse Act to weigh fraudulently or to misgrade any grain stored or to be stored under the provisions of that act. Failure to weigh or grade correctly under the act can result in suspension or revocation of licenses and could lead to criminal prosecution of the act. 1D. Conflicts of interest.-There is potential for conflict of interest on the part of inspectors and weighers licensed under the U.S. Warehouse Act. This is especially true where the licensee is an employee of the warehouse. It is less true on the part of licenses employed by independent supervisory agencies. The conflict could result from the vested interest an employee has in his job for which he is paid by an employer as opposed to his obligation as a Federal license holder. There should be no significant potential for conflicts between licensees and grain shippers except where the shipper is the warehouseman. BACKGROUND INFORMATION ON THE WAREHOUSE ACT1 The U.S. Warehouse Act was passed by Congress in 1916 to improve this country's agricultural warehousing industry. When the act was created, storage facilities were inadequate, warehousemen lacked proper control, warehouse receipts were not uniform and not universally accepted, and there were few uniform standards for grading and classification of agricultural products. One of the most beneficial results of the act was the establishment of warehouse receipts that are uniformly dependable and acceptable in financial circles as reliable collateral for loans. The present system of warehouse licensing, bonding, and inspection assures receipt holders that their products will be delivered when they surrender receipts and pay storage charges. Each depositor's goods must be stored in such a way that he may recover the same product if the warehouse receipts call for separate storage, or the same amount of product of the same grade or better if stored commingled with like products of other depositors. The U.S. Warehouse Act authorizes the Secretary of Agriculture. to license public warehousemen who voluntarily apply for a license and who are found to qualify. The act is administered by the Warehouse Service Branch of the Transportation and Warehouse Division, Agricultural Marketing Service, USDA, headquartered in Washington, D.C. At the Division's National Warehouse Service Center in Prairie Village, Kans., exami 1 Prepared by: Information Division, Agricultural Marketing Service, U.S. Department of Agriculture, Washington, D.C. 20250, June 1975, nation reports are reviewed, bonding and licensing are controlled, and technical aspects of the program are handled. Warehouse examiners operate under the supervision of seven area offices located in Atlanta, Ga.; Minneapolis, Minn.; Omaha, Nebr.; Indianapolis, Ind.; Memphis, Tenn; Temple, Tex.; and Portland, Oreg. The 215 persons assigned to the branch spend about half their time in administering the U.S. Warehouse Act and the other half on programs of the Commodity Credit Corporation. Currently licensed under the act are 316 cotton warehouses. 1.477 grain elevators and 20 warehouses storing other agricultural commodities. These represent about 60 percent of the commercial cotton storage capacity and about 40 percent of the commercial grain elevator space in this country. At any given time, the aggregate value of warehouse receipts-representing the actual stored products in federally licensed warehouses may be $7 billion or more. To qualify for a license, a warehouseman must have a suitable and properly equipped warehouse; a good business reputation; and a minimum net worth computed according to warehouse capacity and the type of commodity stored. He must furnish an acceptable bond in an amount fixed by USDA; have qualified personnel with knowledge of how to weigh, inspect, and grade agricultural products; have adequate equipment to properly grade and weigh; apply on a prescribed form signed by an authorized officer; and pay initial inspection and license fees. To the extent of their capacity, licensed warehouses are required under the act to receive for storage agricultural products of the kind customarily stored, which are tendered in the usual manner in the ordinary and usual course of business and in a suitable condition for warehousing. They must not discriminate between persons desiring to avail themselves of warehouse facilities. The act requires licensed warehousemen to issue receipts for all stored products as evidence to the depositor that his products are in storage. All such receipts, printed under Government contract, must be ordered from USDA. A warehouse receipt may be issued only when the products are actually received in the licensed warehouse. Negotiable receipts must be surrendered to the warehouseman and canceled by him before the products may be delivered. Each licensed warehouseman is required to post a tariff or schedule of charges setting forth the amount he charges for receiving, delivering, storage, insurance, conditioning, and all other warehousing services. Copies must be furnished to USDA and are subject to disapproval if exorbitant or discriminatory. Before making any changes in rates, amended tariffs must be submitted to USDA, and are also subject to disapproval. Receipts issued under the U.S. Warehouse Act are supported by inspection and weight certificates issued by warehouse inspectors and weighers licensed under the act. Licenses are now in effect for 7,570 inspectors and weighers who are usually employees of the licensed warehousemen, but can be employees of an independent agency. Their "service licenses" enable them to perform duties only at the facilities of the licensed warehouseman. No direct supervision is made of their daily operations by USDA personnel. The certificates they issue are not valid for purposes of the U.S. Grain Standards Act (under which grain is inspected and graded) unless they also hold a grain inspector's license under that act. Applicants for service licenses are required to furnish five character references, a 10-year work resume and must demonstrate their ability to properly inspect and/or weigh. Grain inspectors licensed under the U.S. Grain Standards Act may be licensed under the U.S. Warehouse Act upon application without being required to further demonstrate ability. The U.S. Warehouse Act is administered mainly through a program of comprehensive warehouse examinations-about twice each year on an unannounced basis. Examiners review the warehouseman's obligations to depositors as represented by outstanding warehouse receipts, scale tickets, and accounts. They inventory all commodities on hand, comparing this to the record of obligations. They also review a warehouseman's recordkeeping, housekeeping practices, sanitation, insurance coverage, and check the quality of the product in store. When minor discrepancies or adverse conditions are found, warehousemen are asked to bring operations into compliance within 15 days. When considered serious, the warehouseman's license may be suspended. The act provides for penalties of up to 10 years in prison and up to a $10,000 fine for improprieties in connection with warehouse receipts or inspections and weighings. Question 2. Secretary Campbell, in your testimony on June 19, you indicated that the following actions have been taken to correct deficiencies in the grain inspection system: (a) Reorganization of the Grain Division of the Agricultural Marketing Service in 1974 and installation of new leadership. (b) Initiation of a training and recruiting program to hire and upgrade present personnel. (e) Shifting of personnel to meet changing workloads on a continuing basis. Would you explain, in detail, the change in procedures made by each of these three steps? Explain any improvement in the Grain Division that has resulted from these changes. Answer. See attachment. 2A. The AMS Grain Division was reorganized in 1974 as follows: 1. The Commodity Inspection Branch and Grain Inspection Branch consisted of two separate branch headquarters who utilized the same force of Federal field inspectors. In 1974, these two branch headquarters were combined into a single branch headquarters responsible for inspection of commodities made from grains, rice, dry peas, dry beans, dry lentils, and the various grains. 2. A Board of Appeals and Review-Rice (BARR), located in New Orleans, and a Board of Appeals and Review-Grain (BARG), located in Beltsville, Md.. were directly supervised by the Chief of the Commodity Inspection Branch and the Chief of the Grain Inspection Branch. In the 1974 reorganization, the BARR and BARG were combined as the Board of Appeals and Review, located in Beltsville, Md., and placed under supervisory control of the Chief, Standardization Branch. 3. The Standardization Branch was reorganized to consist of a Standards Section, an Equipment and Methods Section, and the Board of Appeals and Review. 4. A Training and Recruiting Unit was created. 5. An additional Deputy Director position was authorized. New leadership was established in the form of personnel changes in the following positions: Director, Deputy Directors, Assistant to the Director (Training and Recruiting), Inspection Branch Chief, Inspection Branch Assistant Chief, Inspection Branch Section Heads, and Standardization Branch Chief. 2B. A training and recruiting program was initiated to upgrade present personnel and to infuse the work force with new employees of high potential. The organization of the new Inspection Branch permits more uniform, coordinated control of all inspection operations. Most importantly, it placed the field inspection force under one Federal headquarters office rather than two as under the previous organization. This is beginning to result in better communications between field and headquarters personnel and allowing for more efficient utilization of field personnel. The Board of Appeals and Review (BAR) is no longer subordinate to the Inspection Branch Chief and, as a staff rather than line unit, can perform its appeal function with considerably less option for bias. Additionally, the Board is now in position to closely collaborate with the Standardization Branch grade-standards specialists in effecting closer interpretations of the U.S. standards for grain quality. Because of the constant expert employment of grading equipment and standard grading methods. the Board is also now in position to more closely collaborate with Standardization Branch equipment and methods specialists in their never-ending quest for more efficient grading devices and faster grading methods. Already, in the short time since the reorganization, this close working relationship has paid off with a revolutionary new visual grading aid device. This device is now in use by all Federal graders and effectively depicts close grain quality cutoff points at the grading table. The reorganization of the Standardization Branch allows for closer concentration on the separate and distinct areas of: (1) Promulgation of new and revised grade-standards, (2) effecting new inspection devices such as timesaving infrared protein analyzers and more accurate moisture testing machines, and (3) Board of Appeals and Review activities. The new Training and Recruiting Unit has embarked upon concentrated programs designed to: (1) Upgrade performance of present personnel in technical, supervisory, and managerial areas; and (2) recruit college graduates, with agricultural backgrounds, showing potential to first become professional Federal inspectors and later enter the supervisory and managerial ranks. Immediately after its initiation, this unit drew up a 2-year training plan for present employees (see enclosure) and put it into effect. This plan covers each individual employee and will be extended on a year-to-year basis. A national training conference for the Inspection Branch supervisory force was held early in 1975, and another is planned for 1976. A program to purchase or create specially tailored audiovisual training aids such as narrated color slide series and training films on technical inspection subjects has been initiated. Several of these efficient training packages have al |