Senator HUMPHREY. In your position, were you out in the field a great deal?

Mr. SKEELS. I was in the New Orleans Regional Office for 2 years, and I traveled throughout the region. I think we had 14 field offices and also various circuits. We traveled to the licensees' offices as well.

Senator HUMPHREY. You made reference in your material to this committee that many of the field graders and licensed inspectors were sharing grading functions at the same time.

In other words, the Federal inspector was sharing work with the licensed inspector instead of supervising the licensed inspector?

Mr. SKEELS. This is what we call common grading, Senator, and hopefully it no longer exists. But what it consisted of was, for instance, if they were inspecting a sublot of, let us say, wheat being loaded aboard a ship, the licensed inspector would, let us say, pick the dark hard and vitreous kernels, which is one of the factors. The Federal grader would pick the foreign material. Each would merely exchange their information. They would not examine to see that the other man had given him the correct information.

Senator HUMPHREY. Now, was that not contrary to regulations? Mr. SKEELS. Definitely, sir, and we broke it up at every opportunity. Senator HUMPHREY. But, nevertheless, it was a practice that was pursued?

Mr. SKEELS. It was a practice pursued, and you cannot be at all places at all times.

Senator HUMPHREY. Have you suffered from the shortage of an adequate number of personnel?

Mr. SKEELS. Yes, sir.

Senator HUMPHREY. Another practice that you described was that of grain companies owning the inspection equipment used by the licensed inspection personnel.

Mr. SKEELS. During my career, this happened only at a small number of places. Hopefully, it was solved. This was strictly against our rules.

The main reason it would occur would be the need for an inspection agency at a certain point. An elevator would provide, in order to get a licensed inspector located at that point, an elevator would provide equipment until such time as the inspector could handle the situation by himself because, to fully equip a lab, it would run anywhere from $3,000 to $5,000, depending on how fully you equipped it.

Many of these people did not have this kind of money to invest in the equipment anyway.

What it did do was give the elevator the right to use that equipment. Senator HUMPHREY. Did it not also give an opportunity for the companies to tamper with that equipment?

Mr. SKEELS. Yes, sir.

Senator HUMPHREY. We had testimony to that effect.

Mr. SKEELS. Personally, yes. They can very easily adjust moisture machines, particularly.

Senator HUMPHREY. On moisture, yes.

Would you feel if you were going to have an inspection system. which, by the way, the inspection system is paid for, as I recollect— when a company has an inspection of its grain, it has to pay a fee, is that correct?

Mr. SKEELS. That is correct. They have to pay an inspection fee.

Senator HUMPHREY. In a sense, it is somewhat self-sustaining to a degree, at least.

Mr. SKEELS. Yes.

Senator HUMPHREY. Would it not be desirable to have all this equipment be Government equipment and properly monitored and supervised as to its efficiency?

Mr. SKEELS. Now, from the standpoint of the U.S. Department of Agriculture, we owned all of our own equipment.

Senator HUMPHREY. Yes, I know you owned it.

But when you have these licensed inspectors that are the agents of the Board of Trade, and you have co-owned equipment, you have two conflicts of interest, is that right?

Mr. SKEELS. The preferred situation there would be for the licensee to try and obtain a bank loan and buy his own equipment.

Senator HUMPHREY. Buy his own equipment?

Mr. SKEELS. Yes.

Senator HUMPHREY. I still think the preferred situation is to make sure that if you get the job of inspecting, that you inspect it with equipment that is neither individually or co-owned.

Mr. SKEELS. This is correct.

Senator HUMPHREY. Now, you have indicated that one of the reasons that you retired was the continuing decrease in the manpower and the increase of the workload without any effort by the Grain Division hierarchy to press for more manpower.

Our whole hearing record bears this point out. In fact, we have all commented about the fact that there was not sufficient manpower. And, as Senator Young of North Dakota, who gives so much time to this work, is the ranking Republican member of the Appropriations Committee, has noted, the Department never asked for an adequate amount and frequently the Congress would raise the amount that was asked for. But there was never any pressure or even requests for the additional manpower that was needed.

On page 186, part 1-A of the hearing record, there is a table that shows the Department of Agriculture had not requested any additional manpower for the Grain Division since 1969. That is about the only Government agency that ever had such a record. It is incredible. [The table above-referred to follows:]

U.S. DEPARTMENT OF AGRICULTURE, AGRICULTURAL MARKETING SERVICE-U.S. GRAIN STANDARDS ACT APPROPRIATIONS AND REQUESTS FOR INCREASES BY FISCAL YEAR (SUPERVISION OF LICENSED INSPECTORS)

U.S. DEPARTMENT OF AGRICULTURE, AGRICULTURAL MARKETING SERVICE-U.S. GRAIN STANDARDS ACT APPROPRIATIONS AND REQUESTS FOR INCREASES BY FISCAL YEAR (SUPERVISION OF LICENSED INSPECTORS)—

1 Assumes Grain Inspection branch and Grain Division increase request to be equal. 2 Variation in actual man-years due to cross utilization in the supervision, appeals and trust fund programs. 3 Reduction due to Public Law 90-487 which amended the U.S. Grain Standards Act The amendment provided for appeal inspections to be funded from fees rather than this appropriation.

Senator HUMPHREY. Even for the 1976 budget, long after the scandal had broken out, there was no request for additional manpower for the Grain Division.

On page 187 of the same hearing record, it shows that the number of Federal grain supervision inspections decreased from 143,566 in 1966 to 60,000 in 1975. During that period of time I suppose our exports more than doubled.

[The above-referred to material follows:]

Senator HUMPHREY. Why do you think the Grain Division was never properly staffed?

I never heard of anybody in the Government not wanting more staff.
Mr. SKEELS. I think that I can go back a little bit historically.
Senator HUMPHREY. Including Members of Congress.
Mr. SKEELS. I can go back a little historically on this.

The Grain Division, at one time years and years ago, was one of the few agencies which asked for precisely what it needed for the time. As a result, when this moved up through channels in the Department, we always wound up with less than what we really needed.

I think that, secondarily, because of this history, we were on a low priority system, maybe with the Department itself. I do not know. Then, again, there is always the question in my mind that there might not be a little trained influence which did not want us to have too many people.

Senator HUMPHREY. It could have been.

I understand that they abolished the regional offices.

Mr. SKEELS. Yes, sir.

Senator HUMPHREY. Would it not seem desirable to have a regional office that is a little closer to the actual operations than to have supervision monitored and guided out of Washington?

Mr. SKEELS. It would to me definitely. I felt they were of utmost importance.

Senator HUMPHREY. We have regional offices for practically everything in the Government.

Mr. SKEELS. Yes, sir.

Senator HUMPHREY. I think they even have regional post offices. And they have regional manpower offices.

Mr. SKEELS. I felt that our regional offices were a vital part of our entire operation.

Senator HUMPHREY. I know, Senator Dole, you have some questions. Go ahead.

I did not get to Mr. Bell, but you proceed and ask your questions. You may cover all I had in mind anyway.

Senator DOLE. You have covered nearly everything.

Mr. Bell and Mr. Skeels both have been very good witnesses and might be able to give us some practical insight on their interpretation of the purpose of the Grain Standards Act.

How did you look at that act?

How did you view it?

What was the purpose of it?

Mr. BELL. That last act that was passed, to me, was a lot softer. It probably had less teeth in it than the previous one.

Senator DOLE. This is the one in 1968 ?

Mr. BELL. I think so, sir.

It abolished mandatory interior grades.

Senator DOLE. At the time we passed that, we thought we were strengthening the act.

Mr. BELL. Well, I personally did not think so.
Senator DOLE. You are probably right.

Mr. BELL. I was in a minority, I think, at the time.

Mr. SKEELS. In my view, as far as the 1968 act is concerned, throughout the act and the regulations you repeatedly read in regard to the development of whatever we might be interested in "after consultation with the grain trade," and I do not believe that this is a valid way to state this. I think that all facets of the industry should be consulted. Senator DOLE. Is there any way to operate an elevator now under present grain standards and provide farmers with so-called identity preserved service with regard to their grain?

Mr. SKEELS. I think as far as country elevators are concerned, this would be very difficult because of their capacity, although each of our country elevators today, as they are rebuilt, are becoming larger and larger, so this would be easier.

Senator DOLE. Is that your view, Mr. Bell?

Mr. BELL. I would agree with Mr. Skeels on that.

Senator DOLE. I do not quarrel with both of your statements that there is too much of a concentration here in Washington.

Mr. BELL. Too many chiefs and not enough Indians.

Senator DOLE. There were a lot of chiefs on the road this morning and a lot of chiefs turned around and went home, but the braves are still here.

But I certainly do share that view and I do not know why the regional offices were abolished, and I assume they would have served some function, but maybe not in the overall system.

Mr. SKEELS. I feel they did, Senator, if I can address myself to that

one.

I think as regional offices we had regularly scheduled trips whereby we went to each of the Federal offices within our regions. In this manner, we were able to observe their operation. We were better able to correlate them, and insofar as that particular region itself went, it operated more as a unit than I think it will in any other way. Senator DOLE. Mr. Bell, you indicate that you audited 2,000 cargo loading logs in 1966 or 1967.

Does that represent 2,000 shiploads?

Mr. BELL. Yes, for a whole year's operation.

Senator DOLE. You had some suspicion at that time?

Mr. BELL. I did not understand your question, Senator.

Senator DOLE. Was there some suspicion at that time of off-grade? Mr. BELL. Well, sir, in my own mind, it would have been a statistical improbability that all the grain loaded on the ships would have been perfect. I think statisticians would probably agree with me, or any realistic person. That loading is just never uniform on that vast of an

amount.

Senator DOLE. It is like our voting record. They are never perfect. Mr. BELL. But this is a perfect operation on paper.

Senator DOLE. Did you notify the Office of the Inspector General at the time?

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