Like the rest of the members of this committee, I think Mr. Gallinghouse can give us a great deal of information, particularly insofar as cooperation with the appropriate department officials.

Whether or not you feel that the investigation should be expanded in any way insofar as the shipping, there seems to be some rumor that only a very few are privileged to ship some of the grain. Of course, I know you cannot touch on it, but if you could expedite the shipping of wheat that we produce and sell in Kansas and other Midwest States, we would appreciate that. I know you are not investigating shipping and loading but if you have any influence with George Meany, I wish you would use it.

[The prepared statement of Senator Dole follows:]

STATEMENT OF HON. ROBERT DOLE, A U.S. SENATOR FROM THE
STATE OF KANSAS

Mr. Chairman, I congratulate you on the continuation of these hearings and the progress of the staff investigation into the grain inspection system operations. As you so aptly pointed out in earlier hearings, if we had taken time to maintain closer oversight on the operations of the grain inspection division of the Department of Agriculture, we might have avoided the problems we are examining today.

The hearings and investigation, coupled with the indictments and convictions (especially in the New Orleans U.S. Attorney's Office) have made it obvious that weaknesses exist in the present law. I believe that S. J. Res. 88, which this Committee reported last week from the Full Committee, will correct most of the weaknesses in the law that we have uncovered so far. I doubt that the 12 month authority that the bill provides will enable the Secretary to implement many of the provisions of the bill, since hiring of necessary additional personnel is difficult to accomplish under such temporary authority.

I look forward to hearing the testimony of Mr. Gallinghouse, the U.S. Attorney from New Orleans. His vigorous pursuit of the violators in his district is certainly exemplary procedure for other Justice Department districts, and I hope that any other irregularities are being investigated equally throughout the nation. The best law in the world is worthless without proper enforcement, that includes proper indictment, conviction and strong penalties to inhibit further violations.

I would especially like to hear Mr. Gallinghouse's comments on the question of enforcement by the Office of Investigation in the Department of Agriculture. Mr. Chairman, one other comment, that being the importance of third party appeal inspection for grain. I must admit when we started these hearings I felt that an all federal or a strictly federal-state inspection system was desirable. The hearings have brought out the importance of third party inspection with the federal division handling that appeal procedure. From testimony received, especially in soybeans where federal appeal is widely used, this system has proved its worth. It would seem to me that greatly increased supervision of inspection with increased personnel, more vigorous random sampling to check licensed agencies, improved sampling techniques and other provisions of S.J. Res. 88 will go a long way to strengthening the present system.

STATEMENT OF HON. HUBERT H. HUMPHREY, A U.S. SENATOR FROM THE STATE OF MINNESOTA

Senator HUMPHREY. Might I just say, Senator Dole, that yesterday in my work with the Office of Technology Assessment, which was established by the Congress, we held a 212-hour hearing on the development of a new and better information system for the Department of Agriculture and our contribution to the World Agriculture Information System.

I mention that only because during that hearing we went over the problems of shipping to which you are alluding.

One of the problems today with the Soviet grain shipments is that they come into the market and buy in huge amounts, which means that you restrict the shipments to about three major companies. Interestingly enough, I might say for the benefit of the media, last year China bought more than Russia; India bought more than Russia; and Japan bought more than the Soviet Union. But they do it on a week-to-week basis, so you have four or five ships going out each week rather than those huge purchases of 2 to 3 to 5 million tons at one time. This means that the smaller companies are excluded from participating because only two or three of the large companies are capable of handling that volume in one full contract.

Just to regularize the shipment of grain would do a great deal to get away from the point that Senator Dole has just made, namely, that ships are available only to certain big companies. The reason that ships are available in the Russian trade to only certain big companies, in part is due to the fact that only certain big companies are in the business of bidding for the Russian grain sale because the Russians come in with one huge big order which is totally beyond the capacity of many of the smaller companies. So you have two or three, actually three, large companies, handling it.

Senator Clark, do you have an opening statement?

STATEMENT OF HON. DICK CLARK, A U.S. SENATOR FROM THE STATE OF IOWA

Senator CLARK. I simply would like to say at the outset that I congratulate you on holding today's hearing. I think we have before us two witnesses who know as much about this subject as anyone in the United States. I have had occasion to visit with them from time to time and I am convinced that if anyone can explain to us what has happened in New Orleans, and in some of the Texas ports, they are in a position to do so.

Our leadoff witnesses, Mr. Heusel and Mr. Gallinghouse, deserve our highest praise. As much as anyone, they are responsible for bringing to light and seeking to correct the pervasive corruption in the gulf port grain trade. They have carried out a very intensive investigation under a great deal of pressure, under very adverse circumstances, and I am convinced that none of us would be here today if it were not for the outstanding work that these two gentlemen have performed. Senator HUMPHREY. Thank you very much.

Mr. GALLINGHOUSE, your prepared statement will be made a part of the record.

Would you proceed now with your statement.

STATEMENT OF GERALD J. GALLINGHOUSE, U.S. ATTORNEY FOR THE EASTERN DISTRICT OF LOUISIANA, NEW ORLEANS, LA.

Mr. GALLINGHOUSE. Thank you very much.

Mr. Chairman and other members of the committee, my first assistant, Mr. Neil Heusel, and I are pleased to accept, in a spirit of constructive cooperation, your invitation to appear at this important hearing to present a progress report on the intensive Federal investigation into the inspection, grading, weighing and handling of grain

that has been going on in our area of south Louisiana for the past 18 months.

Please permit me to make a few preliminary remarks. First, we want to thank the Honorable Edward H. Levi, as Attorney General of the United States, for his trust and confidence in authorizing Mr. Heusel and me to appear before your committee and to express our views on proposed legislation.

Understandably, our appearance must be subject to the necessary and proper admonition that we avoid any statement or disclosure that might compromise our continuing investigation or prejudice the rights of any actual or potential defendant.

Mr. Chairman, we have read copies of Senator Humphrey's letters of August 1 and 29, 1975, to Attorney General Levi, and the transcript of your hearing that was held on June 19, 1975. With special interest we have noted the thoughtful remarks made by members of the committee about the importance of the subjects and purposes of these hearings.

We have also read the comments made by you, Mr. Chairman, and Senator Clark that appear in the Congressional Record, and we want to express our public appreciation for the compliments that have been expressed about the work that has been accomplished in this Federal investigation in our area.

From the statements made by the members of your committee and members of your staff, it is evident that you and they understand and appreciate, as do Mr. Heusel and myself, that all of us, in responsible positions of public authority, must be scrupulously careful to preserve the confidentiality of our continuing Federal investigative efforts, and to protect the rights of persons who are subject to Federal criminal charges.

We are pleased, Mr. Chairman, with the assurances that this hearing will not in any way compromise the ongoing investigation nor prejudice any pending prosecution.

We would like to avail ourselves of this opportunity to commend Mr. Michael R. McLeod, as general counsel and staff director of your Committee on Agriculture and Forestry, and the committee investigators, Mr. Bert Williams and Hugh Williamson, and the other members of the committee staff, for the professional competence they have demonstrated throughout their inquiries.

Mr. Heusel and I are confident that the working relationship, based on mutual trust, respect and confidence, that has been developed between our staffs will enable us to continue our active cooperation until our respective objectives are fully accomplished.

Mr. Heusel and I are anxious, Mr. Chairman, to assist you and the other members of your committee and your staff to realize your congressional objectives in every reasonable way, to the limits of our authority.

We are prepared to respond with all permissible candor to your proper inquiries relating to activities, conditions and situations that are covered by our investigation.

However, we must respectfully request that we be allowed to avoid, insofar as possible, any specific reference to any person by name, and that we not be expected to describe any activity in particular that

might incriminate any individual, or to discuss any evidence that we may be required to present on trial of any pending or future criminal

case.

Mr. Heusel and I, as U.S. attorneys, are mindful that our Federal investigation into the handling of grain and the resulting prosecutions are impressed with intense public interest and may be considered to be of national significance.

We also recognize that representatives of the news media have the right and duty to keep their reading and viewing public informed through their own investigative reporting and their accounts of public matters.

But we feel constrained, Mr. Chairman, to make an urgent appear to the news media to avoid any publication that could prejudice the rights of any actual or potential defendant to a fair trial, or impede the continuing investigation by Federal authorities.

Please let it be understood, Mr. Chairman and members of the committee, that Mr. Heusel and I do not appear as accusers or prosecutors of those who have violated our Federal criminal laws, or as critics of the administration of the affairs of the U.S. Department of Agriculture.

We want to be positive rather than negative. And we want to be a unifying influence rather than a divisive influence. Rather, we are here as administrators of justice. As U.S. attorneys, we are members of the largest and the best law firm, the U.S. Department of Justice. We are charged with the solemn responsibility to assure that our laws are faithfully executed and vigorously enforced in order to maintain the rule of law within our limited jurisdiction.

Our responsibility to the administration of justice requires that we do nothing that will impair the right of any accused person to fair, equal and impartial treatment. As a representative of the public interest, our highest duty is to seek justice, not merely to convict those who may be accused of Federal crimes.

But, Mr. Chairman, we recognize that we have other significant. duties. It is an important function for us, as Federal attorneys, privileged and honored to serve our National Government, to aid, whenever proper and possible, in the reform and improvement of our legal system in general and the administration of criminal justice in particular to protect the public interests by preventing crime and securing the integrity of our governmental affairs.

We ask that our appearance today be viewed and considered in furtherance of these responsibilities, as we submit to you, the makers of our laws, this report on our investigation of the grain industry, our evaluation of the effectiveness of our official grain inspection system under existing statutes and regulations, and, if you wish to consider them, our recommendations for improvements based upon our limited information and experience.

We would also like to make it clear. Mr. Chairman and members of the committee, that Mr. Heusel and I speak only for ourselves. Our opinions and our recommendations are our own. The views we express are not necessarily those of the U.S. Department of Justice, or of any other official in the executive branch of our national government.

Now, in the second part of our prepared statement, Mr. Chairman

and members of the committee, we have presented some background information, a reading of which we believe will enable you to appreciate and understand the complexities and the difficulties of handling grain in the area of south Louisiana.

As we have pointed out in this prepared statement, and I am skipping over now to page 10, the Port of New Orleans is the largest grain exporting port in the world, with exports in 1974 of about 32 million tons, or 1 billion, 280 million bushels. This, we understand, is about 38 percent of all grain exported from the United States. Virtually all of this grain is delivered from all points in the midcontinent to one of the eight export grain elevators in south Louisiana, and later loaded abroad oceangoing vessels for transportation to foreign ports. Senator HUMPHREY. Does much of that come by barge?

Mr. GALLINGHOUSE. Yes; it does, Senator. Much of it does. Most of it, in fact.

Now, moving along to page 11, we want to point out that only two of these grain elevators are within the jurisdiction of the Port of New Orleans. The others are beyond the territorial limits of the Port of New Orleans.

We have, in addition to the two export grain elevators situated within the immediate New Orleans area, six other export grain elevators and four official inspection agencies, in addition to the one located in New Orleans, the New Orleans Board of Trade. These are located along the Mississippi River in south Louisiana that are beyond the territorial jurisdiction of the New Orleans Dock Board.

This gives us a total of eight export elevators and five official inspection agencies within a limited distance of about 160 miles along the Mississippi River. The location of these elevators and the official inspection agencies that service them, Mr. Chairman and members of the committee, are shown on attached exhibit A. A review of this would indicate that these inspection agencies and these elevators are quite close together in some areas.

When we contemplate, against this background, the intensified and expanded activity at our eight export grain elevators and our five inspection agencies that will be generated in the months ahead by the movement through the Port of New Orleans of approximately 38 percent of the 10 million tons of grain purchased by Soviet Russia, with about one-third of the grain being carried in American vessels, we can understand the complications and difficulties that are involved in the inspection, grading, weighing and handling of grain in our area. Senator HUMPHREY. May I interrupt?

Does this also handle the grain going to Eastern Europe?

Mr. GALLINGHOUSE. Much of it. We are advised that about 38 percent of all of the grain exported to foreign ports moves through the so-called Port of New Orleans, which is the Mississippi River going down to the Gulf of Mexico.

Now, we recognize, as you, that the proper and efficient handling and movement of this grain is vital to the general welfare of the United States, and to the economic well-being of the people in our area of south Louisiana.

We want to acknowledge with grateful appreciation the assistance that we received from the local authorities who have the responsi