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That the view expressed herein is in accord with the plain meaning of the statute was recognized by the Chairman of this Commission when he stated to the Senate Committee on Agriculture and Forestry on April 22, 1953, as follows:
"In the first place, I want to emphasize that the Commission cannot initiate section 22 investigations on its own motion or on application of any interested party.
“The law provides for Commission investigations under section 22 only when the President directs the Commission to make such investigations.
"That is important." This view is also squarely in line with the provisions of Executive Order 7233 issued by the President on November 23, 1935, to implement the administration of section 22.
EXECUTIVE ORDER 7233
Paragraph (1) of Executive Order 7233 empowers the Secretary of Agriculture alone upon his own motion or upon request of any interested party to make such preliminary investigations with reference to matters within the scope of section 22 as he may deem desirable.
Paragraph (2) authorizes the Secretary of Agriculture alone to prescribe the manner in which requests for action under section 22 shall be submitted by interested parties.
Paragraph (3) provides that the Secretary of Agriculture shall determine whether the showing or facts disclosed in an application warrant further investigation and requires that the Secretary make his recommendation to the President, so that the President in the light of such recommendation may direct that no further action be taken or cause an investigation to be undertaken by the Tariff Commission.
Paragraph (4) authorizes the Tariff Commission to make investigations, but only when so directed by the President. This is the only delegation of authority from the President to the Commission, and it limits the Commission to investigations directed by the President. In this connection, it is important to note that no distinction is made between investigations in connection with the imposition of import restrictions and investigations pursuant to application of interested persons for the termination or modification of import restrictions. No distinction is made because the statute does not so do.
Under the terms of the Executive order, it is patent that there has been no delegation to the Tariff Commission under either the statute or the Executive order to conduct investigations under section 22, except upon direction of the President. It is equally clear that there has been delegated to the Secretary of Agriculture, and not to the Tariff Commission, the authority to prescribe the manner in which requests for action under section 22 are to be made and to make preliminary investigations with respect to those matters within the scope of section 22.
The regulations of both the Tariff Commission and the Secretary of Agriculture provided that applications from interested persons for any action pursuant to section 22 are to be filed with the Secretary of Agriculture.
RULES OF THE TARIFF COMMISSION
Part 204 of the Rules of Practice and Procedure of the Tariff Commission relate to investigations under section 22.
Section 204.2 of the Commission's rules state that the United States Tariff Commission will make investigations only when directed by the President. Footnote (1) to this paragraph states that applications for investigations under section 22 must be filed with the Secretary of Agriculture. No distinctions are made in this rule between investigations in connection with a proposed imposition of an import restriction and investigations in connection with the modification or termination of an import restriction. It is plain, therefore, that under the Commission's own rules all applications for investigations pursuant to section 22 are to be filed with the Secretary of Agriculture.
Section 201.8 of the Commission's general rules relating to investigation car. ries a footnote stating as follows:
“Under Executive Order 7233 of November 23, 1935, applications for investigations under section 22 of the Agricultural Adjustment Act, as amended, must be filed with the Secretary of Agriculture. For procedure governing such applications see 7 Code of Federal Regulations, part 6."
We stand on the Commission's footnote to its rules. But we submit that the Commission does not have a footnote to stand on.
REGULATIONS OF THE SECRETARY OF AGRICULTURE
The regulations of the Secretary of Agriculture set forth in detail how applications of interested persons for action under section 22 are to be handled. Section 6.3 of the rules designates the agency within the Department of Agriculture with whom requests for action under section 22 are to be filed.
Section 6.4 states that the administrator will cause a preliminary investigation to be made whenever he determines that there is reasonable ground to believe that the imposition of an import restriction may be warranted or that the terminaion or modification of an import quota may be warranted.
It is clear that this rule pertains to actions under section 22 looking either to the imposition of an import restriction or to the termination or modification thereof.
COMMISSION'S REPORT TO THE PRESIDENT The Commission's report to the President dated June 1, 1953, recommending the imposition of import quotas on peanuts and other commodities contains the following statement:
"Commission to observe future developments:
"The Commission will observe future developments with respect to the trade in the products for which import restrictions are herein recommended and the effects of imports thereof upon programs of the Department of Agriculture and will take such action as may be appropriate when necessary for the purposes of section 22 (d) of the Agricultural Adjustment Act, as amended.”
We know of no instance where the question presented by our request for dismissal has ever before been raised specifically, and we do not believe that the foregoing statement by the Commission affords any basis for the proposition that the Commission on its own motion or on request of an interested person may initiate a section 22 investigation for the purpose of modifying or terminating prior action taken by the President under section 22. On the contrary, all the foregoing statement could possibly imply is that the Commission would observe future developments and take such action as might be appropriate. What action is appropriate necessarily is dependent upon further direction of the President. In the absence of further direction, the Commission is powerless to entertain petitions, conduct investigations, and order hearings.
It is elemental that the Commission cannot "by assertion" give itself authority not granted by the statute and the Executive order. Without attempting to pass upon the legal effect of such action had it been taken, we think it is significant that the President did not incorporate the Commission's statement in his proclamation.
COMMISSION'S TESTIMONY BEFORE SENATE COMMITTEE ON AGRICULTURE AND FORESTRY
The Senate Committee on Agriculture and Forestry, apparently for the first time, heard something about the theory of "continuing investigation” in testimony presented by representatives of the Commission on April 22, 1953. The subject matter before the committee was wholly unrelated to the issue in this proceeding. It concerned the general question of imports and exports and dealt with the question of why section 22 had not been a more effective instrument to protect domestic agriculture.
However, in the course of these hearings, the Chairman of the Commission indicated that investigations were sometimes kept open. The chairman of the Senate committee at page 248 of the hearing stated :
"You have brought out something this morning, Mr. Brossard, which we had not heard before. That is that the hearing ordered by President Roosevelt ordered in 1939 is still going on, and the President can take action at any time that you give him a supplementary report on the situation.”
In response to further questions as to the authority of the Commission to hold investigations open, the following statements were made :
“The CHAIRMAN. But you could hold that open, the hearing on dairy products, so that the President could take almost immediate action at any time?
"Mr. BROSSARD. Well, may I ask our legal counsel to express an opinion about that. That is a question we have not decided yet, but he is our legal adviser.
"Mr. KAPLOWITZ. The continuing nature of investigations under section 22 arises in part out of the provisions of section 22 that if we once recommend action and the President proclaims a restriction, then that restriction remains
in force until modified or suspended or terminated after the Commission has advised the President, after another investigation * * *."
Nowhere does the statue or Executive order make any reference to or authorize "continuing investigations" after the investigation directed by the President has been made and he has acted thereon. Neither do the rules of the Commission make any reference to continuing investigations. On the contrary, paragraph (4) of the Executive order makes it plain that no such authority exists.
Even the General Counsel of the Commission recognizes that a "continuing investigation” in instances where the President has acted after prior investigation and report of the Commission, actually amounts to “another investigation." It is clear that such is the fact and that there is, as in the instant proposed investigation, nothing continuing about it. It would be in truth and in fact another investigation" and one which had not been ordered by the President in conformity with the statue.
The next question and answer clearly shows the lack of certainty in the mind of the Commission's General Counsel as to the authority for the theory of "continuing investigations."
“The CHAIRMAN. Is it another investigation or another chapter of the same investigation?
“Mr. KAPLOWITZ. Well, actually the statue in effect makes it a continuing investigation, once the President imposes a restriction, the law contemplates that we keep the matter under review so as to be able to advise the President, for example, that the quota that we recommended originally should be reduced or should be increased. So that each time action is taken under section 22, the law itself requires a continuing review of what has been done or needs to be done in the future.”
We appreciate that the Commission's counsel was called upon unexpectedly to state some legal basis for the prior action alluded to by the Commission Chairman. Nevertheless, his answer, we believe, clearly demonstrates that he was groping for a legal basis which simply does not exist.
In other words, counsel did not cite any express statutory authority to support the proposition of "continuing investigation.” That he could not do so is implicit in his strategic retreat to what the law “in effect * * * contemplates."
We suggest that the theory of “continuing investigation" is totally inapplicable to the present situation, and that it flys directly into the face of the clear language of the statute and the Executive order of the President.
To take the position that once the President has directed an investigation which has served as the basis for the imposition of a quota, he has thereby lost his power of direction over the Commission and that the Commission may thereafter for all time to come conduct subsequent investigations and hearings on that subject on its own motion or upon the request of interested third persons is in complete derogation of the spirit as well as the letter of the statute. Such a position would necessarily constitute an usurpation by the Commission of the authority vested in the President and the Secretary of Agriculture. It could also subject domestic agriculture to grave and irreparable injury since investi. gation on the part of the Commission upon requests by persons seeking to have quotas terminated could easily depress producer prices by threatening to aug. ment the total supply through imports.
Furthermore, such a position might place the Commission in the unhappy predicament of inadvertently causing embarrassment to the President and his Secretary of Agriculture through the conduct of unwarranted and undesired investigations.
All of the foregoing uudoubtedly accounts for the fact that section 22, unlike other statutes did not give the Commission any direct or independent power of investigation and clearly made its action subject to the direction of the President.
In view of the foregoing, it is respectfully submitted that the Commission should dismiss the application filed by certain peanut end users. Respectfully submitted.
SOUTHEASTERN PEANUT ASSOCIATION,
ASSOCIATION OF VIRGINIA PEANUT AND Hog GROWERS, INC. By their attorneys:
Washington, 5, D. C. Dated November 2. 1954.
Mr. RAWLINGS. The Virginia peanut growers are deeply appreciative of the efforts of this committee to get a broad cross-section, grassroots thinking of those of us concerned about some of the problems in agriculture.
We are deeply concerned that at a time when the national prosperity is unequaled in our history that the farmers of our Nation are not participating in this prosperity.
Virginia peanut growers have consistently sought and backed a price-support program of not less than 90 percent of parity with growers voting for marketing quotas and acreage allotments, as contrasted to flexible supports.
We still do so. However, we do not want to be misundertood as selfishly wanting a 90-percent program for peanuts and at the same time saying to producers of other commodities, your price should flex down and at the same time we don't want to be misunderstood on the other hand by others as saying that because we peanut growers want a 90-percent program, they should have one just because we want one.
With that in mind we feel that it is mighty near basically impossible to have one broad farm program with the variances in imports, responsiveness of consumption to price, varying marketing conditions and things of that nature to have one basic program that will do all of the jobs for a great multitude of commodities.
We think it is nearly as impractical as taking one piece of farm equipment and doing every job to be done on the farm. That leads to a recommendation from our group that the committee consider the feasibility of having permissive legislation which, for example, would permit the peanut growers and producers of other commodities in a referendum themselves to decide whether they want a 90-percent program or a flexible program. There may be some groups that want that.
I think we are pretty sure what we want in order not to be misunderstood, we have no hesitancy in a true grower referendum deciding what type program we will have. In other words, it is more of a commodity-by-commodity approach than we have had in the past. In other words, under this proposal we suggest a means by which producers of other commodities who are willing to submit to marketing quotas and acreage allotments, as prescribed by the Congress, can have the same benefits we have and at the same time not, you might say, impose on them a 90-percent program if they should prefer to have no program at all, or a flexible program.
The CHAIRMAN. Suppose you put to the farmers of the country a 90-percent price support in contrast to 75 percent flexible. Which would win?
Mr. Rawlings. I know about the peanut-producing area of Virginia. It would be overwhelmingly 90 percent.
The CHAIRMAN. The idea of leting them choose flexible against rigid they would naturally vote for their own interests. That is human nature.
Mr. RAWLINGS. That is it. Peanuts are-consumption is very unresponsive to price. That is not true with other commodities. Unquestionably the one most disturbing economic matter to Virginia peanut growers in this era of continuing decline in farm income is à severe and permanent, and we feel unjustified, consequence of the so-called modernized parity formula.
The new formula starting in 1956, unless corrective legislation is promptly enacted, will reduce parity level for peanuts by 19.1 percent. This means a cut of 2.35 cents per pound in the support level if we have a 90-percent program.
The CHAIRMAN. What suggestions have you to make to change this formula? What would you add to it or take away from it?
Mr. RAWLINGS. What we are suggesting, sir, if I could make a few more comments on the formula
The CHAIRMAN. You have it there?
Mr. RAWLINGS. Yes, sir; we have a recommendation as to what we think the solution is.
The CHAIRMAN. All right.
Mr. RAWLINGS. In other words, we will siphon off approximately $41,120,000 annually from the current income of peanut growers alone when the full operation of this modernized parity formula becomes effective. If you couple that with the flexible supports of 75 percent of parity—and it is not only possible today but it is mighty near imminent unless there is some rapid movement or some diversion on the part of the Department of Agriculture—it will siphon off approximately $70 million per year from the current income level of peanut growers alone. You must take into consideration the producing areas not just in Virginia but generally throughout the United States occupy a relatively small area within the State. It is not just the peanut growers but the whole economic structure which will feel it in the producing areas and the treasuries of the localities and State and Federal Governments will know something happened to them.
Now, there is very little basis that we can find for theorists to assume that growers are going to recoup any substantial amount of this $70 million by increased consumption because of this lower price that is being legislated.
First, I think we all know that for there to be any response in increased consumption that cut to the farmer has to be passed on to the consumer and that just doesn't happen but very seldom.
Second, the only authoritative study we know of recent date dealing with this subject was a marketing research report No. 16, USDA, BAE, 1952, Peanuts and Uses for Food. The study concludes that peanuts are an inelastic commodity and for each 1 percent variation in price the most you can expect to affect consumption is four-tenths of 1 percent.
At the time this new formula was adopted it is our understanding experts in the Bureau of Agricultural Economics testified before this committee that in a period of 4 years it would not make any difference which of these 2 formulas is used because over 4 years they would move together and coincide.
The CHAIRMAN. In order to test that out, I am glad to say I offered an amendment so as to leave the old formula there and let the one that gives the best returns be the one used.
Mr. RAWLINGS. We are sorry it didn't prevail.
The CHAIRMAN. We will try to improve and continue that next time we meet.
Mr. RAWLINGS. At a later date, it was in June 1952, I believe, Congress passed Public Law 585, which was a 2-year extension of dual