Mr. CALDWELL. So long as the trading is in concentrated frozen juice. Mr. TEAGUE. Thank you. The CHAIRMAN. Mr. Kleppe. Mr. KLEPPE. Mr. Chairman, I think that speculators-I don't call them gamblers-I think they are investors of a sort. This plays a real part in our system of doing business in this country. I think they have a great deal of merit in stabilizing and establishing prices for commodities and that the effected producers get protection from these markets is worthy. I wanted to comment specifically on your line of questioning. It seems to me that this is necessary. This bill is necessary from the mere standpoint of the fact that never in my knowledge has any market exchange been established originally but that there were some manipulators, some bucket shop operators. It seems to me that is the protection that this bill would provide in this particular commodity because it is not already covered. This is no problem for anybody that I can see, but rather would effectuate an opportunity to bring about some controls for the speculator, for the investor, but most of all for the producer. I think this is something that fits in our system of business. To me it makes a great deal of sense. This is the only thing that I could say along the lines of your questioning that I believe were covered along the lines of manipulators. The CHAIRMAN. If the gentleman will yield. Mr. KLEPPE. Glad to. The CHAIRMAN. I just have not yet understood up to right now the reason of the representatives of the Department in opposing the idea of bringing other commodities under their control automatically when it is placed on the board. I get the feeling, without any knowledge at all of the matter, it is a new commodity and therefore the thing you foresee is likely to happen. I agree it is likely to happen. They say we must bring frozen orange juice under control, but we should not bring other commodities under control as they are put on the board. I have not been able to reconcile the two viewpoints. Mr. KLEPPE. I think, Mr. Chairman, you rather hit it when you talked about volume and activity. The CHAIRMAN. It may be that it should be dependent upon volume. Mr. KLEPPE. I am not sure the Department recognizes this, but it seems to me this makes a great deal of difference in making a decision. as to whether a commodity should be under the Commodity Exchange Act or not. The CHAIRMAN. Are there other questions? Mr. GATHINGS. I would like to ask Mr. Caldwell whether or not there has been a great volume of trading in other types of frozen juice. What about grapefruit? You mentioned citrus juices but you specified here frozen orange juice. What about apricot, some other types, cranberry frozen juice? Do you have any information on that? Mr. CALDWELL. Thus far, the only futures market that has been established in frozen juice is this market in concentrated orange juice. Mr. GATHINGS. I happen to go to the grocery store every Saturday and I buy frozen concentrated juice of all kinds. Orange juice is one of them I buy. What about some of these other juices-pineapple? Mr. CALDWELL. The Commodities Exchange Act is supposed to regulate futures trading in various commodities. Mr. GATHINGS. That is because there is no futures trading in others? Mr. CALDWELL. That is right. Mr. GATHINGS. You referred to 1966 and 1967, and there was not any trading whatever before 1966 apparently, from your testimony; is that right? Mr. CALDWELL. That is right. Mr. GATHINGS. It has doubled in 1968 over what transpired in 1967. Only a very few months in 1968 have gone by, yet it is double what it was in 1967? Mr. CALDWELL. That is right. Mr. GATHINGS. In volume? Mr. CALDWELL. It could be that a futures market might develop in certain of these other juices. If that were to happen, and if the volume developed to an extent where this has a real impact upon the producers and merchandisers of this product, then I would favor bringing it under the Commodity Exchange Act just as I now favor bringing orange juice under it. The CHAIRMAN. That is the very crux of the question raised by Mr. Lynn's suggestion. He recognizes they may go to trading in some of these other commodities. Maybe they will trade in juices not frozen; for instance, cranberry juice. I have never seen it frozen, but I buy it too, simply in the bottles, not frozen. Suppose they go to trading in these commodities that are not frozen. They would not be covered by this act? Mr. CALDWELL. That is right. The CHAIRMAN. Why, as Mr. Lynn suggests-and I do not want to keep quoting him but he seemed to raise a very logical question in my mind when he suggested, why do you not make it applicable to these other commodities if and when they too come on the board? Maybe you would want to put some limitation on the amount, maybe you would not want to bother with an infinitesimal amount. Maybe you would want to say when they reached a certain level of trading, you would have the right to deal with them. But it seems to me to make good sense what he suggests, and I have not heard anybody suggest any reason why we should not. Mr. TEAGUE. I have one, Mr. Chairman. I have not seen Mr. Lynn's letter, but we are from time to time complaining about turning things over to the Executive and want to keep our fingers on legislation and policies ourselves. That is the answer that occurs to me. The CHAIRMAN. It may be. Mr. CALDWELL. I am certainly not opposed to Mr. Lynn's suggestion. Please understand that, Mr. Chairman, but it was my feeling that Congress should handle the designation of commodities. If Congress wants to turn over to the Secretary of Agriculture this authority, I certainly would not be opposed to it. The CHAIRMAN. Are there other questions? Does anyone else want to ask Mr. Caldwell any questions? Mr. Dow. Mr. Caldwell, you mentioned here the volume of trading of $400 million in frozen orange juice. I suppose that this is an annual figure; is that right? Mr. CALDWELL. That would be the figure for the 5 months of this year. Mr. Dow. Five months? Mr. CALDWELL. Yes, sir. Mr. Dow. So in any year you would have about a billion dollars of trading. Mr. CALDWELL. Close to it. Mr. Dow. How would that compare with the volume of trading in some other commodities that are now regulated under this act; for example, onions? What is the volume of trading in onions? Mr. CALDWELL. There is no trading in onions. Several years ago Congress prohibited all futures trading in onions. The total volume of trading in all regulated commodities runs about $75 billion a year. Mr. Dow. Would this frozen orange juice be the smallest one of the commodities that are subject to the control or subject to the Commodity Exchange Act, or would this be larger than the smallest? Mr. CALDWELL. It would by no means be the smallest. It would be somewhere in the middle range. Mr. Dow. Somewhere in the middle? Mr. CALDWELL. Yes. Mr. Dow. So you have some commodities with less volume that are under the umbrella of this Commodity Exchange Act? Mr. CALDWELL. Yes. Mr. Dow. Thank you, Mr. Caldwell. The CHAIRMAN. Mr. Miller? Mr. MILLER. I understand from Mr. Dow's questioning that you have some volume. Are we speaking of volumes of contracts or are we speaking of volumes of dollars? You have $140 million as the volume of dollars and you have something over 23,000 as the volume of contracts. Mr. CALDWELL. The volume of contracts would be the actual number of contracts traded. To get the value of the contracts you would merely have to multiply that by the contract unit of 15,000 pounds and then by the average price. Mr. MILLER. The volume then is on the volume of contracts. You are more interested in the volume of contracts than you are in the volume of concentrated juice sold; is that correct? Mr. CALDWELL. We are speaking here of the volume of contracts traded on the futures market. This does not relate to the number of contracts equivalent sold in the cash market. Mr. MILLER. Thank you. The CHAIRMAN. Are there any further questions? If there are no further questions, Mr. Caldwell, we are glad to have had you with us. Thank you. Mr. CALDWELL. Thank you, Mr. Chairman. The CHAIRMAN. Is there anyone else who wants to be heard on this bill, either for or against it? Apparently there is none. If not, the committee will take the bill under advisement. I believe that completes consideration of our public calendar and the committee will go into executive session. (Whereupon, at 11:10 a.m., the committee proceeded to executive session.) AMEND THE WATERSHED PROTECTION AND FLOOD PREVENTION ACT WEDNESDAY, JUNE 5, 1968 HOUSE OF REPRESENTATIVES, The committee met, pursuant to notice, at 10 a.m. in room 1301 Longworth House Office Building, Hon. W. R. Poage (chairman) presiding. Present: Representatives Poage, Gathings, Abbitt, Jones of Missouri, Stubblefield, Purcell, de la Garza, Jones of North Carolina, Dow, Teague, Hansen, Wampler, Miller, Burke, Mathias, Zwach, Kleppe, and Price. Also present: Christine S. Gallagher, clerk; William C. Black, general counsel; Hyde H. Murray, assistant general counsel; L. T. Easley, staff consultant. The CHAIRMAN. The committee will please be in order. This morning the full committee has under consideration S. 2276, an act to amend the Watershed Protection and Flood Prevention Act to permit the Secretary of Agriculture to contract for the construction of works of improvement upon request of local organizations." (The act follows:) [S. 2276, 90th Cong., second sess.] AN ACT To amend the Watershed Protection and Flood Prevention Act to permit the Secretary of Agriculture to contract for the construction of works of improvement upon request of local organizations Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 5(2) of the Watershed Protection and Flood Prevention Act is amended to read as follows: "(2) Except as to the installation of works of improvement on Federal lands, the Secretary shall not construct or enter into any contract for the construction of any structure: Provided, That, if requested to do so by the local organization, the Secretary may enter into contracts for the construction of structures." Passed the Senate May 20, 1968. Attest: FRANCIS R. VALEO, Secretary. The CHAIRMAN. I understand that Mr. Williams is here to testify and I suppose it will be appropriate to start with the Department. Mr. Williams, would you like to make a statement? We are always pleased to have you with us. (73) STATEMENT OF HOLLIS WILLIAMS, DEPUTY ADMINISTRATOR FOR WATERSHEDS, SOIL CONSERVATION SERVICE; ACCOMPANIED BY GERALD E. RYERSON, DIRECTOR OF ADMINISTRATIVE SERVICES, SOIL CONSERVATION SERVICE, U.S. DEPARTMENT OF AGRICULTURE Mr. WILLIAMS. Mr. Chairman and members of the committee, I appreciate the opportunity to testify in support of S. 2276, a bill to amend the Watershed Protection and Flood Prevention Act, Public Law 566, as amended, to permit the Secretary of Agriculture to contract for the construction of works of improvement upon request of local watershed project sponsors. I would like to emphasize the part "upon request of local watershed project sponsors. Presently all contracting is carried out by the watershed sponsors. This responsibility was delegated to the local people to insure greater local participation and greater interest in the program. We heartily concur in these objectives. And we support this bill because it still provides for this procedure if the local sponsors so desire. Nevertheless, our experiences have brought to light many difficulties and situations which indicate the desirability of having the Secretary of Agriculture contract for construction-I might add, in certain instances. Many groups sponsoring watershed projects under Public Law 566 have had no experience in letting and administering construction contracts. It is difficult and frequently impossible for them to find an individual willing and able to act as contracting officer. This activity becomes a hardship on the sponsor and an added expense where only one or two small contracts may be involved. This also puts an extra burden on the Soil Conservation Service to train the local contracting officers and to provide step-by-step assistance in the preparation of invitations to bid, reviewing and analyzing the bids, and awarding and administering contracts involving all dealing with the contractor. This creates an awkward, slow and cumbersome process that is often dissatisfying to all parties including the sponsors, the contractor, and the SCS. Also under some local contract procedures, many reputable and competent contractors are either excluded from bidding or cannot bid on an equal basis due to State and local regulations that give preferential treatment to local contractors or to contractors on an acceptable or preferred list. Free and unrestricted competition is not possible in these instances, and higher construction costs may result. When Federal cost sharing is involved in a project, we are required to assure ourselves that the prescribed equal employment opportunity clauses are included in the contracts. Several States have equally mandatory requirements, some of which conflict with Federal requirements. Reconciliation is often difficult, costly, and time consuming. Also under local procedures, disputes that cannot be settled by direct negotiation must be resolved by the local courts. Even though local sponsors may have agreed to provide legal services, they are often unable to because of the costs involved-especially when funds being protected are entirely Federal. |