DISPOSAL OF SURPLUS PROPERTY OVERSEAS; REIMPORTATION OF SURPLUS PROPERTY; AND EXPANDING THE DONABLE PROPERTY PROGRAM WEDNESDAY, JUNE 1, 1960 U.S. SENATE, SPECIAL SUBCOMMITTEE ON DONABLE PROPERTY, The subcommittee met, pursuant to call, at 10:05 a.m., in room 3302, New Senate Office Building, Senator Ernest Gruening (chairman of the subcommittee) presiding. Present: Senator Gruening. Also present: Glenn K. Shriver, professional staff member, and Ann M. Grickis, assistant chief clerk. Senator GRUENING. The meeting will please come to order. The hearing today will concern itself with all of the bills referred to the Special Subcommittee on Donable Property on which testimony has not been taken. A copy of each bill, together with a staff memorandum explaining the purpose, background, and agency comments, will be inserted at this point in the record. (The material referred to follows:) [S. 2725, 86th Cong., 1st sess.] A BILL To amend the Federal Property and Administrative Services Act of 1949 to permit the donation of foreign excess property for educational and health purposes in certain cases Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the first sentence of section 401 of the Federal Property and Administrative Services Act of 1949 is amended by striking the word "Each" at the beginning thereof and inserting in lieu of said word the following: "Subject to the provisions of section 405, each”. SEC. 2. The first sentence of section 402 of the Federal Property and Administrative Services Act of 1949 is amended by inserting immediately before the period at the end thereof the following: ", or (c) by donation under section 405". SEC. 3. Title IV of the Federal Property and Administrative Services Act of 1949 is amended by adding at the end thereof the following new section: "DONATION OF FOREIGN EXCESS PROPERTY "SEC. 405. Under such regulations, not inconsistent with policies prescribed by the President pursuant to section 404, as the head of such executive agency as may be designated by the President may prescribe, the head of such executive agency may donate without cost (except for costs of care and handling) for use in a foreign country for educational or health purposes any foreign excess property held by any executive agency, which the head of the agency designated by the President determines (1) is not required for the discharge of the responsibilities of any Federal agency in its operations or programs outside the United 1 States, Puerto Rico, and the Virgin Islands, and (2) is suitable for use for such educational or health purposes, to any nonprofit, charitable, or eleemosynary public or private organization which carries on health or educational activities in such foreign country and is in need of such property for carrying on such activities. The head of such agency designated by the President may impose, and make appropriate provision for the enforcement of terms, conditions, reservations, and restrictions on the use of property donated under this section. No such property shall be donated for use within any foreign country except to the agency designated by such foreign country for the purpose of equitable distribution, in conformity with the provisions of this section, of property donated under this section for use in such foreign country. No property shall be transferred to any such foreign agency until the head of the executive agency designated by the President has received from such foreign agency a certification that such property is usable and needed for educational or health purposes in the foreign country, and until the head of such executive agency designated by the President has determined that such foreign agency has conformed to minimum standards of operation prescribed by the head of the executive agency designated by the President for the disposal of property under this section." SEC. 4. The Federal Property and Administrative Services Act of 1949 is amended by inserting in the table of contents appearing in the first section of such Act, immediately after the line in which "Sec. 404." appears, the following: "Sec. 405. Donation of foreign excess property." [S. 2732, 86th Cong., 1st sess.] A BILL To amend the Federal Property and Administrative Services Act of 1949 to permit the donation of foreign excess property to medical institutions, hospitals, clinics, health centers, schools, colleges, and universities Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the first sentence of section 402 of the Federal Property and Administrative Services Act of 1949 is amended by inserting immediately before the period at the end thereof the following: ", or (c) by donation under section 405". SEC. 2. Title IV of the Federal Property and Administrative Services Act of 1949 is amended by adding at the end thereof the following new section; "DONATION OF FOREIGN EXCESS PROPERTY "SEC. 405. (a) Subject to overall policy control by the Secretary of State, the head of each executive agency is authorized in his discretion to donate without cost (except for costs of care and handling) for use in any foreign country for purposes of education or public health, including research for either such purpose, any foreign excess property (including property capitalized in a working capital or similar fund) under the control of such executive agency which shall have been determined to be usable and necessary for any such purpose. In determining whether property is to be donated under this section, no distinction shall be made between property capitalized in a working capital fund established under section 405 of the National Security Act of 1947, as amended (5 U.S.C. 172d), or any similar fund, and any other property. "(b) Determination whether such foreign excess property is usable and necessary for purposes of education or public health, including research for either such purpose, shall be made in accordance with regulations prescribed by the President or his designee. Such property shall be allocated, in accordance with regulations prescribed by the President or his designee, on the basis of needs and utilization, for transfer to nonprofit or tax-supported medical institutions, hospitals, clinics, health centers, schools, colleges, and universities. "(c) The head of the executive agency concerned, in accordance with regulations prescribed by the President or his designee shall give preference to organizations directly or indirectly founded, sponsored, or supported by American citizens in making donations under this section in any foreign country. Except with respect to donations made to organizations referred to in the preceding sentence, no property may be transferred under this section for use in a foreign country except to an agency designated by such foreign country for the purpose of distributing, in conformity with the provisions of this section, all property allocated under this section for use within such foreign country. "(d) The President or his designee may provide for the imposition of reasonable terms, conditions, reservations, and retrictions upon the use of any property donated under this section." STAFF MEMORANDUM No. 86-2-22, SENATE COMMITTEE ON GOVERNMENT Subject: S. 2725 (Humphrey); S. 2732 (Hart and Bartlett), bills to amend the Federal Property and Administrative Services Act of 1949 to permit the donation of foreign excess property for educational and health purposes. PURPOSE These bills provide for amending title 4 of the Federa. Property and Administrative Services Act of 1949 by inserting a new section 405 which would permit the head of an executive agency to donate foreign excess property to public health centers, clinics, hospitals and to schools and educational institutions. S. 2725 would authorize the President to designate a central executive agency to prescribe regulations for and to donate any foreign excess property held by any executive agency which the designated agency determines (1) is not required for the discharge of the responsibilities of any Federal agency in its operations or programs outside the United States, and (2) is suitable for use for educational or health purposes, to any nonprofit, charitable or eleemosynary public or private organization which carries on health or educational activities in such foreign country and is in need of such property for carrying on such activities. The head of the designated agency would be authorized to impose and make appropriate provision for the enforcement of terms, conditions, reservations and restrictions on the use of the property donated. No property would be donated for use in a foreign country except to an agency designated by such foreign country for the purpose of distribution. No property would be transferred to any such foreign agency until it certified that such property is usable and needed for educational or health purposes in the foreign country and until the head of the designated agency has determined that the foreign agency has conformed to minimum standards of operation prescribed by the head of the designated agency. S. 2732 provides, that subject to overall policy control by the Secretary of State, the head of each executive agency would be authorized, in his discretion, to donate for use in any foreign country, excess property under his control which has been determined is usable and necessary for such purpose. Determination whether such foreign excess property is usable and necessary for education and public health would be made in accordance with regulations prescribed by the President or his designee. Such property would be allocated in accordance with regulations prescribed by the President or his designee on the basis of needs and utilization, for transfer to nonprofit or tax-supported medical institutions, hospitals, clinics, health centers, schools, colleges and universities. Preference would be given to organizations founded, sponsored or supported by American citizens, and except for such organizations, distribution would be made by an agency designated by the foreign country concerned. The bill would also provide that the President or his designee may provide for the imposition of reasonable terms, conditions, reservations, and restrictions upon the use of any donated property. Under existing provisions of law, section 402 of the Federal Property and Administrative Services Act of 1949, foreign excess may be donated in those instances where the property has no commercial value, or the estimated cost of care and handling would exceed the estimated proceeds from its sale. Under the provisions of these bills the above criteria would not apply, and therefore the property could be donated under certain regulations to any educational institution, health department, clinic, hospital or school if there was a showing that a need exists, together with a certification that the property is usable and necessary for these uses. One of the marked differences between S. 2725 and 2732 is that under the latter bill the regulations prescribed by the President shall give preference to health and educational institutions which are organized directly, or are sponsored or supported by American citizens in such foreign countries. AGENCY COMMENTS The committee has requested reports from the Bureau of the Budget, General Services Administration, International Cooperation Administration, General Accounting Office, Department of Health, Education, and Welfare, and the Department of Defense. As of this date, the only report received by the committee was submitted by the Comptroller General of the United States. The Comptroller General indicated that making this property available in foreign countries was a matter of policy to be determined by the Congress and therefore made no recommendations concerning the merits of the bills. However, he did suggest that the committee may wish to take into consideration the need for establishing procedures (1) to insure that the property would not be used for discharging the responsibilities of other Federal agencies outside the United States and (2) that specific criteria be established in order to determine eligibility, (3) to assure that the property is used for the purpose for which donated, and (4) to place certain terms, conditions and restrictions on the use of the property donated. Approved : WALTER L. REYNOLDS, GLENN K. SHRIVER, Professional Staff Member. Chief Clerk and Staff Director. [S. 3154, 86th Cong., 2d sess.] A BILL To amend section 402 of the Federal Property and Administrative Services Act of 1949, to prescribe procedures to insure that foreign excess property which is disposed of overseas will not be imported into the United States to the injury of the economy of this country. Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 402 of the Federal Property and Administrative Services Act of 1949 (40 U.S.C. 512) is amended to read as follows: "SEC. 402. Foreign excess property may be disposed of (a) by sale, exchange, lease, or transfer, for cash, credit, or other property, with or without warranty, and upon such other terms and conditions as the head of the executive agency concerned deems proper; but it shall be unlawful to import such property into the United States after such sale or other disposition if the Secretary of Agriculture (in the case of any agricultural commodity, food, or cotton or woolen goods) or the Secretary of Commerce (in the cast of any other property) determines that the importation of such property would be injurious to the economy of this country, or (b) for foreign currencies or credits, or substantial benefits or the discharge of claims resulting from the compromise or settlement of such claims by any executive agency in accordance with the law, whenever the head of the executive agency concerned determines that it is in the interest of the United States to do so. Such property may be disposed of without advertising when the head of the executive agency concerned finds so doing to be most practicable and to be advantageous to the Government. The head of each executive agency responsible for the disposal of foreign excess property may execute such documents for the transfer of title or other interest in property and take such other action as he deems necessary or proper to dispose of such property; and may authorize the abandonment, destruction, or donation of foreign excess property under his control which has no commercial value or the estimated cost of care and handling of which would exceed the estimated proceeds from its sale. "The Secretary of Agriculture and the Secretary of Commerce may make any determinations, rules, regulations, and orders deemed necessary or appropriate to carry out their respective functions hereunder. "Property which is imported in violation of this section or any determination, rule, regulation, or order promulgated hereunder shall be subject to forfeiture to the United States. All provisions of law relating to seizure, summary and judicial forfeiture, and condemnation for violation of the customs laws; the disposition of the property forfeited or condemned or the proceeds from the sale thereof; the remission or mitigation of such forfeitures; and the compromise of claims and the award of compensation to informers in respect of such forfeitures shall apply to seizures and forfeitures incurred, or alleged to have incurred, under the provisions of this section, insofar as applicable and not inconsistent with the provisions hereof: Provided, That no sale of such seized or forfeited property shall be made except upon condition, supported by appropriate bond, that the property shall be exported to a destination other than the United States or reduced to scrap. Awards of compensation to informers under this section may be paid only out of funds specifically appropriated therefor. "The importation into the United States of property disposed of as foreign excess property for the purpose of repair, reconditioning, or rehabilitation of such property and its reexportation thereafter, or for the purpose of transit through the United States, shall not be an importation to which this section applies, if the importer of such property shall, prior to such importation, furnish bond for the performance of such undertaking in such amount and on such conditions as the Secretary of the Treasury shall prescribe." STAFF MEMORANDUM No. 86-2-24, SENATE COMMITTEE ON GOVERNMENT OPERATIONS MAY 27, 1960 Subject: S. 3154 (Humphrey; Engle), bills to amend section 402 of the Federal Property and Administrative Services Act of 1949 to prescribe procedures to insure that foreign excess property which is disposed of overseas will not be imported into the United States to the injury of the economy of this country. PURPOSE The purpose of this bill is to amend section 402 of the Federal Property and Administrative Services Act of 1949 so as to revise and improve existing law dealing with the importation of foreign excess property in the following respects: (1) To make unlawful the importation of such property if it would result in undue loss of production or employment in the United States; (2) to give the Secretaries of Commerce and Agriculture authority to make determinations and regulations to administer the law; (3) to provide for the forfeiture of property imported in violation of law and other penalties; and (4) to permit the temporray importation of property for certain purposes under bond. Under existing authority of law, the head of an executive agency may sell foreign excess property which is under his control but in no event may such property be sold without a condition forbidding its importation into the United States, unless the Secretary of Agriculture or the Secretary of Commerce (depending on the type of property involved) determines that the importation of such property would relieve domestic shortages or otherwise be beneficial to the economy of the country. BACKGROUND This bill resulted from rather extensive hearings which were held by the House Committee on Government Operations and from complaints filed with the committee by manufacturers, jobbers, dealers, and surplus property retailers. In 1958 a number of manufacturers and dealers became alarmed at the influx of surplus property into the United States which was put on the market in competition with the domestic manufacturers. The House Committee on Government Operations held hearings on this matter in July 1958, after which a report (H. Rept. 2661) was issued criticizing the way the Department of Commerce administered the law and made specific recommendations as to how the committee thought the statute should be administered. Subsequently the Department revised its regulations and tightened up on the controls for the reimportation of foreign excess property after which the import dealers complained to the Department of Commerce and to the committee that the law was now being too strictly interpreted, and the foreign excess property dealers were encountering considerable difficulty in obtaining permission to bring property into the United States which had been acquired overseas. The committee decided to make another review and examination of the statute and the Department of Commerce regulations. Additional hearings were held in January 1959, at which time the importers contended that in most cases they were not competing against the manufacturers of new equipment but were operating in an entirely different market. They contended that foreign excess property was sold on the second-hand market where it provided additional em |