importation would in fact result in undue loss of production or employment," he would have to be far wiser than Solomon. We respect fully submit, Mr. Chairman, that the language of S. 3154 or the alternate proposal language of the Department of Commerce or the language in H.R. 9996 would, for all practical purposes, destroy all semblance of control over the disposal of foreign excess property on the domestic market. Senator GRUENING. Thank you very much, Mr. King. Mr. KING. Thank you, sir. (The full text of the statement of Mr. King follows:) STATEMENT OF JOSEPH T. KING Mr. Chairman, I will try to make my remarks brief, and I only intend to comment on some of the legal aspects of the legislation. The bill S. 3154 would amend the present criteria used by the Department of Agriculture and the Department of Commerce to determine whether they will license the importation of foreign excess property for sale on the domestic market. Under the present law, such importation is prohibited unless the respective Secretaries make a determination "that the importation of such property would relieve domestic shortages or otherwise be beneficial to the economy of this country." This law was enacted in 1949 to protect production and employment from being adversely affected because many of the military items were the same, or similar to goods produced and used in a normal economy. Congress wisely decided that these products should not be brought back to this country unless they were needed to relieve a domestic shortage or the importation would otherwise be considered to be beneficial to the economy of the country. Although the term "otherwise beneficial to the economy of this country" is vague and its origin is obscure, I think it is reasonable to conclude that Congress was merely leaving the door open in case some situation developed which at the time Congress could not anticipate. The proposed bill would amend this language to provide that such importations would be prohibited only in the event the respective Secretaries make a predetermination "that the importation of such property would be injurious to the economy of this country." While the proposed change in the criteria would not constitute a declaration of congressional policy to permit unrestricted importation of foreign excess property, the net result under such broad language would be the same. To prove that the importation of any given quantity of goods would be "injurious to the economy of this country" would be an impossible task. The Secretaries would have to first determine what constitutes an injury to the economy of this country and, even if this could be determined, they would then have the problem of deciding the degree of the injury resulting from 1, 50, 100, or 1,000 shipments. I would assume that the term "injury to the economy of this country" would have to be interpreted broadly and the fact that it had an adverse effect on the segment of the economy, a particular industry, or a geographic area would be of little or no consequence. The Department of Commerce and the House Committee on Government Operations have alternate proposals. The Department of Commerce suggests that the language should be "that the importation of such property would not have an injurious impact on domestic production or employment in the United States." The House Committee on Government Operations suggests that it should read "that the importation of such property would not result in undue loss of production or employment in the United States." The only substantial difference between the language suggested by the Department of Commerce and that approved by the House Government Operations Committee is the word "undue." I know of no better way to explain the dilemma the respective Secretaries will find themselves in under this language than to read an excerpt from the House report (pp. 7, 8, H. Rept. No. 1638, 86th Cong., 2d sess.) which accompanies the House bill, H.R. 9996: "(c) By 'undue loss of production or employment in the United States' the committee has sought to somewhat liberalize existing law, develop criteria which will be susceptible to some precision, and also give the Secretaries a reasonable discretion in making determinations. The Department of Commerce as well as the economic interests involved were agreed that the present criteria of relieving domestic shortages or otherwise being beneficial to the economy were very difficult to establish and gave very little discretion or flexibility in making determinations. The committee wishes to make clear, however, that the Secretaries' findings should take into account not only the significance of the importation to the importer and to the industry immediately concerned, but also other industries, including possible beneficial effects of the imports. "The committee noted the positions taken by the Bureau of the Budget in support of the bill, particularly its statement contained in its report (see appendix): "We would be opposed, however, to any criterion which would be construed so that the decision would be based solely upon the interests of a single group of producers, distributors, or surplus property dealers without regard for the interests of other groups, including the general public and the Government.' "The committee believes the Secretary of Commerce will recognize the necessity for making prompt determinations on all import applications and that applications will be denied only where there is valid evidence demonstrating that the importation would in fact result in undue loss of production or employment." Note that the committee makes it clear that it expects the Secretary to take into account "not only the significance of the importation to the importer and to the industry immediately concerned, but also the effect on employment and production in other industries, including possible beneficial effects of the imports." In other words, when an application is received, the Secretary of Commerce must determine the benefits of the particular importation to (1) the importer, (2) the customer (the implication being that the customer would purchase at a lower price than he could on the retail market), and (3) the Federal Government through monetary realization resulting from the sale of the surplus for sale on the domestic market (this would apply only where it could be proved that the importer would pay more than would be realized on the foreign market). Against these benefits, the Secretary must weigh the detrimental effects of the importation which could result in (1) loss of production and employment in manufacturing industries where surplus competes with new products, (2) loss of sales to wholesalers and retailers of new and secondhand products, (3) unequal competitive advantages between users of nonsurplus products and users of surplus products, and (4) Federal, State, and local losses of tax revenue caused by lower production and employment. Also, the Secretary of Commerce would be required to measure the effect of surplus sales against other industries not directly engaged in the sale or manufacture of the commodity. If the Secretary of Commerce is to weigh all the above-mentioned factors and then make “prompt determinations on all import applications" and deny them "only where there is valid evidence demonstrating that the importation would in fact result in undue loss of production or employment," he would have to be far wiser than Solomon. We respectfully submit that the language of S. 3154 or the alternate proposed language of the Department of Commerce or the language in H.R. 9996 would, for all practical purposes, destroy all semblance of control over the disposal of foreign excess property on the domestic market. Senator GRUENING. It is now 10 minutes past 1 o'clock, and I suspect the witnesses are getting hungry. Is there anyone who will not be able to testify this afternoon? If so, please indicate. If not, then we will resume the hearings at 2:30 and hope to conclude them this afternoon. We will hear from Mr. Leslie V. Dix; Mr. Robert C. Moot; Lt. Col. John F. Rey, Chief, Surplus Property Disposal Branch, Department of Defense; Mr. James A. Garvey, Assistant Commissioner, Office of Utilization and Sales, GSA; Mr. Chester B. Lund, Director, Office of Field Administration, Department of Health, Éducation, and Welfare; Mr. Wendell Gray, Chief, Surplus Property Utilization Division, HEW; Mr. Manuel Miller, Office of the General Counsel, HEW; and Mr. Walter G. Rhoten, past president, of the National Association for State Agencies for Surplus Property. And if there is anyone else who wishes to testify, we will be glad to hear him. We will meet again at 2:30. (Whereupon, the committee was adjourned, to reconvene at 2:30 p.m., the same day.) AFTERNOON SESSION Senator GRUENING. The committee will please come to order. Mr. Dix. Present, Mr. Chairman. Senator GRUENING. Would you be kind enough to come up and testify? Mr. Dix, you are the Chief of Defense-State Relations, Office of Assistant Secretary of Defense for Manpower, Personnel, and Reserve. That is a very impressive title. STATEMENT OF LESLIE V. DIX, CHIEF OF DEFENSE-STATE RELA- Mr. Dix. It just represents work, Mr. Chairman. TESTIMONY ON S. 3489 Mr. Dix. I am only going to testify, Mr. Chairman, on the Department of Defense-sponsored bill, which your committee has introduced, S. 3489. This is our own proposal as distinguished from those bills that my colleagues, Mr. Moot and Colonel Rey, will comment on. Senator GRUENING. Have you a prepared statement? Mr. Dix. A very short one, sir, which amplifies the Department of Defense letter we submitted to the committee. Mr. Chairman, as you have said, I am Leslie V. Dix, Chief of Defense-State Relations in the Office of the Assistant Secretary of Defense (Manpower, Personnel, and Reserve). The responsibility for the establishment of criteria and the designation of activities of special interest to the armed services within the meaning of the Federal Surplus Property Act has been delegated to this office by the Secretary of Defense since the early part of 1956. I represent the Department of Defense in expressing, as requested by this committee, the views of the Department with respect to our sponsored bill, namely, S. 3489, Mr. Chairman, at this point I request permission to insert into the record, as part of this testimony on S. 3489, the August 28, 1959, report of the Department of Defense which advocates the enactment of this legislation. Senator GRUENING. It will be done. Mr. Dix. Thank you, sir. 57809-60 (The material referred to follows:) Hon. RICHARD M. NIXON, THE SECRETARY OF DEFENSE, DEAR MR. PRESIDENT: There is enclosed a draft of proposed legislation to amend section 203 (j) of the Federal Property and Administrative Services Act of 1949, as amended (40 U.S.C. 484(j)), to provide that the Department of Defense may allocate surplus property under its control for transfer under that act only to educational institutions conducting approved military programs. The proposal is part of the Department of Defense legislative program for 1959. It is recommended that this legislation be enacted by the Congress. PURPOSE OF LEGISLATION The purpose of the proposed legislation is to limit distribution of surplus property under the control of the Department of Defense to educational institutions conducting military training programs at standards acceptable to the Department of Defense and to transfer the responsibility for administering the requests of other educational activities now receiving such surplus property to the Department of Health, Education, and Welfare. Under criteria developed over the past years within the scope of the present statute, the Department of Defense has found certain fine organizations eligible to receive surplus property. It is unnecessary to emphasize the worth to this country of organizations such as the Boy Scouts, Campfire Girls, and the Boys Clubs of America; however, it is believed that determinations with respect to the distribution of surplus property to such organizations more properly belong within the purview of the Department of Health, Education, and Welfare. On the other hand, the Department of Defense has a direct responsibility for military training programs conducted at educational institutions maintaining and conducting military programs at standards acceptable to the Secretaries of the Army, Navy, and Air Force. The Armed Forces benefit from theṣe programs by receiving militarily trained manpower. It is therefore entirely reasonable that a direct responsibility for supplying needed surplus property to institutions of this nature should be imposed upon the Department of Defense. Similar reasoning impels the inclusion of the proviso in the bill which would preserve the present eligibility of the Civil Air Patrol to receive surplus property under the control of the Department of Defense. The Civil Air Patrol maintains a capability to assist both civil and military activities during emergency, and during periods when no emergency exists, by the voluntary efforts of the Civil Air Patrol senior members who operate and maintain light aircraft, mobile support units, and a nationwide radio communication network. Therefore, it is the position of the Department of 'Defense, that the Civil Air Patrol should continue to receive support of their overall program through the donation feature as heretofore, The Bureau of the Budget advises that there is no objection to the submission 'of this proposal to the Congress. Sincerely yours, NEIL MCELROY. Mr. Dix. The bill would amend section 203 (j) of the FederalProperty and Administrative Services Act of 1949, as amended (40 U.S.C. 484 (j)), to provide that the Department of Defense may allocate surplus property under its control for transfer under that act only to educational institutions conducting approved military training programs. We believe that the main thrust of the bill constitutes a proper circumscription of the Defense Department's role in the Federal surplus property program; that is to say, it is reasonable to conclude that supplying surplus property to educational institutions, as distinguised from organizations, which produce militarily trained man power is a proper arrangement with a discernible or measurable, and we believe therefore justifiable, reciprocal aspect. A similar rationale prompts the preservation of the present Department of Defense eligibility allowed the Civil Air Patrol. The Bureau of the Budget concurs in our view that transfer of the responsibility for donation of surplus property to organizations now receiving such distribution from the Defense Department to the Department of Education and Welfare will be beneficial to the program when the following results are considered: (1) The transfer will remove a priority in selecting and claiming property for donation which is now exercised by organizations such as the Boy Scouts, Girl Scouts, etc., over even the most pressing educational, public health, and civil-defense needs; (2) the additional delays and costs caused by the necessity of allowing separate periods for the various organizations to inspect and claim surplus property will be eliminated; (3) administration of the storage and allocation procedures by the States. will be simplified since the property will be canceled through the existing State agencies for surplus property; and (4) a cause of irritation and complaint by the States will be eliminated. Accordingly, as our letter to you on S. 3489 reports, the Bureau of the Budget has no objection to the proposal as submitted to the Congress. We hope you will favorably consider the Defense Department's request as expressed in S. 3489. In closing, I wish to thank you, Mr. Chairman, for the opportunity of expressing the views of the Department of Defense. Senator GRUENING. This bill would sort of tighten the control of the Defense Department over the disposal of surplus, would it not? Mr. Dix. It would place us in a more limited sphere of direct responsibility for the disposition of it, sir, in that as the bill contemplates, we would retain only direct responsibility for the allocation of property to schools that conduct military training programs under standards approved by the Secretaries of the Army, Navy, and Air Force. Senator GRUENING. Well this would really demote certain educational institutions, Boy Scouts and Girl Scouts, and put them in a lower priority? Mr. Dix. It would transfer the administration of the surplus property programs, to the Department of Health, Education, and Welfare. We now feel, in the Department of Defense, that this is not properly within the scope of our mission, the national defense, and that these organizations should be properly administered by those departments contemplated by the Congress when the Surplus Property Act was enacted. Senator GRUENING. In other words, it is really a transfer of authority, isn't it? Mr. Dix. Yes, sir, with respect to the organizations, that is cor rect. Senator GRUENING. Thank you very much. Mr. Dix. Mr. Chairman, I would like to say at this time that I have examined the prepared statement to be made later by the Department of Health, Education, and Welfare, and the Department of Defense would entertain no objection to the technical amendment to S. 3489 as will be presented by the Department of Health, Education, and Welfare. |