Commerce on January 14, 1969, issued an updated map showing areas of seismic risk for 48 States. This map shows that major zones of seismic risk where major earthquakes may occur are to be found in a considerable number of States. Specifically included in these zones are Washington, California, Montana, Missouri, Arkansas, Mississippi, Kentucky, Tennessee, parts of Pennsylvania, Ohio, New York, Maine, New Hampshire, Vermont, Massachusetts, South Carolina, Alaska, and Hawaii.

The committee's concern relates to the broadspread implications of these findings and problems-specifically, as to the operations and activities of the Federal agencies involved, whether or not the operations and regulations of these agencies, over which the Congress has control, have been and will be adequate in the circumstances.

In response to the chairman's letter, the Comptroller General first submitted a report on July 31, 1967, entitled "Operation of Federal Housing Programs in Areas of Potential Geologic Instability, Foster City, California." A second report, similarly entitled and dealing with the other questions raised in the chairman's February 15, 1966, letter, was submitted on May 20, 1968. (These reports are numbered B-158554 and B-158554 (1).) The reports led to hearings held by the subcommittee on May 7 and 8, 1969.

The principal recommendation in the report urges that:

Federal agencies involved in housing financing should take adequate precautions to guard against the hazards of geologic instability. (1) Written instructions now lacking should be expeditiously issued dealing with the requirements for areas subject to earthquakes and other hazards both as to technical aspects to be considered and in the procedures to be followed in applying them.

(2) Soils reports should be required of sponsors, including a detailed geologic report as to the site, prepared by a competent engineering geologist.

(3) Such reports should be reviewed by the agency's site engineers, and engineering geologists should be added to the staff.

(4) To complement this, the Geological Survey, to be fully responsive to research and study needs in this field, even on a reimbursable basis, should increase its engineering geology staff.

(5) Where the agency does not follow the advice of its site engineers or of special reports from technical agencies, the approval of the subdivision should require that each purchaser receive a copy of such advice, recommendation, or special report.

(b) Benefits.-On October 8, 1969, the chairman of the Committee on Government Operations was advised by Mr. Donald E. Johnson, Administrator of Veterans Affairs, that in the period since the hearings VA had been reviewing their policies and procedures concerning the determination of the acceptability of new subdivisions.

VA testified at the hearing that instructions had been given their field offices last year to coordinate with the Geological Survey for evaluation of new subdivisions in areas of geologic instability. VÀ had to revise those instructions, however, because their case referrals overtaxed the resources of the Geologic Survey.

In principle, VA states it is in accord with the above recommendation, but they did note the impact of fiscal restraints upon their ability to comply fully.

As of this date, neither FHA nor Geological Survey has submitted any comments on the committee's recommendations. However, both FHA and VA have suspended issuing any further commitments in Foster City and Redwood Shores, two developments built up on the mud flats of San Francisco Bay. Moreover, both FHA and VA have withdrawn entirely from the Princess Sierra (California) development. In addition, the committee has been advised that FHA has put out a memo to all of its field offices stating that all embankments, dikes, and levies must have a safety factor of 1.5 to 1 if developments which they protect are to be approved for loan guarantees.

It is impossible to offer a figure of savings to the Government at this time; but should a major earthquake, or a landslide in unstable hilly areas occur, the ultimate financial responsibility to the Government would be in the hundreds of millions or billions of dollars. Since major real-estate developments in hazardous geologic areas are unlikely to proceed without Federal mortgage insurance participation, reasonable restraint by the Government agencies involved should minimize the extent of the potential loss in case of disaster, thus saving the economy vast sums of money.

(c) Hearings.-Hearings were held by the Special Studies Subcommittee on May 7 and 8, 1969. Testifying were witnesses from the Office of Science and Technology of the Executive Office of the President, officials of the General Accounting Office, the Federal Housing Administration of the Department of Housing and Urban Development, the Geological Survey of the Department of the Interior, and the Veterans' Administration. The hearings were printed. 3. "Office of Economic Opportunity and the Medical Foundation of Bellaire, Ohio", House Report No. 91-523, September 27, 1969, Eighth Report by the Committee on Government Operations. (a) Summary. This report is based upon hearings held before the Special Studies Subcommittee on May 20, 21, and 22, 1969, in Washington, D.C., during which time testimony was heard from witnesses who came to the hearing from several communities in Belmont County, Ohio: a representative of the General Accounting Office's regional office in Columbus, Ohio; former officials and officials of the Office of Economic Opportunity; officials of the Medical Foundation of Bellaire and physicians representing the Belmont County Medical Society.

The report cites several failures of OEO to comply with its own. guidelines and procedures. The agency is criticized for bypassing the local community action agency to approve a grant directly to the Medical Foundation of Bellaire, without making any attempt to follow its own "special appeals procedure." This action, the report states, only helped to increase local conflicts, issues, and problems, including the submission to OEO of competing proposals for a comprehensive community health care plan by the Medical Foundation of Bellaire and the Belmont County Medical Society.

The principal recommendation in the report states that OEO should consider providing for the active participation in the comprehensive health services project in Belmont County of the greatest feasible number of the practicing physicians, hospitals, and private clinics in the target area. This consideration, the report states, should involve the problem of providing a broader choice of physicians, and

whether this broader participation would not materially aid in solving the current problem of transporting enrollees.

An equally important recommendation states that OEO should give consideration to making the community action agency the grantee for the health project. The committee felt that such an action could increase coordination and cooperation between and among all OEOsponsored projects in the area, and with various local health resource agencies or groups as well.

(b.) Benefits. By letter dated November 11, 1969, Mr. Donald Rumsfeld, Director, OEO, advised Chairman Dawson that he had read the committee's report with great interest and care and had directed that every feasible step be taken by the OEO staff to attempt to carry out the recommendations of the committee as rapidly as possible. Mr. Rumsfeld described actions that had been taken to correct the identified administrative deficiencies and to strengthen the operations of the project. The actions taken, as described by Mr. Rumsfeld, are consistent with the recommendations of the committee, and include efforts directed toward increasing the number of local physicians actively participating in the project, in line with the objectives and standards of the comprehensive health services program guidelines.

It is too early at this date to estimate the savings to the Government which this report brought about and is continuing to bring about in the OEO. But because of the report's criticism of the general laxity within OEO regarding its own guidelines and procedures, a rather extensive reorganization within the OEO headquarters office has taken place. Moreover, a trial audit of the Medical Foundation of Bellaire requested by the subcommittee has resulted in OEO's internal auditors "questioning" more than $36,000 spent by the grantee during the 6 months period of July 1-December 31, 1968, as well as other items which could increase the sum considerably. On the basis of this trial audit, the chairman of the subcommittee has requested the Comptroller General to make a full audit of OEO funds granted to the Medical Foundation of Bellaire from the start of program year A to the present time.

(c.) Hearings.-Hearings were held on May 20, 21, and 22, 1969, in Washington, D.C. Among witnesses heard were residents from several communities in Belmont County, Ohio; a representative of the General Accounting Office's regional office in Columbus, Ohio, who conducted a survey of enrollees in the OEO-sponsored comprehensive health care plan of the Medical Foundation of Bellaire; physicians representing the Belmont County Medical Society; former officials and officials of the OEO; and officials of the Medical Foundation of Bellaire, Ohio. The hearings have been printed.

4. "Government-Rejected Consumer Items", House Report No. 91-773, December 19, 1969, 17th report by the Committee on Government Operations.

(a) Summary. This report is based upon an investigation and hearings held by the special consumer inquiry of the subcommittee in April 1968, in Washington, D.C., during which time testimony was heard from officials of the Defense Supply Agency, the Department of Agriculture, and various agencies of the Department of Health, Education, and Welfare.

The report describes what may generally happen to consumer-type products which the Federal Government contracts to procure, but which it may reject upon delivery, or prior to delivery, because of a lack of conformity with the specifications in the contract. The report states that most often, when supplies do not conform, they are rejected back to the contractor, and their disposition falls within his control. The contractor may then do one of three possible things to dispose of these Government-rejected items:

(1) If the rejected item is beyond repair or use, it is destroyed: (2) If the product can be rehabilitated by the manufacturer, he may resubmit it to the procuring agency for reinspection, or sell it in normal commercial channels to the public; or

(3) The product is sold without rehabilitation on an "as is" basis into normal commercial channels to the public.

It was this latter practice of selling unrehabilitated products which have been rejected by the Federal Government to unsuspecting consumers that triggered the committee's concern, for the public was being asked to buy inferior or substandard products, as well as products that could be dangerous to health, without any discernible ripple of care on the part of any Federal agency. Since the Federal Government is by far the largest single purchaser and user of consumer-type products in the United States today. Federal responsibility for the protection of the consuming public of Government-rejected items cannot be overly stressed.

The report therefore recommends that Federal agencies which reject consumer products for reasons which would clearly render them less fit than counterpart products available in the marketplace, unless rehabilitated, should report such rejections to the Federal Trade Commission for (1) a determination of the manner and nature of disposition by the contractor, if any, and (2) if the product or item is to be sold to the public without rehabilitation a determination as to whether this would constitute a violation of section 5 of the Federal Trade Commission Act. An additional recommendation of importance is that Government procurement agencies should not sell into private trade channels for ultimate resale to consumers products that are substandard without first obtaining written assurances from vendors of substantial rehabilitation or adequate notice is made that the item is Government rejected.

(b) Benefits.-The Federal agencies especially involved in the matter the Defense Supply Agency, Food and Drug Administration, and the Department of Agriculture-have instituted new procedures for protecting the consuming public from possible harmful or low quality reiected Federal items. Now, when an agency rejects an item where health or safety is involved, all relevant agencies are notified. (c) Hearings.-Hearings were held on April 2 and 3, 1968, and were printed.

B. OTHER INVESTIGATIONS

1. Federal responsibility for retail price increases for beef.

(a) Summary.-Because the Federal Government is the Nation's largest purchaser of beef, through purchases made by the armed services, the Federal prisons, Public Health Service, and VA hospitals, the food stamp program, etc., it is important to determine whether

there is excessive pricing anywhere along the meat production line. Involved in the subcommittee's study is an examination of the manner in which the Bureau of Labor Statistics collects retail prices on selected cuts of beef for the monthly cost-of-living index; how the Department of Agriculture compiles its various statistics on beef and determines a composite per pound price and the way it then uses such statistics; and the mechanics by which the State Department and the Department of Agriculture arrive at voluntary beef import agree

ments.

In addition, the study covers methods most commonly used by retail chainstores, wholesalers, and packinghouses in arriving at the prices they charge. Also included in the study is whether feedlot operators and farmers are being victimized by the prices quoted on the Chicago and Omaha daily markets.

Hearings were held on October 7, 8, and 9, 1969. Witnesses included Mr. C. W. McMillan, executive vice president, American National Cattlemen's Association; Mrs. Virginia H. Knauer, Special Assistant to the President for Consumer Affairs: John Ward, chairman, Meat Importers Council of America, Inc.; Mrs. Ross DeLorenzo, a housewife; Representatives Graham Purcell (Democrat, Texas). Catherine May (Democrat, Washington), John Melcher (Democrat, Montana), Robert Price (Democrat, Texas); Mr. Clarence G. Adamy, president, National Association of Food Chains; Mr. Arnold E. Chase, Assistant Commissioner, Bureau of Labor Statistics; Dr. M. L. Upchurch, Administrator, Economic Research Service, Department of Agriculture; Mr. Julius L. Katz, Deputy Assistant Secretary for Economic Affairs, Department of State; and Mr. Ronald M. Rubel, Assistant Administrator, Foreign Agricultural Service, Department of Agriculture. A report is being prepared.

(b) Benefits. Substantial savings to the Government may be realized as a result of this study of all factors making up the final cost of cuts of meat to the consumer.

2. Packaging and labeling matters.

Summary. The subcommittee has been developing information which suggests that consumers are still confronted with packages which frequently conceal weight decreases, and labels which often fail to provide accurate information as to the contents, although more than 3 years have passed since enactment of the Fair Packaging and Labeling Act of 1966. Hearings on the matter were held on June 3, 4, and 5, 1969, before the special consumer inquiry of the subcommittee to determine whether Federal agencies charged with responsibility in these and related matters are being diligent or efficient in their pursuits. Lack of vigorous enforcement of the provisions of the Fair Packaging and Labeling Act has found the consumer purchasing what in effect could be called shrinking can and package contents without comparable reductions in price. At the same time, the consumer also is found to be suffering from a lack of accurate information on the contents of the can or package. The report makes the point that Congress, through passage of the act, clearly intended that packages and labels should enable consumers to obtain accurate information as to the quantity of the contents and should facilitate value comparisons.

The hearings also dealt with a marketplace phenomenon known as packaging to price-the practice of concealing a price rise behind a