If members of industry should by agreement achieve the standardization or simplification of sizes, dimensions, or weights which the regulations authorized by this bill could require, the combination would probably be regarded as a violation of the Sherman Act if, as might occur, it should result in standardization of prices or curtailment of production. It is our view that the Congress should not by this bill provide a mechanism which could achieve that result by administrative regulation. This seems to be a negation of basic antitrust principles rather than a buttressing of such principles. It seems to amount to a forced molding of industry operations in a manner which would be contrary to the policy of the antitrust laws-not in furtherance of that policy. We fail to perceive any basis for a reorientation of antitrust concepts in this fashion, particularly when, in doing so, business initiative and merchandising practice are made subject to Government control by administrative regulations.

I shall not consider in detail the lack of procedural safeguards in the bill because this matter has been dealt with by other witnesses. No public notice or opportunity for a hearing is mentioned at all in section 3A (c), providing for the net content regulations. Adoption of the commodity regulations provided for in section 3A (e) would be preceded by notice and "consultation" with "persons who would be affected thereby" (section 3A (f)). "Consultation" is a vague and undemanding concept and there is no limitation upon agency discretion as to its extent or scope. The requirement that commodity regulations be promulgated in conformity with the provisions of the Administrative Procedure Act offers no mandatory safeguards. The adoption of these regulations is "rulemaking" subject to section 4 of that act and that section requires no public hearing or findings based upon evidence. It requires only that, after notice

the agency shall afford interested persons an opportunity to participate in the rulemaking through submission of written data, views, or arguments (sec. 4(b)).

Even this may be dispensed with

in any situation in which the agency for good cause finds * that notice and public procedure are impracticable, unnecessary, or contrary to the public interest.

The Food and Drug Administration frequently relies upon this exception to the provision of section 4 in promulgating regulations. By that I refer to regulations which are not subject to section 701(e) of the act, which does provide for hearing, findings based on the evidence adduced at the hearing and appeal to the court of appeals in proper cases.

We join with previous witnesses in opposing the lack of procedural safeguards in a bill such as S. 387. We feel strongly that the hearing and judicial review provisions of section 701 (e) of the Food, Drug and Cosmetic Act should be applicable to each of the kinds of regulations provided for in the bill. There is at least as much reason for incorporating such safeguards in a bill such as S. 387 as there was for enacting them as a basis for establishing the rules provided for in the Food, Drug, and Cosmetic Act. Next, Mr. Chairman, I have mentioned the opposition which has to the sanctions of criminal penalties and seizure of or under the act, principally by incorporation of

those provisions of the sanction provisions of the Food, Drug, and Cosmetic Act. We support the objections to such provisions.

Other witnesses have objected to the provisions of section 3A (h) (1) or the bill, which have the effect of making applicable to violations of regulations adopted under the bill, the sanctions of criminal penalties and seizure of goods prescribed under the Federal Food, Drug, and Cosmetic Act. They have likewise objected to the provision of criminal penalties for failure to submit packages and labels upon agency request pursuant to section 3A (g). We support these objections. I have already stated our objection on principle to section 3A (g). Section 2 of S. 387 provides in part that:

No amendment made by this act shall be construed to repeal, invalidate, supersede, or otherwise adversely affect ***

(d) Any provision of State law which would be valid in the absence of such amendment unless there is a direct and positive conflict between such amendment and such provision of State law.

The very life of an interstate industry such as the food industry is dependent upon its ability to make interstate shipments without running into undue numbers of conflicts between State laws on the one hand and Federal and State laws on the other.

This bill would in effect limit the preemption or supersession doctrine which the Supreme Court has developed under the supremacy clause of the Constitution by its provision that the act shall not be construed to invalidate any provision of State law which would be valid

in the absence of such amendment unless there is a direct and positive conflict between such amendment and such provision of State law.

Now unfortunately I don't know whether I could say that most conflicts between Federal and State law arise by virtue of nonstatutory conflicts. But I think I can safely say that in a great many of the cases with which I have had experience, practically all of them, in fact, the State has proceeded under a general provision of law which is not only not in conflict with the Federal law, but which is very much like it.

But the regulation, the administration, and the enforcement of the State provision is on an entirely different basis. That is where we get into the conflicts, and this provision would leave all of those problems just as they are now.

I have cited some cases which make it quite clear that the present doctrine is protective of industry interests, and before leaving this point I would like to say that as an industry we are not interested in those aspects of the preemption problem which involve State subversive activities statutes or perhaps some of the labor problems that arise and have been associated with the preemption problem.

We are only interested in being certain that we don't have 50-odd different jurisdictions with almost as many conflicting regulations and policies to enforce a law which, in many cases, is very similar to the Federal law.

The U.S. Supreme Court has evolved a doctrine of supercession or preemption of Federal over State law over a period of many years, under the supremacy clause of the U.S. Constitution (article VI, clause 2). We are not directly concerned in the food industry with many of the applications of that doctrine, such as its effect upon State legislation relating to subversive activities. We are certain, however,

that the effect of section 2 upon the doctrine would be extremely unfavorable to the food industry. The real life of the industry hinges upon its ability to ship its products from State to State without the hampering restrictions which result from a multiplication of differing State requirements governing the business of its members. These requirements are of great variety and diverse effects. They can mean the success or failure of particular food products, they can substantially increase the cost and difficulty of doing business in particular States, and they can make it unprofitable to ship into a State a nationally marketed article of food.

We believe that the trade barriers now existing, which arise from diverse labeling, composition, and weights and measures requirements, will be multiplied if section 2 of the bill is enacted; for its evident purpose is to limit the application of the principles applied by the courts under the supremacy clause.

The objective of industry is uniformity of regulation by the Federal Government and the several States. Serious efforts are being made to obtain consistent and uniform State laws and regulations. Unless and until that objective is accomplished, however, the basic protection for interstate food business is the principle that the Federal law is supreme where it conflicts with State law or regulations. Even where the provisions of the State statute are consistent with those of the applicable Federal enactment, actual administration or enforcement of the two may differ and here the preemption doctrine offers protection to industry. Likewise, where the Federal statute or regulation has occupied or preempted the field in which the State law operates, the latter must fall.

The test which the bill would establish―a direct and positive conflict between State and Federal law-does not take account of the case where the conflict is between Federal and State administration or enforcement, as distinguished from clear conflict of statutory requirements. A direct conflict between Federal and State statutes is less likely to arise than variations in regulations or enforcement policies between the State and the Federal administrative agencies, acting under general provisions of law which, on their face, are not in conflict. This important area would be left entirely to conflicting State policies under the bill.

These differences between Federal and State policies and procedures and the application to them of the supercession on exclusivity doctrine are reflected in a number of decisions of the Supreme Court of the United States. For example, in McDetmott v. Wisconsin, 228 U.S. 115 (1913), a State labeling regulation was found to destroy rights arising out of the Food and Drugs Act of 1906, although then there was no "direct and positive conflict" between the Federal and State statute or regulation. In Garner v. Teamsters, 364 U.S. 485 (1953), duplication of enforcement procedures itself was found to be incompatible with the preemption principle. The Court said:

A multiplicity of tribunals and a diversity of procedures are quite as apt to produce incompatible or conflicting adjudications as are different rules of substantive law. And the reasons for excluding State administrative bodies from assuming control of matters expressly placed within the competence of the Federal board also exclude State courts from like action (346 U.S. at p. 491).

Where the Federal law is deemed by the Court to have occupied the field in which the State law operates, under the governing deci

sions, the latter cannot stand even though there is no clear conflict between the two. Campbell v. Hussey, 368 U.S. 297 (1961); Bethlehem Steel Co. v. New York State Labor Relations Board, 330 U.S. 767 (1947); Cloverleaf Butter Co. v. Patterson, 315 U.S. 148 (1942); Napier v. Atlantic Coast Line R. Co., 272 U.S. 605 (1926); OregonWashington R. and Navigation Co. v. Washington, 270 U.S. 87 (1926). In the cases cited, there was no "direct and positive" conflict between Federal and State law. We must assume that, under section 2 of S. 387, the protection afforded the food industry by the principles applied in those decisions would be removed.

For the reasons which I have stated, the National Association of Frozen Food Packers is opposed to the enactment of S. 387. A resolution of the board of directors of the association to this effect is attached to this statement. I should like to restate our basic reason for this position: That, to the extent that misbranding and deception are the targets of the bill, they can be dealt with by vigorous enforcement of present law under provisions which afford reasonable safeguards against arbitrary administrative action; and that, to the extent that the bill would permit, by discretionary agency regulation, the control' of business practices which are not misleading or deceptive, it is unwise and unnecessary.

Thank you very much.

(The National Association of Frozen Food Packers' resolution of board of directors submitted by Mr. Williams may be found on p. 497.) Senator HART. Thank you very much, Mr. Williams. I am sure I have expressed the reaction of each of us at the committee table here when I say that since yours is a statement that emphasizes strongly the legal and technical implications we will all have to reread it carefully. Certainly I will.

The old problem of preemption is one that one hates to face any time. We want to make sure we understand the effect, and then determine whether that is the effect we, in fact, want.

Mr. WILLIAMS. I feel convinced myself that there is also this kind of preemption provision that will not only leave the problems, most of the problems which we presently have in that field, but will add to

them.

Senator HART. In a broader comment that you made on page 11, you concluded with the fear that all packaging competition, not directly a function of price, might be prohibited whether it is deceptive

or not.

My comment is that the drafters of the bill have sought, and will continue to seek, to aim at only those actions and practices which, whether or not they are in fact now deceptive or not, downgrade price competition or detract from it. Those are the things that we seek to eliminate or control.

Mr. WILLIAMS. Do I understand by that, Senator, that you recognize or you agree this bill goes beyond deceptive practices?

Senator HART. Yes, and with this I would be glad to state on the record that we seek to reach actions or omissions, if that is a fair way to put it, in the packaging and presentation of goods, which leave the shopper in a position where his or her judgment cannot be exercised, or there is not available to that decision the basic elements of information which we think both the shopper and competition benefit from

and could reasonably expect. I think that is a fair statement of the purpose behind our introduction of the bill.

Mr. WILLIAMS. Senator, that is just the aspect of the bill which has caused us such great misgivings, the principal one I should say, that in order to cure this alleged evil, you have given to a Federal agency discretionary authority without any kind of standards that I can see that mean much to put its own ideas into effect of just how competition should be conducted among industry.

You have got a question here not of simply doing something that will make the consumer better off but you apparently are going to authorize these agencies to decide whether or not, as a competitive matter, this is a fair practice.

The Food and Drug Administration has never had such authority, and I think Mr. Dixon made it pretty clear this morning that in certain fields the Federal Trade Commission doesn't think it has enough to do those things.

Senator HART. That is exactly the point, and I think we have come face to face with it.

If the purpose had been what you fear it may be, we would simply have underscored the expression of authorization to the agency to eliminate unfair methods of competition and deceptive practices.

There is no broader grant of authority with less delineation that I can think of on the statute books than that. We have become much more explicit than that, and in my judgment thereby respond more to your concern than does the basic law today.

Mr. WILLIAMS. Senator, this is very enlightening to me, because this is the first time that I had realized that you recognized that this bill went beyond deceptive practices and their control.

Senator HART. We have talked about confusion-whether it is deceptive or not. I think we have used that phrase so many times in this record that now you will encourage me to repeat it again and again, but I thought I had said it too often.

Mr. WILLIAMS. If I had been sure that you intended this, Senator, I was careful to say that you didn't, or rather not to say that you did, I would have felt even more strongly about the bill than I do now. Senator HART. Yes, I know that, and that is the reason I want to bring us face to face with it. Mr. Cohen?

Mr. COHEN. I think it equally important to point out that this bill in no way eliminates or attempts to eliminate other forms of nonprice competition in terms of advertising, in terms of product differentiation, nor in terms of most packaging and labeling innovations or imagination.

All this bill attempts to do, I think, is to insist that the imaginative package and the package which may be an innovation accurately reflects the amount that is inside it, and at the same time still gives the consumer the information that she needs to make a practical decision based on price and quality.

This is no attempt to destroy nonprice competition. It is an attempt to make price and quality significant factors in the purchase of goods, if the consumer wants to make those kinds of comparisons. Regulations or standards which are designed to insure meaningful information to a consumer are a far cry from destroying all forms of nonprice competition