Cheddar cheese (chunk Cheddar only; do not buy sliced or grated; packagelabel must identify cheese as Cheddar.) Salt. Canned tuna. Imitation maple syrup. Pancake mix. Peanut butter (smooth or chunk style). Liquid detergent for dishwashing by hand. Hon. PHILIP A. HART, MARCH 13, 1963. Senate Antitrust and Monopoly Subcommittee on Packaging and Labeling Practices, U.S. Senate, Washington, D.C. DEAR SENATOR HART: At the time of our appearance before your subcommittee on February 15 we indicated we might take advantage of your earlier offer for us to insert in the record of the hearings at a later date-additional information and comments. In view of the recently revived interest of the House Judiciary Committee in H.R. 3-the so-called Federal preemption billand its potential impact upon producers, processors, manufacturers, and distributors of food products, we thought that it might be appropriate to request that the enclosed copy of our letter to Chairman Celler of the House Judiciary Committee be made a part of the record of your hearings. During the course of the first day of hearings before your subcommittee. Mr. Chumbris. Mr. Cohen, and yourself gave some indication that the problem of varying State requirements would be studied by the subcommittee. This discussion, as reprinted on page 19 of the published hearings, part I, was as follows: "Mr. CHUMBRIS. Mr. Chairman, on that point, we could also explore the problem that the manufacturer faces in having to meet with different standards in one State as against another State. Perhaps we ought to somehow get that in the record, because it might be something that might be helpful to the manufacturers who are faced with the problem of meeting these different standards, and they are in a somewhat anomalous position because of that. * “Mr. COHEN. In response to Mr. Chumbris' suggestions, we have been told by many producers that this is a real problem, this question of meeting different laws in different States which will determine what the producers have to put on their packages and labels. We are in the process at the present time of doing some work in trying to compile the various statutes that do exist. "Senator HART. I would hope the committee, before concluding these hearings, not necessarily within these 3 days, but before we conclude our general survey, will be able to develop this problem for the record." We feel that the enactment of H.R. 3 (or S. 3) in its present form would add immeasurably to the complications and difficulties which are presently encountered by processors in distributing their food products throughout the country. If your subcommittee intends, as you have indicated, to look into this very troublesome area, we strongly urge that you consider what we have said in our letter to Chairman Celler, and that your subcommittee propose, if the bill comes before the Senate Judiciary Committee, an appropriate amendment such as we have suggested. Respectfully submitted. MILAN D. SMITH. MARCH 13, 1962. Hon. EMANUEL CELLER, Chairman, House Committee on the Judiciary, DEAR MR. CELLER: The National Canners Association is gravely concerned that H.R. 3. as favorably reported by a subcommittee to your full committee on March 1, will have a seriously harmful impact upon the canning industry, as well as all other producers, processors, and distributors of food products. The association urges upon the committee that the bill be amended to exclude from its operation Federal legislation concerning food products and that this statement be made a part of the record of the committee's consideration of the measure. The National Canners Association is a nonprofit trade association of more than 600 members whose canning plants are located in 44 of the 50 States. Members of the association, including both independent canning companies and cooperative canning enterprises, pack approximately 80 percent of our entire national production of canned fruits, vegetables, meats, seafoods, and specialties. This association takes no position on the need or desirability of H.R. 3 insofar as it will be applied to areas other than food regulation. It does maintain, however, that section 1 of the bill, as a general rule of statutory construction, will have the effect in the area of food regulation of greatly impeding the interstate distribution of wholesome food products. The interstate barrier problem has long been a troublesome one for the canning industry, and for other segments of our economy that produce, process, manufacture and distribute the Nation's food supply. This association's membership at its 1961 annual convention adopted a resolution on this subject, as it had in a number of previous years, which reads: "A free competitive economy in a large and diversified country can effectively serve the public interest and the particular needs of individual consumers only if it is permitted to function on a national scale. To do it must remain free of unnecessary local restrictions on the distribution of its products. This association has constantly supported food regulation, Federal or State, that affords benefits to consumers. It has opposed State or local regulations that impose hampering requirements which needlessly impede the free flow of the Nation's food supply from producer to processor to consumer. The National Canners Association reaffirms its determined objection to all local or State regulatory requirements that specify particularized labeling requirements, or that prohibit ingredients authorized by Federal law, or that peculiarly standardize products to reflect local preferences. These constitute unwarranted interstate barriers and defeat the national interests of consumers, canners, and growers alike." As the resolution indicates, the National Canners Association has vigorously supported food regulation by Federal and State governments, when that regulation afforded benefits to consumers. The association and its members were among the leaders in supporting the enactment of the Federal Food, Drug, and Cosmetic Act. When amendments to that act were recognized as necessary in the interest of consumers and the food industry, the association again took an active part. These amendments, all supported by the National Canners Association, have included the 1953 factory inspection amendment, the Miller amendment dealing with pesticide chemicals, the Hale amendment designed to simplify and speed up standardization procedures, the food additives amendment, and the color additives amendment. This association believes that the Federal Food, Drug, and Cosmetic Act, as amended, and other related Federal laws guarantee to consumers throughout the country a wholesome supply of food, truthfully and informatively labeled, and that the Federal agencies administering these laws are adequate. At the same time, the association recognizes the vital role to be played by State authorities in the area of food regulation, and has consistently encouraged the enactment by States of uniform State food, drug, and cosmetic laws. State food regulation, when patterned after Federal provisions, supplies an important complement to Federal regulation, especially in the area of enforcement. Federal and State authority are coextensive to a great degree, and offcials of all jurisdictions have for years cooperated in this area. Difficulty occasionally arises, however, when State and local regulations vary from the Federal requirements. This variance gives rise to barriers to the interstate distribution of food, in the wholesome and informatively labeled products, complying with Federal and other State laws, cannot be sold in a particular State. Canners, and other food processors, when faced with State regulations that specify particularized labeling requirements, or that prohibit ingredients recognized by Federal law, or that differently standardize products, are faced with an unenviable choice. They can pack and label a separate lot of the product to be sold in that State, or they can shut off all sales to purchasers in that State. In either case, the consumer suffers. A distinctly packed or labeled product for one State or area necessarily adds to the canner's costs of production and marketing. Separate labels must be printed and applied. Modern distribution methods make it difficult, and at times impossible to determine at the canning plant in what State a particular case of canned food will be sold. Sales in the particular State may well have to be curtailed. All of this involves increased expense, and in the long run higher prices to consumers. If a canner chooses to discontinue sales to the State with particularized requirements, and many are forced to this decision, competition is lessened, and the consumer's choice of products is restricted. The type of varied State requirements we are referring to range from a minor Labeling point to a proscription against the use of federally approved ingredients. To cite a few examples occurring in recent years, one State demands that a number be placed on drink product labels to identify the plant; where the particular can or bottle was packed. Two States have prohibited the sale of fruit drinks under a label name acceptable by Federal and other State authority. Another State tried to enforce a regulation requiring that ingredients be listed on the product label even though a Federal standard of identity was in effect that specifically waived this requirement as unnecessary. Weights and measures officials in at least two States have involved the food industry in considerable expense by attempting to insist upon unique label statements declaring in a particular way the quantity of the contents. And other States have attempted to prohibit the sale of products containing certain federally approved preservatives and coloring. These requirements were not necessarily objectionable in themselves. The important point was that they varied from the requirements of all other States and the Federal Government, raised serious problems of manufacture and distribution, and created significant barriers to the free interstate movement of food products. The very real problems raised by interstate barriers to trade were anticipated by the Founding Fathers, and were to some degree responsible for the inclusion of the supremacy clause in article VI of the Federal Constitution. Difficulties in the area of food regulation did not arise until early in the 20th century, and for some time there was some uncertainty on the part of the Supreme Court as to what effect the supremacy clause had upon State food laws in the light of Federal statutes. But this uncertainty was largely dissipated by the 1930's, and there is now little doubt that the doctrine of Federal preemption, as taken from the supremacy clause, precludes States from establishing any regulation of the same subject matter that does not conform to Federal requirements. Federal preemption is, then, of vital significance to the food industry. State legislatures and regulatory officials are conscious, to some extent, at least, of an obligation to conform their requirements to those of the Federal Government. Where they ignore this obligation, State and Federal courts have relied from time to time upon the supremacy clause to nullify particularized labeling and ingredient requirements. If the Federal preemption doctrine were restricted in this area, distinctive State requirements, already present to an alarming degree, would no doubt multiply, and no recourse whatsover would be available to canners or other food processors, even though their products complied in full with Federal regulations, were unquestionably wholesome, and were informatively labeled. It must be emphasized that the Federal preemption doctrine does not nullify State regulation of food products. It applies only when a State establishes requirements that differ in effect from those of the Federal Government on the same subject matter. Congress, with the support of canners and other members of the food industry, has given to Federal agencies the means to insure that the Nation's food supply is wholesome and informatively labeled. State requirements differing from the Federal have the effect of adding to costs, lessening competition, and restricting consumer choice, with no increase in consumer safety and information. In the light of the considerations outlined above, the National Canners Association respectively urges that H.R. 3, as now before the committee, be amended to exclude from its operation the Federal food regulatory laws. A suggested form for such an amendment would be to add a proviso at the end of section 1(a), so that the section would read: "No act of Congress shall be construed as indicating an intent on the part of Congress to occupy the field in which such act operates, to the exclusions of all State laws on the same subject matter, unless such act contains an express provision to that effect, or unless there is a direct and positive conflict between such act and a State law so that the two cannot be reconciled or consistently stand together: Provided, That this section shall not apply to the construction of any act of Congress, or regulation issued pursuant thereto, regulating the safety, 97158 0-63-pt. 1-31 distribution and labeling of food products destined for or shipped in interstate commerce." The National Canners Association respectfully submits that this amendment would be in the interest of consumers, producers, processors, and distributors of the Nation's food supply. Very truly yours, MILAN D. SMITH. NATIONAL CANNERS ASSOCIATION, Hon. PHILIP A. HART, Acting Chairman for Packaging and Labeling, Antitrust and Monopoly Subcommittee, Senate Judiciary Committee, Washington, D.C. DEAR SENATOR HART: In the course of my appearance before the subcommittee on March 7, 1963, questions were raised concerning the rulemaking procedures and the judicial review provisions of S. 387. The enclosed memorandum, prepared by our general counsel, is in response to your request for a brief on these subjects. We sincerely hope that the subcommittee will find it of value in their consideration of the measure. Sincerely, MILAN D. SMITH. MEMORANDUM on Lack of MEANINGFUL JUDICIAL REVIEW IN S. 387 During the course of the testimony of Milan D. Smith, executive vice president of the National Canners Association, before the Senate Antitrust and Monopoly Subcommittee on March 7, a question arose concerning the rulemaking procedures and judicial review provisions that would be applicable under S. 387 by reason of its reference to the Administrative Procedure Act. At that time Senator Hart invited the association to submit a short brief on this subject for the benefit of the subcommittee. RULEMAKING PROCEDURES The bill in its present form provides in section 3A(f) (2) that "all regulations adopted under this section shall be promulgated in conformity with the provisions of the Administrative Procedure Act." There is no reference in the bill to hearings, findings of fact, judicial review, or a requirement that regulations be based on substantial evidence. Section 4 of the Administrative Procedure Act sets forth the minimum procedural requirements for rulemaking by all Federal agencies. Section 4(a) provides that general notice of proposed rulemaking shall be published in the Federal Register and shall include a statement of the time, place, and nature of the proceedings, a reference to the authority under which the rule is proposed. and either the terms or substance of the proposed rule. This section, however, specifically provides that such notice is not required for interpretative rules, general statements of policy, rules of agency organization, procedure, or practice, or in any situation in which the agency for good cause finds that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest. Section 4(b) provides that after notice, "the agency shall afford interested persons an opportunity to participate in the rulemaking through submission of written data, views, or arguments, with or without opportunity to present the same orally in any manner; and, after consideration of all relevant matter presented, the agency shall incorporate in any rules adopted a concise general statement of their basis and purpose." Subsection (b) goes on to provide that "where rules are required by statute to be made on the record after opportunity for an agency hearing, the requirements of sections 7 and 8 shall apply in the place of the provisions of this subsection." [Emphasis added.] Sections 7 and 8 set forth detailed procedures for agency hearings and decisions. The language quoted above from subsection 4(b) makes it clear, however, that the hearing provisions of sections 7 and 8 apply only when the basic statute specifically requires that the rules be made on the record after opportunity for an agency hearing. There is no such requirement in S. 387, and it can thus not be questioned that the abbreviated procedures of section 4, rather than the formalized hearing procedures of sections 7 and 8, would be applicable to the adoption of rules under S. 387. JUDICIAL REVIEW The judicial review provisions of the Administrative Procedure Act vary according to the procedures under which the regulations have been adopted. Section 10 provides that except insofar as statutes preclude judicial review, or agency action is by law committed to agency discretion, any person suffering legal wrong because of agency action or adversely affected or aggrieved by such action, shall be entitled to judicial review thereof. Section 10(e), which sets forth the scope of review, provides that the reviewing court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of any agency action. The court may compel agency action unlawfully withheld or unreasonably delayed and hold unlawful and set aside agency action, findings, and conclusions found to be (1) "arbitrary, capricious, and abuse of discretion, or otherwise not in accordance with the law"; (2) "contrary to constitutional right, power, privilege, or immunity"; (3) "in excess of statutory jurisdiction, authority, or limitations, or short of statutory right"; (4) "without observance of procedure required by law"; (5) "unsupported by substantial evidence in any case subject to the requirements of sections 7 and 8 or otherwise reviewed on the record of an agency hearing provided by statute"; (6) "unwarranted by the facts to the extent that the facts are subject to trial de novo of the reviewing court." [Emphasis added.] But as already indicated, regulations promulgated under S. 387 would not be subject to the hearing requirements of sections 7 and 8, and there is no provision for a trial de novo by a reviewing court. Thus, neither (5) nor (6) listed above would be applicable to the court review of these regulations. As section 4 makes clear, there would be no findings of fact or other evidentiary record for review; the court would be faced merely with the responsibility of determining whether the regulations on their face meet the broad requirements of items (1) through (4), and whether the minimal procedures set forth in section 4 were observed.. In short, there can be no judicial review without a record to be reviewed. In the context of the detailed economic regulations that would be authorized by S. 387, section 10 of the Administrative Procedure Act would afford virtually no protection to the affected industries. It is difficult to conceive of any regulations adopted under the provisions of S. 387 that could on their face be deemed to be arbitrary, capricious, or not in accordance with the law, or in excess of statutory jurisdiction, particularly in the light of the extremely broad grant of administrative authority contained in the bill. But a regulation that appears on its face to be entirely reasonable could have been promulgated without any regard for the particular facts in the industry, could severely restrict its operations without affording any concomitant consumer benefits, and could in fact be arbitrary and unreasonable. Regulations that so vitally affect the marketing and distribution practices of an industry should be promulgated only after a detailed hearing into the relevant facts and only after a satisfactory showing has been made that the facts warrant the specific regulation proposed. Although written information could be submitted to the agency under the procedures of section 4 of the Administrative Procedure. Act, there is no requirement in that section that the regulations be based on the data submitted. In addition, the information would not form part of the record upon which any court review could be based. As stated during the course of the testimony on March 7, "there is no provision [in S. 387] for any record or for any hearings or for anything on which there could be judicial review beyond the face of the regulations." PROCEDURES OF SECTION 701 OF THE FOOD, DRUG, AND COSMETIC ACT During the course of the NCA testimony it was recommended that detailed economic regulations of the type proposed in S. 387 should be adopted in accordance with procedures such as those set forth in section 701 (e), (f), and (g) of the Federal Food, Drug, and Cosmetic Act. Some question arose as to the suitability of these procedures for the adoption of regulations under S. 387, particularly when the regulations may not be controversial. Without attempting to summarize in detail the procedures set forth in section 701, it is con |