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 sidered appropriate to emphasize that section 701 requires hearings only in the event that a person who would be adversely affected by a proposed regulation has filed a specific objection and has stated reasonable grounds therefor. The Hale amendment to section 701, enacted in 1956, is designed specifically to permit the adoption of regulations without hearings when the FDA and those affected have no significant difference of opinion concerning the nature and content of the regulations. Only in the event that there is controversy, when the affected persons feel that there is no factual basis for the proposed regulation, is a hearing required. If section 701 were to be utilized in conjunction with the adoption of regulations such as those proposed in S. 387, these same Hale amendment procedures would come into play. NORTH CAROLINA DEPARTMENT OF AGRICULTURE, DIVISION OF WEIGHTS AND MEASURES ADMINISTRATIVE INTERPRETATION OF A DECEPTIVE PACKAGE The uniform weights and measures law, General Statute 81-14.3, reads: "It shall be unlawful to keep for the purpose of sale, offer or expose for sale, or sell, any commodity in package form when said package is so made, or formed, or filled, or wrapped, or exposed, or marked, or labeled as to mislead, or deceive the purchaser as to the quantity of its contents." Question has been raised as to when is a package deceptive as to fill regardless of size or shape, thus requiring an administrative definition which is as follows: "A package is deceiving when the named contents therein occupies less than 90 percent of the enclosed volume of the package, exclusive of any wrapping or other material attached or included therewith; provided that the principal label shall indicate the net weight of contents by legend as plain and conspicuous as any other legend thereon, and as likely to be read as any other legend, and shall not be obscured by crowding, or by color, or by any other legend." Another factor involved in deception is the plainness and conspicuousness of the marking of the net content on the principal label in terms of weight or measure or numerical count. The law declares what constitutes "plain and conspicuousness" which reads as follows: (General Statute 81-15) "the words plainly and conspicuously marked as used in this section shall be construed to mean that the principal label shall indicate the net weight contents by legend as plain and conspicuous as any other legend thereon and as likely to be read as any other legend, and shall not be obscured by crowding or by color or by other legend." The other 10 percent of package volume unaccounted for in the above definition is intended as a maximum allowance for natural shrinkage or settling resulting from natural characteristics of the product in the package from the time the package is filled by the manufacturer or distributor until received by the consumer, and is not to be considered as a tolerance for the benefit of the packer. Expressed in other words: If upon receipt of a package by the ultimate consumer or user, the fill, exclusive of any wrapping or binding or filler or other material, is less than 90 percent of the total filling space or if the net content declaration on the principal label is not plain and conspicuous as required by law, it shall be considered that the package was not legally filled and/or labeled by the originator of the package. The principal label herein referred to, shall be that part or panel of the label which presents or displays the commercial or brand name of the product under customary conditions of purchase. It is obvious that a number of processors and packers are not conforming to these requirements of our law and are therefore liable to be prosecuted accordingly. It is hoped that all processors and packers, who distribute any commodity in package form in this State, will take cognizance of these laws and govern themselves accordingly. JUNE 22, 1961. C. D. BAUCOM, State Superintendent. NORTH CAROLINA DEPARTMENT OF AGRICULTURE, Subject: Net contents specifications. To All Manufacturers, Processors, and Packers of Products Which Are Marketed in Package Form: Even though the North Carolina weights and measures law and its related rules and regulations and the North Carolina pure food and drug law and its related rules and regulations, also the Federal Pure Food and Drug Act and its related rules and regulations, do not specify location of content declaration on the label of a package, it, nevertheless, is obvious that the purpose is to enable a prospective purchaser to become informed regarding the quantity of the product that is in the package, the name of the product in the package, and the name of the packer. It is also obvious that the intent of the above-referred-to laws and regulations is to enable a prospective purchaser to discern quickly the quantity of product that is in the package. Therefore, since June 1, 1961, this office has held conferences with, and received letters from, a great many manufacturers and packers of products marketed in package form, which had as its objective the determination of what is necessary to satisfy the law and rules and regulations as regards to the conspicuousness of the net content declaration. As a result of these conferences and letters, this office concludes that the following specifications will satisfy the purpose and intent of the law and rules and regulations of the North Carolina State Department of Agriculture, to wit: "1. That the net content declaration appear on the principal label, main panel, or face, preferably at the top, in a contrasting color and not be obscured by crowding or by color, or by other legend. Said label, panel, or face being the one which is customarily displayed by the vendor within the view of a prospective purchaser. "2. That the letters or figures that comprise the net content declaration be of a height not less than 3 percent of the height of the package or one-eighth inch, whichever is greater. Or as an alternate, a package less than 8 inches high shall be labeled with letters or numerals no less than one-eighth of an inch high, and for each additional 4 inches in package height or fraction thereof, the letters or numerals shall be increased in height by one-eighth of an inch up to and including packages 32 inches high. The height of letters or numerals on packages in excess of 32 inches shall be optional but not less than 1 inch." In adopting these specifications for enforcement in this State, we recognize that there is a time element which must be reckoned with; namely, the intervening time from date of this letter until date of ability of manufacturer or packer to comply; therefore, we are sending this letter in duplicate asking that you acknowledge with endorsement on copy and return, and that you fill out and return, at your earliest convenience, the attached form. Your acceptance and compliance with these specifications will, in the opinion of this office, justify toleration of disposition of packages now in warehouses and at retail level. Very sincerely yours, C. D. BAUCOM, Superintendent, Weights and Measures Division. AN ADDRESS BY PAUL S. WILLIS, PRESIDENT, GROCERY MANUFACTURERS OF AMERICA, INC., BEFORE THE EIGHTH ANNUAL MEETING OF TELEVISION BUREAU OF ADVERTISING, INC., NOVEMBER 16, 1962, WALDORF-ASTORIA, 12:30 P.M., STARLIGHT ROOF IN 1962 GMA MEMBERS WILL INVEST $1.2 BILLION IN ADVERTISING In your publicity covering your annual meeting, you say that industry is learning that it cannot increase sales just by increasing production and pushing more products through the distribution pipeline. It is the customer's pull that determines sales today, a pull transmitted through the chain of demand. Our manufacturers as well as the distributors-wholesalers and retailershave been keenly aware of this for a long time. That is why they are annually investing so many millions of dollars in advertising and promotions. The theme of your meeting, "The Chain of Demand," is right down our alley. GMA-WHAT DOES IT DO? Before discussing your theme, I want to tell you a little bit about GMA- who we are and what we do. Our membership includes the leading manufacturers of this country that produce most of the food and grocery items sold in supermarkets throughout the United States. In addition to the regularly accepted items that make up the grocery basket, our manufacturers produce soft drinks, beer, cigarettes, beauty aids, general merchandise items-most of the branded products available in supermarkets. In recent years many manufacturers who heretofore sold their products primarily through other channels, and who are now marketing them through supermarkets, have joined GMA, and we have been very helpful to them. GMA provides many services.—We have 20 working committees on which some 800 people serve actively. This includes committees on marketing, advertising, public relations, trade relations, employee relations, traffic, agricultural relations, broker relations, legislative, consumer services and so on. Our members look upon GMA as their organization to provide leadership with the trade, the public, the Government, communications, press, and so on. INDUSTRY GROWTH Our industry has had a fabulous growth, especially within the last two decades. It grew from a $16 billion annual business to an estimated $80 billion in 1962. This growth did not just happen because people have to eat, or because of population increases. Had we depended on these two factors only, our total annual food consumption bill would probably now be $40 billion instead of $80 billion. This extra growth resulted from many things *** good management at all levels, fine teamwork among all segments of the industry, heavy investment in research, new and improved products, modernization of plants, new equipment, automation, and very importantly, advertising and promotions. It was the combination of these many factors that helped to promote this extra growth, and the industry is moving right ahead-spending more dollars for advertising, etc. CONSUMER BENEFITS This industry has made great contributions to the American people and to our total economy. Today's homemaker has the distinct privilege of selecting her groceries from an assortment of some 8,000 items instead of a limited selection of 1,000 items as before. Two-thirds of today's items are either new or were materially improved within the past 10 years. She prepares her three daily meals of nutritious, tasty foods for a family of four, in 12 hours compared with an earlier time requirement of 51⁄2 hours. Today's food products, in many instances, are far superior in nutrition, tastiness, safety, variety, and reliability of quality. Today's new household items with their built-in maid service provide many timesaving devices which have materially lightened the homemaker's chores. Largely because of the availability of safe, tasty, nutritious foods, and the public's greater understanding and appreciation of the value of good eating, the American people, as a nation, are healthier now than ever before. Children are taller. Sports records are continuously broken and the lifespan is constantly increasing. The American consumer never had it so good. The press apparently like this way of stating the point and picked it up. COST-OF-LIVING INDEX While our Government's overall cost-of-living index shows an increase of 17 percent within the last 10 years, exclusive of food, we are highly pleased to say that the cost of our Government's standard "grocery basket" costs no more today at the supermarket than it did 10 years ago. This standard grocery basket set up by the Government contains some 80 selected basic grocery items carefully weighted as to consumer usage. It is the composite cost of this grocery basket that the Government uses as a monthly measurement of food prices at the grocery store. Whenever we make the statement that today's grocery basket costs no more than it did 10 years ago, it naturally raises eyebrows for some people spend more dollars now at the supermarket than before. There usually is a practical explanation for this. The family may be larger today, and growing children require more food. People are also buying different |