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ISCELLANEOUS PEANUT AND RICE LEGISLATION

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HEARING

BEFORE THE

SUBCOMMITTEE ON OILSEEDS AND RICE

OF THE

COMMITTEE ON AGRICULTURE

HOUSE OF REPRESENTATIVES

EIGHTY-EIGHTH CONGRESS

FIRST SESSION

ON

H.R. 101, H.R. 1917, H.R. 3742, and H.J. Res. 192

. 4111111111111P

MARCH 25, 1963

Serial F

Printed for the use of the Committee on Agriculture

IT S. GOVERNMENT PRINTING OFFICE

WASHINGTON: 1963
-. •

COMMITTEE ON AGRICULTURE

HAROLD D. COOLEY, North Carolina, Chairman

W. R. POAGE, Texas, Vice Chairman

GEORGE GRANT, Alabama

E. C. GATHINGS, Arkansas

JOHN L. McMILLAN, South Carolina

THOMAS G. ABERNETHY, Mississippi

WATKINS M, ABBITT, Virginia

PAUL C. JONES, Missouri

HARLAN HAGEN, California

LESTER R. JOHNSON, Wisconsin

BILLY MATTHEWS, Florida

FRANK A. STUBBLEFIELD, Kentucky

RALPH R. HARDING, Idaho

G. ELLIOTT HAGAN, Georgia

GRAHAM PURCELL, Texas

JAMES H. MORRISON, Louisiana

BENJAMIN S. ROSENTHAL, New York

ROBERT B. DUNCAN, Oregon

.ALEC G. OLSON, Minnesota

ROBERT L. LEGGETT, California

SPARK M. MATSUNAGA, Hawaii

MTS. CHRISTINE S. GALLAGHER, Clerk

HYDE H. MURRAY, Assistant Clerk

.JOHN J. HEinthuacEa, COUB8el

ROBERT C. BRUCE, A88i8taBt COUB8e/

FRANCIS M. LEMAY, Staff Consultant

CHARLES B. HOEVEN, Iowa

PAUL B. DAGUE, Pennsylvania

PAGE BELCHER, Oklahoma

CLIFFORD G. McINTIRE, Maine

CHARLES M. TEAGUE, California

ALBERT H. QUIE, Minnesota

DON L. SHORT, North Dakota

CATHERINE MAY, Washington

DELBERT L. LATTA, Ohio

RALPH HARVEY, Indiana

PAUL FINDLEY, Illinois

ROBERT DOLE, Kansas

RALPH F. BEERMANN, Nebraska

EDWARD HUTCHINSON, Michigan

RESIDENT COMMISSIONER

A. FERNOS-ISERN, Puerto Rico

SUBCOMMITTEE ON OILSEEDS AND RICE

PAUL C. JONES, Missouri, Chairman

GEORGE GRANT, Alabama

E. C. GATHINGS, Arkansas

WATKINS M. ABBITT, Virginia

GRAHAM PURCELL, Texas

HARLAN HAGEN, California

ROBERT L. LEGGETT, California

II

PAGE BELCHER, Oklahoma

PAUL FINDLEY, Illinois

ROBERT DOLE, Kansas

RALPH F. BEERMANN, Nebraska

EDWARD HUTCHINSON, Michigan
CONTENTS

House 

certain 

Joint Resolution 192, joint resolution relating to the validity of Page

H.R. 101, 

rice 

a bill 

acreage 

to extend 

allotments 

for 2 

for 

years 

1962 and prior crop years 3

is now 

the definition of "peanuts" which

H.R. 1917, 

in 

a 

effect 

bill to 

under 

extend 

the Agricultural Adjustment Act of 1938 1

is now 

for 2 years the definition of "peanuts" which

H.R. 3742, 

in 

a 

effect 

bill to 

under 

amend 

the Agricultural Adjustment Act of 1938 1

the provisions of the Agricultural Adjustment

-alliptraents 

Act of 1938, as amended, relating to the transfer of producer rice acreage

Communications submitted 2

Freeman, 

to the subcommittee by Hon. Orville L. Secretary of Agriculture:

Report on H.R. 101 

Report on H.R. 1

3742 

Report on 2

House Joint Resolution 192 Statement of-- 3

Fuqua, Hon. Don, a Representative in Congress from the State of Florida 

Matthews 24 Hon. D. R. (Billy), a Representative in Congress from the State of Florida 

Mauritz, 22 Marcus, vice president, Rice Council for Market Develop- ment 

Satterfield, 7

J. Alton, Deputy Director, Grain Policy Staff, U.S. Department of Agriculture 

Thigpen, 5

James, Director, Oils and Peanuts Policy Staff, U.S. Depart- ment of Agriculture 

Thompson 23

'

Hon. Clark W., a Representative in Congress from the State of Texas 5, 10

III

MISCELLANEOUS PEANUT AND RICE LEGISLATION

MONDAY, MARCH 25, 1963

HOUSE OF REPRESENTATIVES,

S UBCOMMIITEE ON OILSEEDS AND RICE OF THE

COMMITTEE ON AGRICULTURE,

ashington, D.C.

The subcommittee met, pursuant to notice, at 10:10 a.m., in room

13102 Longworth House Office Building, Hon. Paul C. Jones of Missouri (chairman of the subcommittee) presiding.

Present: Representatives Jones, Grant, Gathings, Matthews, Hagen

of California, Purcell, Leggett, Dole and Beermann.

Also present: Martha Hannah, Aaff ; Hyde H. Murray, assistant

clerk; John Heimburger, counsel; and Robert Bruce, assistant counsel.

Mr. JONES. The subcommittee will come to order. We have waited

for 10 minutes, but we will have to start in order to get through.

We have several bills before us. We have H.R. 101 on peanuts, H.R.

1917 on peanuts, H.R. 3742 on rice and House Joint Resolution 192 on

rice which will be made a part of the record at this point, together

with the reports from the Department.

(H.R. 101, H.R. 1917, H.R. 3742 and House Joint Resolution 192,

together with the departmental reports follow:)

[H.R. 101, 88th Cong., let sees.]

A BILL To extend for two years the definition of "peanuts" which is now in effect under

the Agricultural Adjustment Act of 1938

Be it enacted by the Senate and House of Representatives of the United States

of America in Congress assembled, That the last paragraph of the Act entitled

"An Act to amend the peanut marketing quota provisions of the Agricultural

Adjustment Act of 1938", approved August 13, 1957, as amended (7 U.S.C. 1359

note), is amended by striking out "and 1963" and inserting in lieu thereof "1963,

1964, and 1965".

[H.R. 1917, 88th Cong., 1st sees.]

A BILL To extend for two years the definition of "peanuts" which is now in effect under

the Agricultural Adjustment Act of 1938

Be it enacted by the Senate and House of Representatives of the United States

of America in Congress assembled, That the last paragraph of the Act entitled

"An Act to amend the peanut marketing quota provisions of the Agricultural

Adjustment Act of 1938", approved August 13, 1957, as amended (7 U.S.C. 1359

note), is amended by striking out "and 1963" and inserting in lieu thereof "1963,

1964, and 1965".

DEPARTMENT OF AGRICULTURE,

Washington, D.C., February 19, 1963.

Hon. HAROLD D. COOLEY,

Chairman, Committee on Agriculture,

House of Representatives,

Washington, D.C.

DEAR MR. CHAIRMAN: This is in reply to your request of January 22, 1963, for a

report on H.R. 101 to extend for 2 years the exemption of boiled peanuts in
2 MISCELLANEOUS PEANUT AND RICE LEGISLATION

the definition of peanuts which is in effect through the 1963 crop year under the

Agricultural Adjustment Act of 1938, as amended.

The bill provides for a 2-year extension of the exemption of boiled peanuts

in the definition of peanuts as contained in section 359(c) of the Agricultural

Adjustment Act of 1938, as amended. This definition excludes from the provisions of acreage allotment and marketing quotas any peanuts which are

marketed before drying or removal of moisture, either by natural or artificial

means for consumption exclusively as boiled peanuts. Such peanuts do not

enter the market in competition with salted peanuts or other peanut products.

Experience under the exemption during the past 6 years has shown that it

does not adversely affect the supply adjustment and price support programs for

peanuts.

On .January 4, 1963, this Department addressed a letter to the Honorable

John W. McCormack, Speaker of the House of Representatives, in which we

recommended that the present definition of peanuts be extended without a time

limitation. A copy of this letter and the proposed draft bill mentioned therein

is enclosed.

The Department would prefer permanent extension of the present authority,

but would have no objection to extending it for a 2-year period if Congress

so determines.

The Bureau of the Budget advises that there is no objection to the presentation of this report from the standpoint of the administration's program.

Sincerely yours,

ORVILLE L. FREEMAN, Secretary.

[H.R. 3742, 88th Cong., 1st sess.]

A BILL To amend the provisions of the Agricultural Adjustment Act of 1938, as amended,

relating to the transfer of producer rice acreage allotments

Be it enacted by the Senate and House of Representatives of the United

States of America in Congress assembled, That subsection (f) of section 353 of

the Agricultural Adjustment Act of 1938, as added by Public Law 87-412, is

amended in paragraph (3), clause (i) thereof by adding immediately following

the Word "acquire" the language ", except for land," and by striking out the

language ", and any land owned by the transferor to which any of the transferred rice history acreage may be ascribed".

DEPARTMENT OF AGRICULTURE,

Washington, D.C.

Hon. HAROLD D. COOLEY,

Chairman, Committee on Agriculture,

House of Representatives

DEAR Mn. CHAIRMAN: This is in reply to your request of February 2(), 1963,

for a report on H.R. 3742, a bill "To amend the provisions of the Agricultural

Adjustment Act of 1938, as amended, relating to the transfer of producer rice

acreage allotments."

This Department has no objection to the enactment of this bill.

H.R. 3742 would amend section 353(f) (3) of the Agricultural Adjustment Act

of 1938, as amended, to eliminate the requirement that a producer transferring

rice history acreage must also transfer any land owned by the producer to which

any of such rice history acreage may be ascribed.

Enactment of this bill would, in States in which farm rice acreage allotments

are determined on the basis of past produuction of rice by the producer On the

farm, place owner-operators of rice-producing farms who desire to permanently

withdraw from rice production on a comparable basis with tenants in such States

who own no land and desire to permanently withdraw from the production of

rice.

Due to urban expansion in some areas of such States it is neither practicable

nor eccinomically feasible to continue rice production on.land which-the. purchaser

would have to pay prevailing market prices to acquire. Thu.s, it is felt that an

owner-operator producing rice on such land who permanently withdraws from

the production of rice should be permitted to transfer his rice history acreage

with the sale of his rice-producing equipment without having to sell the land to

which any of such rice history acreage may be ascribed.

The enactment of this bill will not require the expenditure of any additional

funds.
MISCELLANEOUS PEANUT AND RICE LEGISLATION 3

of 

The 

this 

Bureau 

report from 

of the Budget advises that there is no objection to the submission the standpoint of the administration's program. Sincerely yours,

[H.J. Res. 192, 88th Cong., 1st sess.]

JOINT RESOLUTION Relating to 

and 

the 

prior 

validity of certain rice acreage allotments for 1962 crop years

America 

Resolved 

in Congress 

by the Senate and House of Representatives of the United States of

ments are determined 

assembled, That in a State in which farm rice acreage allotthe farm, any producer 

on 

T

the basis of past production of rice by the producer on

or the ASO 

ice acreage allotment found by the ASC county committee

rice acreage 

State 

allotment 

committee to have been properly apportioned from the State

producer allotment 

and the acreage allotment for any farm to which such

in good 

has been allocated and approved by the county committee

have been 

faith 

validly 

for any crop year 1956 to 1962, both inclusive, shall be deemed to

quota and 

established and shall remain in effect, and the farm marketing

such valid farm 

farm marketing excess, if any, shall be determined on the basis of rice acreage allotment.

rice 

This 

acreage 

resolution shall not apply to any producer rice allotment or any planted

or 

that has been obtained by duplication, forgery, bribery, intimidation,

exceeding 

practices that would result in the total allotted acreage in the State the .State acreage allotment, less any unallocated reserve acreage.

DEPARTMENT OF AGRICULTURE,

Hon. Washington, D.C. HAROLD D. COOLEY,

Chairman, Committee on Agriculture, House of Representatives, Washington, D.C.

a 

DEAR Mn. CHAIRMAN: This is in reply to your request of January 30, 1963, for

certain 

report on House Joint Resolution 192, a resolution relating to the validity of rice acreage allotments for 1962 and prior crop years.

understanding 

The Department has not objection to the adoption of this resolution upon the

hereinafter 

that the final paragraph of the resolution will be interpreted as set out.

House Joint Resolution 192 would validate any producer rice acreage allot- ment found by the ASC county committee or State committee to have been properly apportioned from the State rice acreage allotment and the acreage allotment for any farm to which such producer allotment has been allocated and approved by the county committee in good faith for any crop year 1956 through 1962, inclusive, even though the allocation of any such producer allot- ment might be subject to recall and revocation (with comparable reduction in the total farm allotment) if the holder of such producer allotment has been found not to have been actively engaged in the production of rice on the farm. The resolution would not apply, however, if the allocation of the producer rice allotment to the farm is subject to recall or cancellation due to duplication, forgery, bribery, intimidation, or practices which would result in the total allotted acreage in the State exceeding the State acreage allotment, less any un- allocated reserve acreage.

In order to prevent traffic in producer rice acreage allotments, the regulations governing the determination of farm rice acreage allotments have always provided that a producer may not allocate his producer allotment to a farm un- less he will be engaged in the production of rice on the farm.

The term "engaged in the production of rice" is defined in the regulations as "actively participating as a producer in the farming operations necessary to produce and harvest a crop of rice on a farm and the sharing in the pre- determined and fixed portion of the rice crop, or the proceeds thereof, at the time of harvest by virtue of furnishing as landowner or landlord the land on which the rice is being produced, or by furnishing as tenant or sharecropper the labor, water, or equipment necessary to produce and harvest the crop". Beginning with the 1958 crop of rice, the regulations have provided that "If the county or State committee has reason to believe, after the establishment of any farm acreage allotment * * * that a tenant whose allotment acreage

was allocated to such farm is not, or was not, in fact actively participating
4 MISCELLANEOUS PEANUT AND RICE LEGISLATION

in the production of the rice crop produced on the farm in such year, a hearing

shall be scheduled by the county committee and the tenant shall be invited to be

present, or to be represented, at which time he shall be given an opportunity

to substantiate his claim that he is, or was, actively engaged in the production

of rice on the farm as indicated at the time of filing his request for the allocation of his producer allotment to the farm. If the county committee, with State

committee approval, or the State committee finds that such tenant is not, or

was not, actively participating in the production of the rice crop on the farm,

except where allocation was made for the purpose of participating in the conservation reserve program or for the preservation of acreage, and therefore

did not actively engage in the production of rice on such farm during the year in

question, the county committee shall, with approval of the State committee,

recall such producer's allotment acreage proviously allocated to the farm and

adjust the farm rice acreage allotment accordingly." [Italic language added

by amendment to regulations, approved March 21, 1962.]

On the basis of audits conducted in the rice-producing area of Texas and

California, some producer rice acreage allotments now are subject to recall under

the existing rice acreage allotment regulations. ;Several additional cases have

come under question in California and are being investigated. Indications are

that these violations in both Texas and California pertain not only to rice of

1962 production, but to that of several prior years.

In those cases where it may be determined that the allocation of the allotment for a producer should be recalled and the rice acreage allotment for the

farm reduced, which adjustment then leaves the rice acreage on the farm in

excess of the farm allotment, all of the producers on the farm, jointly and

severally, become subject to marketing penalties.

At the present time the Department is endeavoring to enforce the provisions

of the regulations in each case where it has been determined that the allocation

of a producer's allotment to a farm should be recalled or revoked because the

producer was not actually engaged in the production of rice on the farm. Because the 1962 crop was being harvested, or was practically ready for harvest

at the time of discovery of the violations, and so as not to deter the orderly

movement of the crop, investigation to determine the extent of liability to penalty

was related initially only to the 1962 plantings.

As a general rule, two or more producers on the farm will be involved on the

average rice farm in Texas and California. Thus, under such circumstances

the recall or revocation of the allocation of one producer allotment on a farm

is likely to make other producers on the farm jointly and severally liable for

the marketing penalty computed for the farm, although in fact they did not contribute to the excess of rice plantings.

The violations of the regulations fall into two general categories, The

typical situation in one category is where a producer who received a valid

producer allotment allocated it to a farm, but the allocation became subject to

recall because it was later determined that the producer was not engaged in

the production of rice on the farm for the year in question. It is this type

of situation to which we understand it is intended the resolution shall apply.

The other type of situation is where a farmer, usually through the payment of

money to an employee of a county ASCS office, obtained for his own use the

allocation to a farm of the producer allotment of a producer who was a

fictitious person or had already properly allocated his producer allotment to

another farm in the same or a different county or had no knowledge of the

allocation of his allotment to the farm. The payment to the ASCS county

employee may have been a bribe or the farmer may have actually thought he

could "lease" an allotment. In this situation, the allocation of the producer

allotment most likely involved a fictitious allotment or a duplicated allotment

which in either case would tend to result in the total allotted acreage in the

State being in excess of the State acreage allotment, less unallocated State

reserve acreage. As we interpret the resolution, it would not apply to the

situation in which a farmer obtained for his own use the allocation of the

allotment of another producer by the payment of money to a county office

employee. It would be helpful to the Department in carrying out our interpretation of the provisions of the resolution should it become law if the language of lines 5 through 10 on page 2 of the resolution were to -be clarified

by including in the committee's report on the resolution specific examples of

the type of cases to which the resolution would not apply.
MISCELLANEOUS PEANUT AND RICE LEGISLATION 5

It is believed that the adoption of this proposed resolution would result in

considerable savings to the Federal Government in administrative costs as well

as saving ,from bankruptcy a considerable number of rice producers, including

many who were not really responsible for any improper allocation. It would

entail the loss to the Federal Government of some rice marketing quota

penalties, but the amount of penalties collected would in all probability be offset

by the costs of administrative and judicial proceedings necessary to effect

collection.

The Bureau of the Budget advises that there is no objection to the submission

of this report.

Sincerely yours,

•

Mr. JONES. The first bill that we will consider this morning will be

H.R. 3742 introduced by Mr. Thompson of Texas. Mr. Thompson,

would you like to make a statement?

STATEMENT OF HON. CLARK W. THOMPSON, A REPRESENTATIVE

IN CONGRESS FROM THE STATE OF TEXAS

Mr. THOMPSON. Mr. Chairman and members of the committee, since

we have a favorable report from the Department and since the Department is represented ably here this morning, I suggest we let the

Department go ahead and explain the bill, what it would accomplish,

and then I would like to file a statement of my own and answer such

questions as may occur to the members of the committee.

Mr. JONES. We will be glad to do it that way. I thought that perhaps you had some other engagement which you wanted to cover, in

which case we would hear you first.

Mr. THOMPSON. I might add further, for the record, that I have

with me here, Mr. Marcus Mauritz, of Ganado, Tex., vice president,

Rice Council for Market Development, and president, United States

Rice Export Development Association, who is very well known and

equally well known to you is Dr. George Blair, general manager of

the American Rice Growers Association of Lake 

Charles, 

La.

Let me comment on Mr. Mauritz' work, because it will 130 of interest

to you, although it has no bearing on the legislation before you.

When Cuba went to the Communist side we lost the biggest market

for long-grain rice that we had. Mr. Mauritz and Dr. Blair and

others interested in the rice industry went out into the world and

found dollar markets to make up for the Cuba market and to put us on

our feet in the markets of the world. It is good to have people like

that.

Mr. JONES. Thank you. We will proceed now to Mr. Satterfield,

the Deputy Director of the Grain Policy Staff, of the ASCS to give

us the views of the Department on H.R. 3742. Mr. Satterfield.

STATEMENT OF J. ALTON SATTERFIELD, DEPUTY DIRECTOR, GRAIN

POLICY STAFF; ACCOMPANIED BY EDWIN F. ROLLINS, FARMER

PROGRAMS DIVISION; AND WEAR K. SCHOONOVER, ATTORNEY

GENERAL COUNSEL'S OFFICE, U.S. DEPARTMENT OF AGRICULTURE

Mr. SATTERFIELD. Mr. Chairman and members of the committee, I

have with me Mr. Schoonover and Mr. Rollins from the Department

who will assist me on this.

97646-63-2
6 MISCELLANEOUS PEANUT AND RICE LEGISLATION

I am not sure that I can add anything more to the views which the

Department has set out in its report on this bill. The report states:

H.R. 3742 would amend section 353(f) (3) of the Agricultural Adjustment Act

of 1938, as amended, to eliminate the requirement that a producer transferring

rice history acreage must also transfer any land owned by the producer to which

any such rice history acreage may be ascribed.

Enactment of this bill would, in States in which farm rice acreage allotments

are determined on the basis of past production of rice by the producer on the

farm, place owner-operators of rice-producing farms who desire to permanently

withdraw from rice production on a comparable basis with tenants in such States

who own no land and desire to permanently withdraw from the production of

rice.

Due to urban expansion in some areas of such, States it is neither practicable

nor economically feasible to continue rice production on land which the purchaser would have to pay prevailing market prices to acquire. Thus, it is felt

that an owner-operator producing rice on such land who permanently withdraws

from the production of rice should be permitted to transfer his rice history

acreage with the sale of his rice-producing equipment without having to sell the

land to which any of such rice history acreage may be ascribed.

There are only two points that this report makes. I do not know

that I will attempt to add any in my own behalf. I would be glad to

answer any questions which the committee may desire to ask me.

Mr. JONES. Mr. Satterfield, in other words, I think it is included

in the report that the enactment of this bill would not require the

expenditure of any additional funds? And we are always glad to

have that.

Mr. SAITERFIELD. Yes, sir.

Mr. JONES. I think it might be well to explain for the benefit of

the chairman and, possibly, for other members of the committee the

procedure in Texas, I believe it is, that is different from that in other

States in the handling of rice allotments. Is that true?

Mr. SATTERFIELD. That is true.

Mr. JONES. Can you give us a little background on how that situation arose and why it does not apply to these other rice-producing

areas? I have not quite understood that myself.

Mr. SATTERFIELD. The basic legislation itself is predicated on the

allotment being established for the farm on the basis of the past production of rice by the particular producer on the farm.

In other words, we go through the process of determining a pre- liminary allotment for the produucer which he has to allocate to the

farm for it to become effective.

We have legislation on the statute books which does permit a producer to transfer rice acreage history along with the sale of his rice producing equipment, including any irrigation equipment not

permanently attached to the land, but the statute, also, provides that

where a producer is an owner-operator and he wishes to withdraw

from the production of rice, he would have to sell the land along with his equipment in order to transfer the rice acreage history.

What this bill does is to eliminate that provision, so that he may withdraw from rice production, sell his equipment and any irrigation

equipment not permanently attached to the land, and to transfer his rice history acreage to the purchaser of such equipment.

Mr. JONES. I understand that feature. What I was asking about is something else. Under the present law the tenant has the privilege of taking this allotment with him, does he not?

Mr. SATTERFIELD. That is correct.
MISCELLANEOUS PEANUT AND RICE LEGISLATION 7

Mr. JONES. Is Texas the only place that applies or does it also apply in Louisiana?

Mr. SATTERFIELD. No; it applies to what is known as the River Area of Louisiana; also the State of California. We have three counties in west Tennessee in which there is a little rice grown, and in Florida, which has only one country where rice has been produced.

However, in recent years there has been no acreage seeded in that

area for the simple reason it has been quarantined because of plant disease.

Mr. ,TONE. I am still trying to find out why we use a different rule—why we do not apply the same rule all over the rice producing

area. Is there any other crop other than rice that you know of where the tenant has control of the allotment and can take it with him?

Mr. THOMPSON. May I explain this to you? I think that I know what it is that you are trying to get at.

Mr. JONES. We will be grad to hear from you, Mr. Thompson.

Mr. THOMPSON. In Texas and in California and in some parts of Louisiana the process of growincr

b

rice is this: You farm 3 years and

you let the land lie fallow for 2years. In order to farm profitably,

of course, the farmer has to work every year at his trade.

For that reason we started the system of letting the allotment go with the farmer, rather than with the farm. The practice is to lease

land—most of it is done on leased land—and to take your allotment

with you when you leave. For that reason we call it a hip pocket

allotment.

Does that answer the question?

Mr. JONES. I wanted to know why it does not apply to the State of Arkansas or the State of Missouri or some other State where rice is grown.

Mr. THOMPSON. The gentlemen from Arkansas can tell you the situation there but as I understand it, you do not follow the practice

thatwe do in Texas of moving from land to land. You go ahead and

farm year after year.

Mr. GATHINGS. We have the land allotment system.

Mr. THOMPSON. Which runs with the farm.

Mr. GAT-HINGS. Yes

Mr THOMPSON. They do the farming on their own farm and not otherwise.

Mr. JONES. I think that this would be a good place to get this in

the record somewhere so that we can understand it, because it has

always been a question that I could not understand.

Mr. THOMPSON. Mr. Mauritz can tell you about this. He is a rice

farmer. He does it.

STATEMENT OF MARCUS MAURITZ, GANADO, TEX., VICE PRESIDENT, RICE COUNCIL FOR MARKET DEVELOPMENT, AND PRESIDENT,U.S. EXPORT DEVELOPMENT ASSOCIATION

Mr. illAuarrz. Mr. Chairman and members, I might say that at the

time the law was passed in 1938 the question came up. And because

of theoperation of rice farming in these particular States and areas

it was necessary to have a different method of allocating the allotment

in Arkansas and in Louisiana, the area where the allotment is on the
8 MISCELLANEOUS PEANUT AND RICE LEGISLATION

land itself. They felt that those particular farmers who were then

farming rice were, also, landowners and the landowner actually participated actively in the farming of rice, whereas in Texas and California, particuuarly, it was not that way. There are very few actual

landowners in Texas who are interested in the actual operation, other

than the revenue received from the land.

Due to the outside ownership of the areas that are farmed in rice

in California and in Texas it was necessary that some recognition

be given as to who is going on the farm. At that time it was felt that

if the allotment was put on the land we would have a lot of out-ofState people who had allotments who were not entitled or even interested in the operation of the rice farm, only in what the land rent

would bring them. And at that time it was agreeable with everybody

that the allotment in those two areas, because of those peculiarities,

that the allotment, actually, would go to the farmer, so that he could

move it from one piece of land to the other piece of land without it

being tied up, particularly, by out-of-State landowners who did not

or were not present in the State and could not take care of the allotment like it should be taken care of. It was actually voted. The

States that wanted the area was Louisiana, where they had two areas,

one of which was similar to those in Texas and one similar to those in

Arkansas and it was finally agreed at that meeting in 1938 that the

allotment should be divided and certain areas would be on the land

and in certain areas it would be on the producer himself.

Mr. JONES. Well now, this bill that we are considering changes

the law, permitting the landowner to transfer the rice history without

having to transfer the land as is now the case. We are making that

exception. In other words, we are making an exception in that case,

are we not? How many people will this bill affect, do you think or,

how many acres will be affected by it?

Mr. MAURITZ. Well, actually, this is not really an exception. We

found a year or so ago when this bill originally was passed with this

peculiar situation that people in Arkansas and people in Louisiana

where the allotment is on the land, could transfer their allotment,

but under the original law it was very, very difficult for a person in

Texas and I say that because that is what I am most familiar with,

for them to actually get out of the rice farming business without

taking a complete loss on their whole operation,, because the operation

of rice farming is definitely tied to an allotment. We had an awful

lot of people who wanted to quit rice farming, but they did want to

realize something for their past efforts and their past history, and

they could not even sell their equipment, because no one would buy

it because they could not farm rice. Therefore, it was necessary to

provide some way where the transfer of the allotment could go from

one producer to another producer.

This bill was enacted which gave us this privilege.

Now then, after consideration of it and after its operating 1 year

we ran into this question about this, that about 90 percent of the

farmers in Texas are not landowners. Therefore, we have created

a situation where a man who owns land is penalized in that he cannot do the same thing that his neighbor can, because he owns land.

His neighbor, under the bill, can transfer his allotment under certain

conditions.
litISCELLANEOUS PEANUT AND RICE LEGISLATION 9

This amendment actually, makes those conditions applicable to all

rice farmers without being prejudiced against the man who happens

to own some land.

Personally, I do not think that will affect more than about 10 percent of the transfers of allotments in the States, but I do think that

it is a big hindrance and a big injustice to a man who owns land that

he has to sell his land in order to transfer his allotment, whereas his

neighbor who does not own his land can transfer his allotment without

that provision in there.

Mr. JONES. Does he actually transfer the allotment or just give

the allotment up and let the ASCS transfer it?

Mr. MAuRrrz. No, sir, he actually transfers the allotment. He

comes in and applies to withdraw, and the person whom he has agreed

to turn over his equipment to reapplies for the allotment, and the

county committee then approves that transfer, and they transfer it

from one name to another name. It does not go into a general pot

and then is reallocated.

Mr. JONES. Are there any further questions?

BEERMANN. Mr. Mauritz, this farmer who prefers not to Continue to grow rice, if he does not withdraw, does he have to grow

rice

Mr. MAURITZ. State that question again, I do not believe I got it.

Mr. BEERMANN. You say that if he does not wish to grow rice, that

he has to withdraw; is that right?

Mr. MAURITZ. Yes, sir; he has to withdraw.

Mr. BEERMANN. If he does not withdraw from the program, does

he have to grow rice?

Mr. 1VIAuRrrz. No, sir; he does not have to grow rice, but he does

lose, in other words, if he does not grow rice, of course, he will lose 

part of his history. The allotment is based on his 5-year history and

if he does not grow rice or there is a provision whereby he can turn

it into the county for reallocation. But if he did that, he would still

have to grow it once out of 5 years or he would lose it entirely. And

if he does not turn it in, he would lose 20 percent of it, because it is

based on the 5-year history.

Mr. BEERMANN. Thank you.

Mr. JONES. Pardon me, Mr. Mauritz, let me ask you this: Is it the

general practice, in other words, when you transfer these allotments,

are they transferred for a cash consideration?

Mr. MAURITZ. Technically, the farm equipment is transferred for a

cash consideration. The allotment is not supposed to be transferred

for a cash consideration.

Mr. JONES. In other words, the farmer sells the equipment for so

much money, and he can get a higher price for it if he has the

allotment.

Mr. MAURITZ. That is correct.

Whether we admit it officially or not, it certainly has a value, just

the same.

Mr. GATIIINGS. It would mean to the landowner which consists of

about 10 percent or a little more of them, but probably 10 percent in

those particular areas who could obtain the value of the allotment

that they.have in the same manner as the tenant.

Mr. MAuRrrz. He would have the same privilege and the same guarantee as all the rest of them have.
10 MISCELLANEOUS PEANUT AND RICE LEGISLATION

Mr. GATHINGS. In Mr. Thompson's statement that I have read, he

stated that in some instances these people may not care to produce

rice any more on the land, but they may want to go into the cattle

business, and they want to hold their land so that they could use the

same procedure as suggested here.

Mr. MAuRrrz. That is right; that is correct.

Mr. GATHINGS. They could probably sell the equipment at an increased price.

Mr. MA uRrrz. Yes.

Mr. JONES. Are there any questions, Mr. Purcell?

Mr. PURCELL. No.

Mr. JONES. Mr. Leggett?

Mr. LEGGETT. These sales are made within the State and not between

different States, are they?

Mr. MA-oRrrz. This is• entirely applicable to the State, because we

have no provision to transfer from one State to another.

Mr. LEGGETr. Thank you.

Mr. JONES. Are there any other questions?

Mr. THOMPSON. Somebody is going to ask this question if you get 

increase

the 

bill to the floor, which I hope you will, whether this will 

the production of rice. It will not. It will not affect production

in any way, shape or form. All it does is, as Mr. Mauritz has an

example in point, that he is a cattleman and a ricegrower. If he

wants to go out of the rice business, he does not have to sell the land

on which he expects to run cattle. That is all there is to it.

Mr. JONES. Thank you.

Are there any other questions about this bill, H.R. 3742? Does

the Department have any other comment?

Mr. SATTERFIELD. No.

Mr. JONES. We are going to include your two prepared statements

in the record at this point.

Mr. THOMPSON. Thank you.

(The prepared statements of Hon. Clark W. Thompson on H.R.

3742 .and H.J. Res. 192 follow:)

STATEMENT OF HON. CLARK W. THOMPSON, A REPRESENTATIVE IN CONGRESS FROM

THE STATE OF TEXAS, ON H.R. 3742

Public Law 412 which was enacted last year provided for the transfer of rice

acreage history where producer withdraws from the production of rice. This

law gave expressed statutory effect to the succession of interest provisions

which for several years were included in the Department of Agriculture's regulations governing the establishment of farm rice acreage allotments in States

and administrative areas (notably California, Texas, and parts of Louisiana)

in which such allotments are determined on the basis of past production of

rice by the producer on the farm.

Under this law a rice producer desiring to permanently withdraw from the

rice business and transfer his rice acreage history to another producer or producers must meet the condition to sell the entire farming operation pertaining

to rice, including all production and harvesting equipment, any irrigation equipment not permanently attached to the land, and any land owned by the transferor to which any of the transferred rice history acreage may be aseribecL

The land requirement is where we run into a serious problem. More than

75 percent of the producers in Texas and more than 75 percent of the rice acreage

farmed is on leased land. A producer in this category who permanently withdraws from the production of rice is not required to sell land. Those who are

not in this category and who produce rice on acreage they own must sell this

land when they withdraw from rice production.
MISCELLANEOUS PEANUT AND RICE LEGISLATION 11

of 

The 

the 

latter 

rice 

is a significant discouragement for a farmer who wants to get out business but wants to keep the land for other purposes, particularly

producers 

cattle operations. H.R. 3742 seeks to correct this problem and to treat all rice equally when they desire to withdraw from rice production. The bill requires no expenditure of additional funds.

STATEMENT OF HON. CLARK W. THOMPSON, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS, ON HOUSE JOINT RESOLUTION 192

The purpose of this resolution is to validate certain rice acreage allotments for 

who 

the crop years 1956 to 1962. The farmers that would benefit by it are those for a number of years followed the practice of going to the local ASC man- ager with their various programs, securing his approval and later that of the appropriate committees on the county and State level, and then proceeding under what they considered a proper and legitimate course. When these practices were questioned by the Department of Agriculture last fall, the rice industry came to a standstill. The orderly marketing of crops already harvested was not possible until various court procedure developed. For the year§ 'involved, these farmers had followed the advice and guidance of Department of Agriculture officials. In good faith, they thought they were complying with the letter and spirit of departmental regulations. For the De- partment to now question these operations and to pose a threat of retroactive penalties and retroactive loss of allotments could have disastrous consequences to this industry.

This resolution would relieve these farmers from this threat and give immedi- ate clarification to the matter so that they may proceed with current and sub- sequent planning. It specifically excludes from consideration any operation which had been undertaken by duplication, forgery, bribery, intimidation, or practices that would result in the total allotted acreage in the State exceeding the State acreage allotment.

Mr. JONES. We have another bill, House Joint Resolution 192, which

was also introduced by Mr. Thompson. We have a rather lengthy, 4-

page report from the Department which states that the Department

has no objection to the adoption of the resolution with the under- standing that the final paragraph of the resolution will be interpreted

as hereinafter set out.

Mr. Satterfield, if you will give us a brief explanation of what this bill does and also comment upon the interpretation of this last para- graph, maybe we can expedite things a little bit.

Mr. SATTERFIELD. Since I have Mr. Schoonover here from the Office of the General Council for the Department and Mr. Rollins from our

Farmer Programs Division, who are a lot more familiar with the individual cases involved in this resolution than myself, may I ask that either Mr. Rollins or Mr. Schoonover be permitted to speak on this bill?

Mr. JONES. Either one that you would like to have speak.

Mr. SATTERFIELD. I will ask Mr. Rollins to start.

Mr. JONES. We will be glad to hear from you, Mr. Rollins.

Mr. RomaNs. Thank you, Mr. Chairman.

It is quite difficult to explain this. There is considerable involved,

but I will try to make it just as brief as I possibly can.

We might pick up more or less where we left off in respect to Mr. Mauritz' remarks in connection with the other bill, in that Individual

producer allotments which have been established for individuals for

the purpose of being allocated to a particular farm for the production

of nee are provided for and have been provided for, for a number of

years, in the statutes and the departmental regulations. The departmental regulations generally speaking require that before an individual can allocate his producer allotment to a particular farm for
12 MISCELLANEOUS PEANUT AND RICE LEGISLATION

a specific year, he must file an application with the local county committee, and in this .application he Certifies that he will be engaged

in the production of rice on the farm in question for such year.

Now, to be engaged generally, he furnishes either one or more of

the factors or services: Land, labor, water, or equipment, for a predetermined and specified share of the crop to be produced from such

acreage during such year.

In the event there is no question as to his application and his arrangement, the county committee approves that individual producer's

allotment as a component of what eventually becomes the farm acreage allotment.

Likewise, this would happen to each producer who is farming on

the farm in question. It may be one or it may be any number of producers, but all allocations of producer allotments when allocated and

approved to a particular farm, the sum of those acreages, generally,

becomes the farm acreage allotment. And from now on throughout

the year, that particular farm is treated in the same manner as a farm

is treated in Arkansas or in any of the other States in which farm

allotments are made.

Mr. JONES. I do not follow you there. In other words, let us say

that Mr. Thompson has 1,000 acres of land and he might have five

different people bring their allotments to him, and he makes a lease,

an agreement with them to grow rice on that farm, and they are going

to pay him one-fourth share of it or to pay him cash or some other

remuneration, but then in the county office, all of those five allotments

would be considered to be on this one farm?

Mr. ROLLINS. Yes, sir that is correct. Generally speaking, that is

correct.

Mr. JONES. That is, this contract agreement is made for only 1

year with all of these people?

Mr. ROLLINS. One year at a time.

Mr. JONES. Although there is nothing to prevent them from making

a new contract each year and being there for 3 years on the same farm

and under the same conditions?

Mr. ROLLINS. There is one point: The farm contract which Mr.

Thompson has may be extended beyond 1 year, but insofar as the local

county committee's approval is concerned, this would be a year-toyear operation.

In other words, each of those five producers would come to the county

office and apply to have their allotment allocated to Mr. Thompson's

farm, before planting time each year.

Mr. JONES. I see. Thank you.

Mr. ROLLINS. For example, one year all five might be on Mr.

Thompson's farm and the following year one or more may drop out,

one or more may be added, but it is an annual allocation process by

the individual producers.

The basic question, I think, is that as previously stated, each of

these individuals are allocating his allotment to this farm on the

premise that he will be engaged in the production of rice on the farm

and that he will furnish one or more of the factors or services for

a share of the crop.

Beginning with the year, shall we say 1957, there have been instances

brought to the attention of the Department by internal• audits where
MISCELLANEOUS PEANUT AND RICE LEGISLATION 13

the individual farmer may or may not have been engaged in the

production of rice on the farm in question. There is a regulation

issued by the Department which provides with respect to the 1962

crop, the crop that was practically ready for harvest when this situation first arose, that where the county or the State committee has

reason to, believe that an individual producer is not or was not engaged in the production of rice as he alleged that he would be at the

time the allocation was approved, that where his operations were

questioned by the county or the State committee, a hearing must be

scheduled by the county committee, and he be given an opportunity

to substantiate his claim as to his actual operations for the particular

year. If he is found not to be engaged in the production of rice on

the farm his producer allotment is recalled and the farm allotment

is reduced, retroactively.

I would hesitate to state just how many cases at the moment may

be involved in this category. I am sure that the committee would like

that information. But may I pass it at the moment and move to a

situation which is similar to that previously described, except for the

fact that in the latter situation an individual who may or may not

have been a valid producer or the holder of a producer allotment arranged through the local county ASCS office for a sum of money to

have additional acreage allotted to his farm.

There are any number of situations or arrangements or combinations of arrangements which could bring this about, but in any event,

the end result I think can be stated in that an individual received the

use of producer rice acreage allotment under some arrangement

through the local county office. That generally would sum up the two

situations.

One situation is where the producer allotment is valid and there is

no question about it whatsoever. The producer received an allotment

and allocated it to a particular farm and there was no question about

it at the time he allocated it. But subsequent to that time, the fact

that he might not have been engaged in the production of rice during

the year as he alleged he would be, became a question for the county

committee or the State committee.

The other situation is where an individual may or may not have been

rightfully apportioned a producer allotment, but prior to planting,

generally, or thereabouts, arranged through a county office representative for additional acreage allotment which he might utilize and

thereby increase his operation on the farm in question.

Really, Mr. Chairman, I am not in a position to say at this point

just how far to go into this, except that producers in the first category,

whose operations had been questioned or were under question as to

whether or not they were engaged in the production of rice, their

operations were found to have not met the 'requirement and the farm

acreage allotments were reduced by the amount of the 'allotment questioned in the producer's allocation. That happened generally during

the months of August and September of last year with respect to the

1962 crop.

Following that, a number of producers in Texas brought suit against

the Department and 'asked that no further allotments be adjusted. I

believe that'would be the correct terminology—and that no marketing

cards be canceled with respect to these operations until the court de97646-63 3
14 MISCELLANEOUS PEANUT AND RICE LEGISLATION

cided the validity of the particular regulation which the Department

was operating under. That came before the Federal court in the

southern district, in Houston, in the early part of October, I believe

October 3, 4, and 5 of last year.

The decision at that time as I recall, was in favor of the Department,

but the opposition arranged with the court or appealed to the court for

a stay order to be issued, pending their appeal to the circuit court of

appeals, the Fifth Circuit Court of Appeals. The stay order was

issued, I believe, about October 15, which precludes the Department

from making any further reductions in rice acreage allotments in

Texas, specifically.

The case, incidentally, went to the fifth circuit and arguments

were heard. I think it was on February 21 or 23, just past—I do not

recall the exact date.

As of the moment, to my knowledge, there has been no decision by

the fifth circuit court in connection with this ease.

In the meantime the State ASCS officials are precluded from making any further adjustments in allotments because of this situation.

During the interim this particular bill was introduced. I do not

recall at the moment when—it is, of course, a matter of record—but

last fall representatives from the American Rice Growers Association

and others, including Mr. Mauritz, who spoke a moment ago, and Mr.

Blair, who is present, I believe contacted Congressman Thompson

and they asked if the Department would consider assisting them in

drawing a bill. The Department took the position that it was not in

a position to draw the bill, but would be glad to assist in any way that

they could if requested to do so. Congressman Thompson requested

that we assist these gentlemen in drawing the basic language, and we

did, on the basis of that request.

The general language as it currently stands, I believe, is basically

what was in the bill at the outset.

The question I would say is primarily: Which category of individuals would be excused under this resolution from the departmental regulation and marketing quota penalties? Supposedly, the latter group,

the group where arrangements were made through county office representatives for additional rice acreage allotments for an amount of

money would not be excused. I believe it is a matter of record that

there are any number of situations—I think Mr. Schoonover might

elaborate on this better than I—with respect to employees in the

ASCS who became involved in this situation and whose actions have

been investigated.

Mr. JONES. I would like to interject one question here. I have been

trying to follow you and I am convinced that you have such a complicated situation that I cannot understand all of it, but it seems to

me that I want to ask you this question why the Department did not

make a recommendation that the law be changed, rather than to express, as you did, that the Department has no objection to the adop- tion of this resolution. As I understand it, this resolution is more in the form of trying to interpret what the present law means. Is it im- possible for us to write and make changes in the law that would be

more specific and would be easier for the Department to administer by changing the law?

Mr. RoLLINs. In answer to that, Mr. Chairman, may I say that it is my understanding that the Department, after having issued certain
MISCELLANEOUS PEANUT AND RICE LEGISLATION 15

regulations which have been cleared by the General Counsel as being

legally sufficient, is not in a position to rescind such regulations. Instead it is obligated to follow the regulations as they have been issued, and for that reason, in my opinion, the Department could not

recommend—well, under those circumstances, could hardly recommend that the regulations become invalid. Other than that, I am not

in a position to say why they could not recommend either for or against

this resolution.

Mr. JONES. Can you help us out there, Mr. Satterfield?

Mr. SATTERFIELD. Mr. Chairman, a point that Mr. Rollins did not

make, of course, was that in many of these cases the violation may

have occurred several years ago and the producer involved in such

violation may have been on a farm where there were other producers

engaged in the production of rice. Since rice compliance is checked

on a farm basis, as is the case for any other crop, this means that all

rice producers on a farm having excess acreage as a result of the farm

allotment being reduced because of a technical violation by one of

the producers on the farm, would be jointly and severally liable for

the marketing quota penalty, even though none of the producers on the

farm had any knowledge of such violation. If these violations go back

to 1957 or even beyond that, it might take several years to straighten

out the records of all individual producers who may have been engaged

in the production of rice on a farm where a technical violation may

have occurred. This is something that we did not know about until,

as Mr. Rollins pointed out, along about August 1962. We feel that

probably the best way to straighten out this situation is by action of

the Congress permitting us to disregard cases of technical violations

which occurred in prior years.

I think a lot of this involved misunderstandings on the part of the

producers as well as county office personnel. I also think that the

Department was at fault in some respects. We did not check on the

operations of this program close enough.

Mr. JONES. My question was why the Department did not recommend the passage of a bill which would have changed the law, rather

than giving a "no objection" statement with a certain recommendation

about the interpretation in a certain way.

Mr. Heimburger wants to make a comment.

Mr. HEINIBURGER. May I have a go at answering your question? If

I understand the situation, I think the answer to your question is that

the matter involved here is not a law, but a regulation of the Department of Agriculture which has been in effect for a number of years

and which investigation has recently disclosed has, probably, been

violated for a number of years by a number of people so it is not a

matter of changing a specific provision of law, but a matter, I think,

being asked here to ratify possible violations of the Department regulations which have occurred in past years. Is that not correct?

Mr. SATTERFIELD. That is correct.

Mr. JONES. Pardon the interruption. Is not in fact what we are

doing approving the regulation, the interpretation of the regulation

as it is contained in this letter from the Department which has been

included in the record and made a part of this, so that Congress is in

effect writing a regulation for the Department rather than changing

the law?
16 MISCELLANEOUS PEANUT AND RICE LEGISLATION

Mr. HEIMBURGER. It is not my understanding that this bill will

Change the regulation. I assume, although I believe the latter is silent

on this subject, that the regulation would remain on the books in its

present form.

Mr. JONES. Under this interpretation?

Mr. HEIMBURGER. That is my understanding. What we are saying is that in the past this regulation appears to have been violated,

perhaps inadvertently. We will forgive all of these past violations,

but we are going to leave the regulation on the books.

Mr. THOMPSON. May I be indulged for just a moment on that point?

Mr. JONES. Yes.

Mr. THOMPSON. Where you say that you are going to forgive all of

the past or however you worded it, please bear in mind that these irregularities were submitted to the Department of Agriculture, to the

proper authorities, all of the time every year and they were approved,

and on the basis of the approval of the Department the farmers went

ahead and planted. Five years later they are told that those regulations were violated and so forth and so on.

What we are trying to do, and Mr. Maurtiz can explain it far

better than any of us here, because he has lived with it—we want to

say that you cannot let these regulations be retroactive against them.

We will do anything you wish from here on out, but let us understand

each other. We do not want the regulation changed, Mr. Chairman.

We do not need it. We can live with it, but we do want to have it

so that when we get the approval of the Department that they will

live up to that. That is what we are trying to accomplish in this

resolution.

Mr. JONES. As I understand Mr. Rollins, some of these regulations

went to court. In other words, the producer went to court, saying

that the regulations had not been correctly interpreted. The regulation was right, in other words, but that the Department misinterpreted

them and was then going back to make them retroactive.

Mr. THOMPSON. That court case has not been settled yet. That is

this year, as I understand. It does not attempt to do anything

retroactively.

Mr. JONES. Let us hear from Mr. Mauritz. Maybe he can get it

straightened out. It is a pretty complicated sort of thing and I am

getting lost.

Mr. MAURITZ. First, to answer your question, let me say, that so.

far as we are concerned we are not asking that the law be changed.

We would like for it to remain as is. The only thing, as the Congressman said, as well as Mr. Satterfield and Mr. Rollins, is that in this 

situationin this resolution we are asking that the retroactive enforcement that was not enforced at that time that it not be imposed upon

us now when we cannot do anything about it. I think that Mr.

Rollins brought out one thing that is very pertinent to this situation,

that is, that in 1962, that crop year, when due to some criminal violations of the law—and we might as well recognize them, there were

criminal violations and they were intentionally done—it was called

to mind that probably under strict enforcement of the regulations,.

ever since the inception of the later program, which was in 1955,

there had been some technical violations of these regulations and theDepartment took the position that they should go back retroactively-
MISCELLANEOUS PEANUT AND RICE LEGISLATION 17

and enforce these regulations against the farmers. Even though we

did bring suit, the rice farmers brought suit against the retroactive

enforcement of the regulation, it is simply on the regulation, that we

say the interpretation of it is that after a certain date they cannot

go back and change the allocation of allotments. And that would

apply not only to 1962, but to any other year. Whether we are right

or not the judges will finally decide.

This provision in this joint resolution to us means that they will not,

that the Congress will recognize the fact that the farmers have been

operating in good faith all of this time and those are the only ones

we are interested in. We are not interested in any that violated the

law willfully and knowingly. We do not protect them at all, but those

who have operated in good faith in the past year should not now be

penalized when they cannot take the steps that were provided for in

the law for correcting any violation. As of last year, between then

and now as to what was brought to our attention in August, practically every rice farmer in Texas would now have a clean slate as far

as 1962 is concerned, because when it was called to our attention as

to what the regulations technically called for those farmers who had

violated that in a technical point of view went and corrected their

operations so as to be in compliance. And I think as of right now I

believe there are only about six or seven farmers who have not gotten

a clean bill of health from the department and been issued their marketing card.

I do not think that this is forgiving anybody anything. It is only

a means to keep from actually bankrupting the whole industry because of, I would like to say, a little negligence on everybody's part

by not reading every little thing in the regulation that said what they

should do.

Mr. JONES. Pardon the interruption. In other, words, you are not

objecting to the interpretation of the regulations by the Department

as it applies to this year?

Mr. MAITRITZ. That is correct.

Mr. JONES. But you are objecting for the same interpretation being

placed on these prior years and going back retroactively to assess

penalties?

Mr. MAURITZ. That is right. We are objecting to the interpretation

being put in the same light for this coining year back in these prior

years when we did not know anything about it.

Mr. JONES. In other words, if they had enforced the regulation

back, say, in 1957 like they are proposing to do in 1962, you would

have had no objecton to it?

Mr. MAtritrrz. No not any whatsoever.

Mr. JONES. I think that I understand it. Does anybody else have

any questions?

Mr. HEIMBURGER. Could we ask Mr. Mauritz to give us an example of the technical violations that he is talking about?

Mr. MAURITZ. Mr. Rollins said that even though the allotment is

on the producer in Texas there is a time, which has been June 1, that

all allotments that are given to the producer have to be tied into a certain farm in order to measure it and see whether it is in compliance

or not. To do that, each farmer with no allotment must come in and

sign a paper showing what farm number really that allotment is going

to be farmed on, and who participates in the crop. The average rice
18 MISCELLANEOUS PEANUT AND RICE LEGISLATION

farmer in Texas is not familiar enough with regulations to know all

of the details. He comes in. They have a form and they ask him a

question, "Who is going to farm your rice allotment? What farm is

it going to be on?" And he tells them that. The normal procedure

is for him to sign it, and that is it.

Well, according to the form there is a little space in there for him

to put down what the percentage of the crop is that he is going to get.

In some instances he puts it in and in some instances he does not even

pay any attention to it. He signs it, and that is it, because he has

made a deal with the man who is going to do the farming for a percentage of the crop or for cash. That is where he has technically violated the law, because, according to the law he cannot make any deal

with anybody except that each year he gets a percent of the crop for

furnishing not only the allotment but one of the four factors Mr. Rollins pointed out. And in actuality he has not furnished, in some instances, any of the four factors, and he does not get a percentage of the

crop but he has actually been getting cash rent for the use of his allotment. That is a violation of the regulation.

Then, as Congressman Thompson brought out, I would say that in

a very large majority of the cases where this violation has occurred

it has not been covered, in fact, that is what brought this to light and

made it so large in Texas, when the investigator started asking people

they did not hesitate to tell him—they told the investigator, "Sure,

John Doe farmed my allotment, he gave me $30 an acre for it." It

was not a willful violation at all. It had been going on and it had been

growing. Mr. Rollins said that he did not know how many. I do not

know what the actual number is, but I will say that about 85 percent

of the rice farmers in Texas were affected one way or the other, directly

or indirectly.

I have been criticized a time or two and it has been said that this is

not a matter of interest, but to me I think it is the main interest. I

think that the law we enacted in 1938 was to control the orderly marketing of rice.

We had a case this year in Texas where it ruined our market. It

had—had we not been successful in getting an injunction to hold up on

the execution of these penalties and withdrawals of marketing cards

we would have faced an awful marketing year.

But one thing that I think gives us reason to ask Congress to do this

for it is that normally and in the very large majority of cases it is not

that we have planted any more rice than the acres allotted, but it is a

technical question as to whether or not that is the law or whether it

means that John Doe can only plant 10 acres and he has to put out certain seed and take a certain risk in planting the 10 acres, but there have

not been more than 10 acres planted in John Doe's name, and that is

what he was originally allotted, 10 acres.

Mr. JONES. Thank you, Mr. Mauritz.

Are there any other questions?

Mr. GATHINGS. I wonder if Mr. Rollins would give us more information with regard to whether any other regulation has been violated?

Was this the only regulation that has been violated by these farmers

these past years?

Mr. RowNs. The regulation in particular, yes.

The regulations contain two specific sections. One provides that in

order for an individual to allocate his allotment to a farm, as Mr.
MISCELLANEOUS PEANUT AND RICE LEGISLATION 19

Mauritz indicated, he has to certify that he will participate by furnish- ing one of the four factors and receive a part of the crop. The other regulation, that is, the other section of the regulation provides that if the county or the State committee at a later date finds that the producer did not, in fact, furnish these factors or share in the crop, then they are to conduct a hearing and give him an op- portunity to justify his contention. If he fails to do so to their satisfaction, the county committee, with the concurrence of State committee, or the State committee recalls the producer allotment allo- cation and the farm allotment is reduced, as Mr. Mauritz indicated, and that is the state we were in when the suit was brought to stop any further adjustment of the 1962 'allotments.

Mr. GATHINGS. Are both of these contained in the report? Mr. JONES. We have 4 pages here that talk about it. The inter- pretation of the regulation will be a part of the report. Mr. SCHOONOVER. The report does quote the regulation in its entirety.

Mr. GATHINGS. That is what I wanted to know. Mr. JONES. Are there any further questions?

Mr. BEERMANN. I would like to ask Mr. Mauritz a question at this point. How would you know that all of the acres allotted to Texas are planted in rice?

Mr. MAURITZ. Well, the regulations provide for carrying out the program that before a marketing 'card is issued you must have a mar- keting card to market your rice, that the farm has to be measured by the county committee to determine what acreage you have in rice. Therefore, at the end of the year, or the beginning of the marketing season, just prior to it, each county does have an accurate measure- ment of all of the rice that is planted within the county. That is com- bined then on a State basis to determine what the planted acreage is. Mr. BEERMANN. Well now, a new grower wants to grow rice: How does he get into business?

Mr. MAURITZ. Today there is no way for a new grower to get into the rice farming, because even though the law provides for an acreage for him, the acreage is so small that it is not economically plausible for him to farm, because I think with most of the new growers that we get today, if we took all of the acres they would have about 5 or 10 acres. Also that is one of the reasons for the amendment that we are asking for today. For a person who wants to get into the rice busi- ness so he can get in, he would have to purchase this right to farm rice, rather than getting a new allotment, because there is not enough allot- ment—that is, in excess—which has not already been allotted to the old producers, for the new growers to get an allotment. That is one of the reasons that we have gotten into the situation we are in, frankly. I might explain that alit/tie bit.

We found ourselves with a lot of people who had 10 acres, 20 acres, and 30 acres. You cannot grow rice in Texas economically with that small an allotment. The only way that allotment could be farmed whereby a man could realize anything out of it was to combine it with

some other like allotments or with somebody who had enough and would take it over, and he would realize something out of it. That is what got us into the situation we are in.

Mr. BEERMANN. Thank you.
20 MISCELLANEOUS PEANUT AND RICE LEGISLATION

Mr. JONES. Are there any other questions? If not, Mr. Satterfield,

do you intend for Mr. Schoonover to make any other statement?

Mr. SATTERFIELD. I want to make sure that the Department has the

committee's interpretation of what cases are to be covered by this resolution. I think Mr. Schoonover has discussed this with the General

Counsel and I would like for him to comment on that particular point.

Mr. MATTHEWS. May we go off the record?

Mr. JONES. Yes.

(Discussion off the record.)

Mr. JONES. I believe that we have most of the explanation we require. If you have anything to add, we will be glad to hear from

you.

Mr. SCHOONOVER. Mr. Chairman, basically there are two kinds of

cases involved here. One is where a rice farmer makes some sort of

arrangement with another rice farmer to farm together the rice

acreage of the one who is not interested actively in farming it. In

some cases, I think the farmer just made an outright purchase or

lease of that allotment, and there was no intention on the other

farmer's part that he would actually be engaged in the rice production.

In other cases they made an operating agreement of some kind—in

many cases called a partnership which may or may not have been a

bona fide partnership, but in all of these kinds of cases, as we interpret

the resolution, it says that if that allotment was properly allocated

in the first instance and the State and county committees approved it,

those allotments would be valid and we could not then come in under

our present regulation and inquire into the facts of whether both

producers are really, actually producing rice.

That is the kind of case we understand this resolution is intended

to cover. The other type of case is where the farmer wants more

allotment.

In most cases—of course, you cannot generalize too much—in most

cases the farmer would go to the county office. He would ask the

county office manager, "Is there any possibility of my getting any

more allotment?" And the county office manager would say, "Well,

come back and see me Saturday, perhaps."

Then he would come in on Saturday and the county officer manager

would say, "Well, I can get you 30 acres of allotment from the adjoining county, transferring it over here, belonging to John Doe," let us

say.

And he would say, "It will cost you $20 an acre per year."

What happens? The farmer is agreeable to that. He pays the

money to the county office manager for delivery to the other farmer

but, in fact, the county office manager sticks it in his pocket. The

allotment he brings over is either fictitious or has already been allocated somewhere else.

In some cases the farmer may be innocent. I mean, he may not be

trying to bribe anybody. But he is getting additional allotment

which is strictly contrary to our regulation.

It is this kind of case—in fact, we have had two county office managers in Texas indicted for violation of the Federal criminal law

for accepting money under these circumstances.

Another man—a field man who is technically an employee of the

State office—has been so indicted. Two other county office managers

we thought were involved have died in the meantime.
MISCELLANEOUS PEANUT AND RICE LEGISLATION 21

It is this type of case in which our own people have accepted money

from farmers that, as we interpret the bill, would not be covered by

the resolution. And that is what we would like to have spelled out

in the report to be sure that our understanding of the bill is correct.

Mr. Mauritz may have some comment on that, because we know he

is interested in the bill. We would not want to interpret it contrary

to his thoughts, if it is contrary to them.

Mr. MAURITZ. We concur 100 percent in what he has said. We are

not trying to protect anybody who gets acres that are not legitimate

acres.

Mr. JONES. Thank you.

Mr. HEIMBURGER. May I ask a question there!

Mr. JoNEs. Yes.

Mr. HEIMBURGER. Take the case of a farmer who 3 years ago did

have some of this fictitious acreage that you have talked about, but

completely innocent on his part. So far as the farmer is concerned,

it would be a bona fide transaction. Let us assume he had no idea

that the acreage which was being allocated to him was other than

bona fide acres that somebody had and did not want to use.

What will be the effect on such an innocent participant who in

1939 had 30 acres under the interpretation that you are talking about?

Mr. SCHOONOVER. He has acquired an allotment in most cases that

was either fictitious and did not exist or had been allocated somewhere else, and so was duplicated. And under our regulation, if we

could make the facts stick, we would impose a penalty on that farm

retroactively, you might say.

Mr. HEIMBURGER. In other words, he will then be subject to a

marketing penalty?

Mr. SCHOONOVER. That is correct.

Mr. HEIMBURGER. For the year in which this occurred?

Mr. SCHOONOVER. That is correct; that is right. Of course, that is

one of the questions involved in the court case. We have been expecting the decision, but we have not received it yet. Whether we can

go back retroactively and do that, I mean.

But to generalize again. We think in most of those cases that the

farmer who bought the acreage, even though he may have been assured by the county office manager that it was all right, knew there

was something wrong about it.

Mr. MAuRrrz. I would like to call your attention to the fact that

we agreed with him 100 percent, to say that when we made that statement, there are other means whereby this farmer, if he thinks he is

innocent of any wrongdoing, can defend himself.

Mr. SCHOONOVER. Sure.

Mr. MAURITZ. I do not personally think that he should be exempt

for any acts of his, whether he be innocent or not. Under this resolution that we are asking to be passed, there are other means whereby

he can get restitiution if he thinks that he is innocent, that he is an

innocent purchaser.

Mr. SCHOONOVER. That is correct. We would apply the regulation.

Then if we found the facts justified, we would impose a penalty.

He then has a right to go, first, to the review committee, as you know,

of the other farmers in the county who pass on the case. And if they

find for the fanner, that is the end of it. If they find against him,

he has the right to go to the U.S. district court or to the State court.
22 MISCELLANEOUS PEANUT AND RICE LEGISLATION

Technically, the role of the review committee is to review the facts

on which the county committee made its determination. They are not

supposed to go into it, to sit as a court of law or equity. They are just

determining the facts. They are supposed to uphold the department's

regulations. They are not supposed to say that the regulation is invalid. That is up to the court to do that. But they review the facts

on which the county committee made its determination. If they disagree with the county committee, they can put their own interpretation

on the facts. And if that is in the farmer's favor, that is the end of it,

because the Government cannot appeal, but if it goes against , thp

farmer, he has the right to go to court and follow it that way.

Mr. JONES. Thank you.

If there are no further questions, we thank you gentlemen.

We will now go to H.R. 101 by our colleague, Mr. Matthews. We

will be glad to hear from you now, sir.

STATEMENT OF HON. D. R. (BILLY) MA.TTHEIVS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF FLORIDA

Mr. MATTHEws. Mr. Chairman and members, thank you so much

for this privilege.

H.R. 101, as the title indicates, is a bill to extend for 2 years the

definition of peanuts which is now in effect under the Agricultural

Adjustment Act of 1938, as amended.

My colleagues on the committee will recall that in 1957 we extended

the definition of peanuts for a period of 2 years. The definition of

peanuts was so worded so that peanuts for boiling purposes would not

come under the provisions of acreage allotments.

The committee felt that the legislation should be on a 2-year basis

because it wanted to make sure that there would be no complication

from peanuts for boiling and peanuts used for other purposes.

I believe the history of this legislation is such as has proved beyond

all shadow of a doubt that there is no complication.

I would like to call the attention of the chairman and the members of

the committee to the boiled peanuts that are on the desk before you

to illustrate the difference between boiled peanuts, crushed peanuts

and other peanuts used for other purposes.

I think we can say, therefore, that there has been no conflict insofar

as other uses of peanuts are concerned. We now, as I understand it, have about 1,500,000 acres of peanuts planted a year and there are only

about 3,000 acres of peanuts that have been planted for boiling purposes. I think then we have no need for worry about the fact that

peanuts planted for boiling purposes might cause some restriction in

acreage allotments.

Mr. Chairman, this bill, although not of great importance, to many, is of tremendous importance to a lot of people who have modest incomes. In my section of the country, the boys and girls plant peanuts for boiling purposes and sell them, thereby making part of their expenses for their school work. In one county in my district, the county,

agent told me that peanuts planted for boiling purposes contributed immeasurably to the income of general farming in that county.

I, .therefore, sir, hope that the committee will approve this bill. And may I. suggest that the committee might want to consider the
MISCELLANEOUS PEANUT AND RICE LEGISLATION 23

possibility of making this legislation permanent. I have in this bill only suggested the privilege of planting peanuts for boiling purposes

be extended for only 2 years. Whatever the committee would like to do in that connection, of course, is strictly in accord with my feeling.

I personally feel that it would loe better if we could make this legisla- tion permanent legislation.

Thank you very much, Mr. Chairman. I believe that Mr. Thigpen,

who is in the audience, will answer any questions on this. I shall attempt to answer any questions that you may have, too.

Mr. JONES. Mr. Thigpen, if you will come up and give us the Departm.ent's view on H.R. 101, please, we will appreciate it.

STATEMENT OF JAMES THIGPEN, DIRECTOR, OILS AND PEANUTS

POLICY STAFF, ASCS, U.S. DEPARTMENT OF AGRICULTURE

Mr. THIGPEN. Mr. Chairman and members of the committee, the

Department has reported favorably on the bill, and recommended that action be made permanent rather than being an extension.

Mr.- JONES. The Department has recommended that it be made

permanent?

Mr. THIGPEN. Yes.

Mr. JONES. Are there any questions that anybody would like to

ask of Mr. Thigpen or of Mr. Matthews?

Mr. GATHINGS. How many acres would be involved in this?

Mr. MArrHEws. It is my understanding from the last survey the

Department of Agriculture made that it indicated 2,500 acres, approximately. Our feeling is now that there is no more than 3,000

acres out of a total of 1,500,000 acres being.planted in peanuts.

I will ask Mr. Thigpen to make any further observations on this.

Mr. THIGPEN. I have no comment.

Mr. LEGGETT. What is the use made of these peanuts?

Mr. MATTHEWS. They are harvested when they are green. There

are several plants that take the peanuts now and freeze them. Then

they boil them with the moisture still in the peanuts. The schoolchildren about whom I talked pick the peanuts out in the fields and

boil them immediately for sale at football games, or on the street.

These peanuts that you have before you are about 3 years old, by the

way. I am interested to note that the processor did a good job. They

are not soggy. A man who likes boiled peanuts is very careful to get

a peanut that is not soggy. This man I think did a very good job.

Mr. GRANT. Do you boil them in salt water?

Mr. MATTHEWS. You put salt in the water solution. Of course,

when you buy them in the can, the solution in the can is poured in,

that is, the salt is put in there.

Mr. DOLE. As to the acreage under this bill, would the acreage increase under it, the 2,500 acres that you now have for this type of production ? Would it increase in the years ahead?

Mr. THIGPEN. Congressman Dole, there is no indication up to the

present time that it would increase. If the technique of harvesting

and shelling were to be perfected, and freezing increased, then it could

increase, if that were done, but the product would not have, in our judgment, any significant impact on our normal market for peanuts for

edible use. It is a different type of product. That is why we have no

concern about permanent extension.
24 MISCELLANEOUS PEANUT AND RICE LEGISLATION

Mr. DOLE. Mr. Matthews wants to make this permanent.

Mr. MATTHEWS. May we go off the record?

Mr. JONES. Yes.

(Discussion off the record.)

Mr. JONES. Are there any further questions?

Mr. GATHINGS. You just stated before that this was a 2-year extension.

Mr. MATTHEWS. This is the third time, Mr. Chairman, as I understand it, that we have had this up. We have extended it on a 2-year

basis, and I believe that this is the third time for that.

Mr. BEERMANN. I would like to ask Mr. Matthews if he is quite

happy with the supply management program for peanuts.

• Mr. MATTHEWS. I think that the program for peanuts has worked

out very well and has produced an attractive price. There are always

opportunities for improvement. I know that I certainly will keep

an open mind to any suggestions for improvement on this program.

Mr. BEERMANN. I would like to ask Mr. Matthews if there are any

other exceptions to supply management programs that would be appropriate.

Mr. MATTHEWS. I do not know whether we would call it that. May

I say that in my district that it is rather an opportunity for a new

use of peanuts.

The emphasis of this bill is on opening the door of opportunity so

that we can, you might say, have more opportunities rather than any

new techniques in supply management.

Mr. BEERMANN. Would it be helpful in this area?

Mr. MATTHEWS. Mr. Chairman, I must say that we have had no

chance to check on the legislation. I do not believe I am qualified to

answer that question.

Mr. JONES. Are there any other questions? If not, we thank you,

Mr. Matthews.

Mr. MATTHEWS. Thank you, Mr. Chairman. And may I ask permission for Congressman Fuqua of Florida, who has introduced

similar legislation, to have his statement inserted in the record at this

point.

Mr. JONES. We have his statement and it will be included in the

record at this point.

(The prepared statement of Hon. Don Fuqua follows:)

STATEMENT OF HON. DON FUQUA, A REPRESENTATIVE IN CONGRESS FROM THE STATE

OF FLORIDA

Mr. Chairman, I first wish to express my appreciation for being allowed to

bring to you and the committee my statement concerning my bill, H.R. 1917, for

the extension of the definition of "peanuts" which is now in effect under the Agricultural Adjustment Act of 1938. I introduced this bill, having in mind the interest of the people of my district and it is also with that frame of mind that I

now appear before you. In the area that I represent, along with that of my able

colleague and a member of this committee, Mr. Matthews, peanuts prepared in this

manner are a common product and a popular treat at various public gatherings

and even just along the street. When they are sold in this manner the proceeds

often go to supplement the income of a farm family or a young fellow seeking

a source of small income.

• As has been reported to this committee in previous hearings, the product enters

the market as a green vegetable or novelty item rather than as do peanuts which

we normally think of that are dry, roasted, or salted, or those made into peanut
MISCELLANEOUS PEANUT AND RICE LEGISLATION 25

butter or oil. The "boiled peanut" never enters the market in competition with

the type of peanut production controlled by the acreage allotments and marketing

quotas. Therefore, with this in mind, I feel that this is a reason whereby the

subject legislation should receive favorable and affirmative consideration. I ask

that the peanuts planted to be boiled be recognized as an entirely different commodity from other peanut products and be excluded from the programs designed

to regulate the production of peanuts for conventional use.

The acreage for that of the "botiled peanut" is very small when we consider the

total allotment for the entire production of peanuts. The Department of Agriculture tells me that the total allotment is 1,610,000 acres. At the last report of

the acreage of peanuts exempted from this allotment, there were 2,206 acres.

This was in 1960 and the Department states that this has not materially changed

since then. The Department has stated in their letter to you, Mr Chairman, of

February 19, 1963, that experience has shown that the exemption in no way adversely affects the supply adjustment and price support programs for peanuts,

and the Department further recommends that a permanent extension of the

present authority be enacted. This I think, speaks well for this bill.

Gentlemen, I request your affirmative action on this bill and favorably reporting it to the House floor for passage.

Mr. JONES. The committee will go into executive session now.

(Whereupon, at 11:30 a.m., the committee proceeded into executive

session.)