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HEARING

BEFORE THE

SUBCOMIVIITTEE ON FORESTS

OF THE

COMMITTEE ON AGRICULTURE

HOUSE OF REPRESENTATIVES

EIGHTY-NINTH CONGRESS

SECOND SESSION

ON

AUGUST 22, 1966

Printed for the use of the Committee on Agriculture

GOVERNMENT PRINTING OFFICE

69-029 1 WASHINGTON : 1966
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COMMITTEE ON AGRICULTURE

HAROLD D. COOLEY, North Carolina, Chairman

W. R. POAGE, Texas, Vice Chairman

E. C. GATHINGS, Arkansas

JOHN L. McMILLAN, South Carolina

THOMAS G. ABERNETHY, Mississippi

WATKINS M. ABBITT, Virginia

PAUL C. JONES, Missouri

HARLAN HAGEN, California

FRANK A. STUBBLEFIELD, Kentucky

GRAHAM PURCELL, Texas

JAMES H. MORRISON, Louisiana

ALEC G. OLSON, Minnesota

SPARK M. MATSUNAGA, Hawaii

MASTON O'NEAL, Georgia

THOMAS S. FOLEY, Washington

JOSEPH Y. RESNICK, New York

LYNN E. STALBAUM, Wisconsin

ELIGO DE LA GARZA, Texas

JOSEPH P. VIGO RITO, Pennsylvania

JOHN C. MACKIE, Michigan

ROLLAND REDLIN, North Dakota

BERT BANDSTRA, Iowa

STANLEY L. GREIGG, Iowa

CLAIR A. CALLAN, Nebraska

PAUL B. DAGUE, Pennsylvania

PAGE BELCHER, Oklahoma

CHARLES M. TEAGUE, California

ALBERT H. QUIE, Minnesota

MRS. CATHERINE MAY, Washington

RALPH HARVEY, Indiana

PAUL FINDLEY, Illinois

ROBERT DOLE, Kansas

LAURENCE J. BURTON, Utah

PRENTISS WALKER, Mississippi

GEORGE V. HANSEN, Idaho

RESIDENT COMMISSIONER

SANTIAGO POLANCO-AB RE U, Puerto Rico

MRS. CHRISTINE S. GALLAGHER, Clerk

HYDE H. MURRAY, Assistant Clerk

JOHN J. HEimanaGER, General Counsel

FRANCIS M. LEMAY, Staff Consultant

SUBCOMMITTEE ON FORESTS

JOHN L. McMILLAN, South Carolina, Chairman

THOMAS G. ABERNETHY, Mississippi

JAMES H. MORRISON, Louisiana

MASTON O'NEAL, Georgia

THOMAS S. FOLEY, Washington

JOSEPH Y. RESNICK, New York

JOHN C. MACKIE, Michigan

II

CHARLES M. TEAGUE, California

MRS. CATHERINE MAY, Washington

LAURENCE J. BURTON, Utah

GEORGE V. HANSEN, Idaho

0
,1111M••••Ir

CONTENTS

Page

H.R. 7381, a bill to repeal the Naval Stores Act 1

Freeman, Hon. Orville L., Secretary of Agriculture, letter of:

March 17, 1965 8

August 4, 1966 2

Statement of:

Bennett, Irving, general manager, Pan American Resin & Chemical

Co 4

Burton, Hon. Laurence J., a Representative in Congress from the

State of Utah 1

Grange, George R., Deputy Administrator, Marketing Services, Consumer and Marketing Service, U.S. Department of Agriculture_ _ _ _ 14 Smith, J. Lundie, representing the American Turpentine Farmers

Association 19

III

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_
REPEAL THE NAVAL STORES ACT

MONDAY, AUGUST 22, 1966

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON FORESTS

OF THE COMMITTEE ON AGRICULTURE,

Washington, D.C.

The subcommittee met, pursuant to call, at 10 a.m., in room 1302,

Longworth House Office Building, Hon. John L. McMillan (chairman

of the subcommittee) presiding.

Present: Representatives McMillan, Teague of California, O'Neal,

Burton of Utah, and Hansen of Idaho.

Also present: John J. Heimburger, general counsel; Hyde H.

Murray, assistant clerk; Mrs. Martha Hannah, staff; Fowler West,

staff.

Mr. MCMILLAN. The committee will come to order.

We have for consideration this morning H.R. 7381.

(H.R. 7381 and report follow:)

[H.R. 7381, 89th Cong., 1st sess.]

A BILL To repeal the Naval Stores Act

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

America in Congress assembled, That the Naval Stores Act approved March 3,

1923 (42 Stat. 1435; 7 U.S.C. 91-99), be hereby repealed.

Mr. MCMILLAN. Congressman Burton, do you have a statement?

Mr. BURTON. Yes, sir; if this is the appropriate time I would like

to make a statement.

STATEMENT OF HON. LAURENCE J. BURTON, A REPRESENTATIVE

IN CONGRESS FROM THE STATE OF UTAH

Mr. BURTON. Mr. Chairman, the Naval Stores Act was passed by

this committee in March of 1923. There is some reference in a communication from the executive department that they think it should

be referred to the Science and Astronautics Committee and I would

resist that attempt because this is the committee of origin and this is

the committee where it should remain, in my judgment.

My bill H.R. 7381 simply repeals the Naval Stores Act approved on

March 31, 1923. The reason for this, Mr. Chairman, is that there is a

technicality in the law that was passed in 1923 that prohibits the purchase of rosins from fossilized fuel and we have fossilized deposits in

the State of Utah which meet, in every respect, the standards established by this committee and by the Department of Defense under

that act.

Again I reassert this is a mere technicality in the law and for the

benefit of the committee I would like to read a letter that the chairman

1
2 REPEAL THE NAVAL STORES ACT

of the full committee, Mr. Cooley, received from the Department of

Agriculture signed by the Secretary. He actually received two letters,

but one is superseded by the other and I shall read the revised letter

of August 4, 1966, and it says:

DEAR MR. CHAIRMAN—

This is addressed to Mr. Cooley—

This is in reply to your request of July 14, 1966, for a report on H.R. 7381, a bill

to repeal the Naval Stores Act of 1923.

Although this Department supports repeal of the Naval Stores Act, we favor

the proposed legislation which the Department recommended to the Congress

on March 17, 1965.

In addition to repealing the Naval Stores Act, that proposal would repeal

several other laws pertaining to specific commodities. Over the years economic

conditions and marketing practices have changed so that the need for these

specific acts is no longer as great as when these laws were enacted. Further, the

Agricultural Marketing Act of 1946 provides authority to permit the continuation of the portion of these activities that need to be continued.

The Naval Stores Act provides standards for naval stores (spirits of turpentine

and rosin) and authorizes the Secretary of Agriculture to modify such standards

and to establish new standards for naval stores; authorizes the Secretary to provide for the analysis, classification, grading, and certification of naval stores upon

request and on a cost recovery basis; and, under criminal penalty, requires the

use of official naval stores standards in selling naval stores in interstate or foreign

commerce, and prohibits false or misleading practices in such commerce in the

sale of naval stores and similar activities.

Under the proposed legislation recommended by the Department, the provisions

for establishment of naval stores standards and for the analysis, inspection,

classification, and grading services on a fee basis for rosin and turpentine would

be continued under the authority of the Agricultural Marketing Act of 1946.

Under the budget for fiscal year 1967 reductions in appropriation were estimated

based on the proposed repeal of these several specific laws. The estimated savings in appropriations attributable to repeal of the Naval Stores Act is $36,000

and about 3 man-years of employment.

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.

Now Mr. Chairman, the bill that the Department recommends

is pending before another committee. It would not only repeal

sections of the Naval Stores Act which apply to turpentines and rosins

but several other commodities. It is my feeling, Mr. Chairman, in

all honesty this is a delaying tactic, this is a process of pushing it to

another committee that will not act this year I am sure, and in Utah

we are capable of producing rosins from fossilized stores as well and

as adequately, sir, as you are from South Carolina from your white

pines.

I would hope that this committee will not relinquish jurisdiction

to another committee. In so doing you are merely putting it off and

stalling it and delaying it and in effect killing it.

At this time, Mr. Chairman, with your permission I would like to

call to the witness chair my constituent, Mr. Irving Bennett, who is

general manager of the Pan American Resin & Chemical Co., and

have him explain to us the position of the fossilized resin industry

which is in Utah.

Mr. MCMILLAN. Mr. Bennett. We will be glad to hear any

statement you care to make.

Mr. TEAGUE. Mr. Chairman, may I ask Mr. Burton a question

first?

Mr. McMILLAN. Yes.
REPEAL THE NAVAL STORES ACT 3

Mr. TEAGUE. Mr. Burton, this is the first I have heard of this

proposal. I have no idea of whether I am for it or against it, so I

have an entirely open mind on the subject. I would like to know,

however, why your purpose could not be accomplished by an amendment to authorize the use of fossilized deposits rather than repealing

the whole Naval Stores Act.

Mr. BURTON. May I say to my friend from California that I cannot

see any objection to an amendment. The way the original bill was

written in 1923 makes it a criminal offense to purchase less than certain standards and so on and so forth. If we can accomplish the

same thing by an amendment, I would have no objection to it.

Mr. TEAGUE. I am not saying now I would favor such an amendment, I am merely trying to get the problem in my mind.

Mr. O'NEAL. Mr. Chairman?

Mr. MCMILLAN. Mr. O'Neal.

Mr. O'NEAL. I was interested in the same thing. My first impression was that you were recommending throwing out the baby with

the bath water. I just wondered why it was necessary in order to

serve your particular purpose, why we had to repeal the entire act.

Mr. BURTON. Let's put the shoe on the other foot. Why not

repeal it? The Department itself, Mr. O'Neal, said the statute is

obsolete; they said it in their report. They said to repeal it and

save $36,000 per year. Why not repeal?

Mr. O'NEAL. Did I understand you a little while ago when you

were making an accusation of delaying tactics that was aimed at the

Department, the Department itself?

Mr. BURTON. Yes, it was aimed at the Department.

Mr. O'NEAL. You are saying in one breath that the Department

wants to repeal it and in the same breath that the Department is

using delaying tactics.

Mr. BURTON. That is right; that is what I said.

I would like to say, Mr. Chairman, to my friends from California

and Georgia, I would be happy to support any amendment they

would care to introduce that would accomplish the purpose of my

act. But it seems to me the simple thing to do is just to repeal it

because in the Department's own report they said, "Under criminal

penalty, it requires the use of official naval stores standards in selling

naval stores in interstate or foreign commerce, prohibit false and

misleading practices in such commerce," and so on.

The way the bill was written in 1923, Mr. O'Neal, it would make it

a criminal offense for the Secretary or anyone involved in the purchase

of rosins to purchase it from fossilized sources. It would make it a

criminal offense. If you care to suggest an amendment that would

accomplish what repeal would do, I would be very happy to withdraw

my bill and support your amendment.

Mr. O'NEAL. Let me say, 1\4r. Burton, my question a moment ago

was completely exploratory. I was not even conscious there was a

Naval Stores Act until Friday morning when I got a call that we were

to meet this morning. I do not know now what is in the Naval

Stores Act. So I am here in the interest of informing myself.

Mr. BURTON. In the interest of informing you, I would like to say

the way the bill is now written, as passed by this committee in March

of 1923, it would make it a criminal offense for the Secretary or anyone

else involved in the Government to purchase rosins that have a
4 REPEAL THE NAVAL STORES ACT

fossilized base. It can only come from pine trees. I do not regard

this as a threat to the economy of the rosin industry in the South; I

merely regard it as an equalization.

Mr. O'NEAL. Was this passed in 1923 as an effort to develop high

standards of grade and so forth?

Mr. BURTON. I think so. I think that is a fair statement.

Mr. O'NEAL. As matters now stand, you have no market anywhere

on this earth for your product?

Mr. BURTON. We have a market for it, but you are shutting out a

great market when you eliminate the entire Defense Department.

I would say this too: that I think it is a fair statement to say that

when this act was passed in 1923, it was an effort to establish high

standards of rosin, and if we cannot meet the same standards in fossilized base rosins, I would say shut us out. But when we can't compete because of a technicality in the law that was passed more than

40 years ago you eliminate this industry from fair competition. I say

this is not fair. I think the committee ought to change it.

My bill 7381 repeals that law. It does not do anything particularly

to change the standards because the Secretary still has the authority

to set certain criteria and standards.

Mr. O'NEAL. Let's see if we can more particularize your interest.

If I understand you, it is getting down to the point now where your

principal interest is enabling the Defense Department to buy this

product you have.

Mr. BURTON. That is correct, yes.

Mr. O'NEAL. And you are permitted to sell it on the world market,

are you?

Mr. BURTON. Right.

Mr. O'NEAL. But your interest in it is in the Defense Department?

Mr.: BURTON. Because the law in 1923 says the Defense Department

is prohibited from considering it.

Mr. O'NEAL. I think I understand it a little better now.

Mr. MCMILLAN. You may proceed Mr. Bennett.

STATEMENT OF IRVING BENNETT, GENERAL MANAGER, PAN

AMERICAN RESIN & CHEMICAL CO., NEWARK, NJ.

Mr. BENNETT. Gentlemen I am the man that sparked this whole

production out of Utah back in 1939 and 1940. While in the University of Utah I saw a little of this particular product that is in this

coal here [indicating] and from that little sample this whole industry

was established. We have a fossilized coal in Utah. The country

as a whole has gotten to know that wherever we sell it. We have

gone along through the years and we float this out with a flotation

method used in the mining industry. We then clean up the solvent

with a process we have to clean out the coal. We have two or

three forms. One goes to the chewing gum industry one goes to the

industrial finishes and another goes to the printing industry.

Through the years I have had a problem getting this thing marketed. We are higher priced than the principal rosins and hydrogenated rosins.

We never heard of the Naval Stores Act until 2 years ago when

somebody said "You cannot use the word `rosin'." I said "We are

not using the word 'rosin,' we are using the words 'fossilized rosin."

This is a new industry. They brought up this act to us.
REPEAL THE NAVAL STORES ACT 5

We have today areas in this country where they are producing

rosins. It is no longer the small producer of rosins. You have

Hercules Powder, Hayden, Newport, and half a dozen giant producers

of rosin. They are no longer producing rosins, they have got a big glut

of this stuff. But they are processing it, liming it, hydrogenating it.

They are chemically treating it all over and are still calling it hydrogenated rosin, limed rosin. When we come out in our industry

and say we have fossilized rosin, they say it is against the Naval

Stores Act.

We go to Europe with it and the tariff people get after us. Thirtysix percent. I say to them this is a new industry in Utah. I bring to

them coal just like this. I went to every country in Europe where we

had 36 percent of our consuls there, with their commercial attaches,

helped me out by getting me to the right parties. We showed them

the product. They finally said "All right, fossilized rosin, 2.8 percent."

We go to all the countries and go into Canada duty free. They

called it synthetic originally but they had no category for it. Nobody

seems to know this new industry in Utah. But we finally convinced

them in every country, even in Italy where they do not want to call it

anything but gums and balsam. So we ship it as gums and balsam.

As long as we can ship our material, if they want to put it in that

category, we do it. But the Naval Stores Act says—and this I only

learned 2 years ago when the Inspector General's Office descended

on us and said "You are now acting contrary to this Naval Stores

Act." I said "What is this all about?"

"You cannot use the word `rosin'."

Gentlemen, after going through the years establishing my tariffs

and everything else and now suddenly to have them say we cannot

use the word "fossilized rosin"—and Mr. Anderson agreed with me,

the Assistant Administrator in Agriculture. I have gone through

that Department and wound up with Mr. Steve Wrather, and I said

"Look, we are in a quandary. What can we call this product?" He

said he would turn to the legal department. And in the meantime

the Inspector General's Office sent a man into our Salt Lake City

office, to our office, and wants to see all of our records from 1940 to

1964, which we refused to do. 1 said I admit the fact we used the

words "fossilized rosin." Let's get this thing out in the open. This

act is antiquated. Let's do something about it.

Gentlemen, we have gone through the years now and have come

up with a case here where if we do not get something done which

prevents people from calllng us criminals, according to that act there,

when we use the word "rosin" in conjunction with the word "fossilized," all of our work has gone for naught.

We have a plant and we are going into another one and if we have

to pay this duty it is going to kill us. That is about it.

Mr. BURTON. Why can you not—and I want to underscore this

point—why can you not use the term?

Mr. BENNETT. Because the Naval Stores Act says that any naming

of any product with the word "rosin" in it is against the law. You

cannot use the word "rosin."

Mr. BURTON. Unless it comes from what?

Mr. BENNETT. Unless it comes from pine stumps or has such and

such a spec on it. They have certain specifications which we agree

with, we know.

69-029-66--2
REPEAL THE NAVAL STORES ACT

Mr. BURTON. Do you get your rosin from a fossilized source?

Mr. BENNETT. From the coal of Utah.

Mr. BURTON. Is that correct?

Mr. BENNETT. That is right.

Mr. BURTON. And you are prohibited by the Naval Stores Act

from calling it "fossilized rosin"? This is because it comes from a

fossilized source rather than the plant source; is that correct?

Mr. BENNETT. Yes; and the ironic thing is we do not call it rosin,

just "fossilized rosin."

Mr. BURTON. My next question is, how does your rosin measure

up in terms of standards and quality as compared to the plant source?

Mr. BENNETT. Let me say this briefly: Our rosin is about 6 or 7

million years old. It has been fossilized. It has gone way above

this rosin you have today here. We go into the same markets as that

rosin, but not as rosin as such, but processed rosin where they change

it chemically but still call it rosin. They call it themselves limed

rosin or hydrogenated rosin.

Mr. BURTON. You are not answering my question directly, and

I do not think this committee is going to repeal the Naval Stores

Act to permit an inferior brand of rosin to be purchased.

Mr. BENNETT. Right. •

Mr. BURTON. This is what I am asking you: Is this inferior in any

respect?

Mr. BENNETT. No. This is the highest grade of rosin that ever

appeared on the market.

Mr. BURTON. Higher than what?

Mr. BENNETT. Than the rosins they have on the market. It is a

product that has been established. We go into areas where they

cannot go in. We go into areas where we help their rosin by a customer combining their cheaper rosins with our better ones. This is

the sum, and substance of the whole deal.

Mr. *TEAGUE. Mr. Bennett, suppose a potential buyer had a use

for a rosin and he was satisfied that he could use either yours or a

rosin coming from pine trees or stumps, being fully satisfied he could

use either source. How would your price compare with the rosin

from other sources?

Mr. BENNETT. Our price is much higher.

Mr. TEAGUE. Much higher?

Mr. BENNETT. That is right, sir. We have a superior product.

We go in and we upgrade some of these resins they call the limed

rosins and hydrogenated rosins. They use the word "rosin" all

over but they are cheaper than ours, but they cannot work in certain

areas where we go in with ours, and they combine them and make a

better product out of them.

Mr. TEAGUE. So your contention is that you have a high quality

product and under present law you are forbidden from selling it to

the Defense Department?

Mr. BENNETT. We are forbidden from going out and declaring it

for tariff purposes. We go into Europe, we go into Canada and we

get into New Zealand and Australia. They ask us what this product

is and we send them a piece of coal and say this is a fossilized rosin.

Millions of years ago there were these conifers and the ancestral pines,

and the metamorphosis of coal taking place and you have a fossilized

rosin remaining. So we go into Canada duty free and we go into
REPEAL THE NAVAL STORES ACT 7

Europe. Instead of the 36 percent where we never could get into

the market, we come in with 2.8 percent. if this law stays, we have

to give up all of that foreign business because we would have to no

longer say it is fossilized rosin, which it is. It is like calling myself

my own name. I cannot use it because the law is against that.

This is the oldest rosin in the world, fossilized rosin. It is a new

industry. It is much more expensive than these rosins that are

found in the South.

Mr. O'NEAL. Who has ruled you cannot use the word "rosin"?

Is it some Federal court? Is it the Department of Agriculture?

Mr. BENNETT. The Department of Agriculture, sir. I have a

letter from a Mr. Morse 2 years ago where he first called my attention

that we were acting contrary to the law of 1923, the Naval Stores

Act; it is a criminal offense, et cetera.

I came in to see him and brought him the coal. He agreed with

me and says, you are right but with the Naval Stores Act we cannot

do a thing for you.

Mr. O'NEAL. Do you have the sentence or paragraph in the Naval

Stores Act?

Mr. MCMILLAN. Here is a copy of the act.

Mr. BURTON. Mr. Chairman, while he is reading that, I would like

to read into the record a portion of the letter from the Department of

Agriculture, signed by Secretary Freeman, addressed to the Speaker

under date of March 17, 1965. It pertains to several subjects which

I will not belabor the committee with. These subjects are the Standard Container Act of 1916 and 1928, the Tobacco Plant and Seed

Exportation Act of 1940, the Wool Standards Act in 1928, but the

thing we are interested in is the paragraph pertaining to the Naval

Stores Act of 1923.

Mr. Chairman, I would ask your permission to be able to read that

paragraph.

Mr. MCMILLA N. All right.

Mr. BURTON. The paragraph reads as follows:

Naval Stores Act of 1923 provides for establishment of standards for naval

stores (spirits of turpentine and rosin); authorizes the Secretary to provide a

grading and certification service on request and on a cost recovery basis; requires

the use of the official naval stores standards in selling naval stores in commerce;"

To digress a moment, this is what the gentleman from Georgia is

concerned about in his colloquy with Mr. Bennett—

and prohibits false or misleading practices in sale of naval stores in commerce.

When enacted, the law was needed to provide a basis for attaining uniformity in

these products and in marketing practices related thereto. Since that time

significant changes have occurred in the handling and marketing of naval stores.

Further, the Agricultural Marketing Act of 1946 provides authority for the establishment of standards and for inspection and grading on a fee basis. It also prohibits fraudulent actions related to inspection such as false labeling of products

as being officially graded or inspected. Therefore, the retention of the Naval

Stores Act is no longer necessary.

Mr. Chairman, attached to that letter is a series of recommendations from the Secretary of Agriculture pertaining to five laws that

have been enacted by Congress that he recommends should be repealed. Without going through the whole list, I would only refer to

section 2 of this recommended bill which says: "Be it enacted that the

Acts of Congress listed below are hereby repealed" and then section 2
8 REPEAL THE NAVAL STORES ACT

reads: "The Naval Stores Act approved March 3, 1923, 42 Stat. 1435

(7 U.S.C. 91-99)."

I will submit that letter for the record.

Mr. MCMILLAN. Without objection, it will be inserted in the record

at this point.

(The letter follows:)

Hon. JOHN W. MCCORMACK,

Speaker of the House of Representatives,

Washington, D.C.

DEPARTMENT OF AGRICULTURE,

Washington, D.C., March 17, 1965.

DEAR MR. PRESIDENT: There is enclosed a proposed bill to repeal the Standard

Container Acts of 1916 and 1928, Tobacco Plant and Seed Exportation Act of

1940, Naval Stores Act of 1923, and Wool Standards Act of 1928.

Over the years, economic conditions and marketing practices have changed so

that the need for these Acts is no longer as great as when the legislation was

passed. Therefore, to promote greater efficiency and economy in Government,

in accordance with the President's request, we are recommending the repeal of

these Acts. The portion of these activities that needs to be continued will be

performed under the Agricultural Marketing Act of 1946. Savings in appropriations realized by repeal of these Acts, involving limited or special interests, would

be available for use in areas of more vital public importance.

The following paragraphs set forth in more detail the reasons for the Department's proposal:

Standard Container Acts of 1916 and 1928 prescribe standard sizes and capacities for certain types of baskets and hampers used in shipping fresh fruits and

vegetables. When these laws were enacted, baskets and hampers were used for

a large part of the fresh fruits and vegetables shipped in containers and standardization of the volume capacity was needed to prevent deception. Since that time,

there have been many changes in shipping containers for fresh produce. Crates,

lugs, boxes, and bags not in existence at that time have been developed and are

now most commonly used. Also, the construction material has changed significantly with fiber board, paper, and film now being commonly used. These

containers are not standardized by Federal law as to capacity or shape. Most

fresh fruits and vegetables are today sold by weight or count rather than by volume

measure so that deception due to slight variations in container volume is no longer

an important marketing factor. Less than 10 percent of the fresh fruits and

vegetables are now marketed in the regulated types of baskets and hampers.

These Acts, therefore, have been of decreasing importance in recent years and

the Department does not believe that there is sufficient justification for continuing

the program.

Tobacco Plant and Seed Exportation Act of 1940 was intended to protect American

tobacco growers by restricting the exportation of tolpacco seed and plants to

experimental purposes only, with a written permit granted by the Secretary of

Agriculture. Since 1940, tobacco production outside of the United States has

expanded considerably and research in tobacco seed breeding and production is

now well established in most of the tobacco 'Producing countries of the world.

As other countries have succeeded in producing flue-cured tobacco (the type that

the Act was primarily intended to protect), the need for restricting American

exports has practically ceased to exist. This Act, therefore, is of very limited

usefulness and the cost of administering it is no longer justified.

Naval Stores Act of 1928 provides for establishment of standards for naval

stores (spirits of turpentine and rosin); authorizes the Secretary to provide a

grading and certification service on request and on a cost recovery basis; requires

the use of the official naval stores standards in selling naval stores in commerce;

and prohibits false or misleading practices in sale of naval stores in commerce.

When enacted, the law was needed to provide a basis for attaining uniformity in

these products and in marketing practices related thereto. Since that time significant changes have occurred in the handling and marketing of naval stores.

Further, the Agricultural Marketing Act of 1946 provides authority for the

establishment of standards and for inspection and grading on a fee basis. It also

prohibits fraudulent actions related to inspection such as false labeling of products

as being officially graded or inspected. Therefore, the retention of the Naval

Stores Act is no longer necessary.

Wool Standards Act of 1928 provides for the development of standards for

wool grades, and for educational and demonstrational programs on wool standards.
REPEAL THE NAVAL STORES ACT 9

The authority contained in this Act is also contained in the Agricultural Marketing

Act of 1946. Currently, there are no active Federal grading programs for wool

and wool products. Adequate grade standards are available for trade operations

and a de-emphasis of this work is planned for the future. The necessary periodic

review and maintenance of the standards can be performed adequately under the

Agricultural Marketing Act of 1946. The repeal of the Wool Standards Act will

reduce the number of laws administered by the Department without restricting

the Department's authority to establish and maintain wool standards.

The combined result of repeal of the five Acts would be an annual reduction of

$113,000 in Federal expenditures and related employment, and a similar reduction

in direct appropriations from the general fund of the Treasury.

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.

ABILL To repeal certain acts relating to containers for fruits and vegetables, exportation of tobacco plants and seed, naval stores and wool, and for other purposes

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

America in Congress assembled, That the Acts of Congress listed below are hereby

repealed:

(a) The Act of August 31, 1916, entitled "An Act to fix standards for Climax

baskets for grapes and other fruits and vegetables, and to fix standards for baskets

and other containers for small fruits, berries, and vegetables, and for other purposes," 39 Stat. 673, as amended (15 U.S.C. 251-256) ;

(b) The Act of May 21, 1928, entitled "An Act to fix standards for hampers,

round stave baskets, and splint baskets for fruits and vegetables, and for other

purposes," 45 Stat. 685, as amended (15 U.S.C. 257-257i) ;

(c) The Act of June 5, 1940, entitled "An Act to prohibit the exportation of

tobacco seed and plants, except for experimental purposes," 54 Stat. 231 (7 U.S.C.

516-517) ;

(d) The Naval Stores Act approved March 3, 1923, 42 Stat. 1435 (7 U.S.C.

91-99) ;

(e) The Act of May 17, 1928, entitled "An Act To authorize the appropriation

for use by the Secretary of Agriculture of certain funds for wool standards, and

for other purposes," 45 Stat. 593 (7 U.S.C. 415b-415d).

SEC. 2. This Act shall become effective on 

Mr. MCMILLAN. Continue, Mr. Bennett.

Mr. BENNETT. Gentlemen, we never realized anything about this

Naval Stores Act until 2 years ago as it affected the use of the word

"rosin." They then sent the Inspector General to my office out at

Salt Lake City a-id San Francisco, and I called the Department of

Agriculture, and they said, "We will put a stop to it. It is making a

Federal case out of it."

It is not right because we are legitimate people, an old mining company in Utah. We are associated with them. This Naval Stores

Act, as I say, was written in 1923. It had to protect a lot of small

growers and pullers of stumps down there. But the picture has

changed radically since those days. We have gone into the story

thoroughly and, as I said before, there is Hercules Powder and Hayden

Newport and four or five others of our competitors who have combined all of these different operations and are giants compared to us.

We have a few million pounds of our products. We do not even go into

their fields except in two or three where they cannot match our quality.

Mr. O'NEAL. Does Hercules get their product out of the dead

stump?

Mr. BENNETT. That is right.

Mr. O'NEAL. Are they permitted the use of the word "rosin"?

Mr. BENNETT. That is right. All this is, it is a resinous material

and they call it rosin.
10 REPEAL THE NAVAL STORES ACT

Mr. O'NEAL. And they are permitted to do so?

Mr. BENNETT. That is right.

Mr. O'NEAL. Have you had any litigation in court about this use

of the word "rosin"?

Mr. BENNETT. Outside of the Inspector General's Office being in

our office, we have had none.

Mr. O'NEAL. You have just been confronted with a letter or a

ruling from the Inspector General of the Department of Agriculture,

but you have had no litigation?

Mr. BENNETT. NO litigation up to now; no, sir.

Mr. O'NEAL. You are merely concered with the label you put on

your product?

Mr. BENNETT. We call it Parcoresin. We do not call it rosin but

declare it as Utah fossilized rosin and this they object to.

Mr. O'NEAL. I understand, but you are permitted to sell it, and

you have a high-quality product, but your only concern here today

with this whole question turns on the label that you are permitted to

put on your product?

Mr. BENNETT. Not the label, sir, the declaration for tariff purposes.

We do not use the word in the label, we call it Parcoresin.

Mr. O'NEAL. You are denied the use of the word "rosin"?

Mr. BENNETT. That is right.

Mr. O'NEAL. But you believe a rose by any other name smells as

sweet?

Mr. BENNETT. Let me say these are two different animals.

Mr. O'NEAL. And you believe a rose is a rose is a rose, is it not?

Mr. BENNETT. That is for sure.

Mr. O'NEAL. And a rosin is a rosin is a rosin?

Mr. BENNETT. If you look in the dictionary under "rosin" it refers

you to. "resin," and if you look under "resin" it says, "See rosin."

They play around with the word "rosin." There is no such thing as

rosin. It has always been a resinous material found in the tree

stumps and coming out of the trees in the form of sap. There has

never been—it goes back millions of years, in Biblical times they had

rosin and they took it upon themselves to say you cannot use the

word "rosin." This is the thing that stumped us for tariff purposes

because we have got to use the words "fossilized rosin."

Mr. O'NEAL. If I read correctly here in the Naval Stores Act in

the section on definitions, you have a definition of naval stores and

have a definition of spirits and turpentine, gum spirits of turpentine,

wood turpentine, all of these things. Down in paragraph (g) you

have, "rosin includes gum rosin and wood rosin."

Mr. BENNETT. Right.

Mr. O'NEAL. And somebody has ruled that does not include your

product; is that correct?

Mr. BENNETT. No; but I say we are in violation of this act. This

is what they tell us.

Mr. BURTON. That is what he is saying, Bennett's rosin is fossilized.

Mr. BENNETT. Ours is coal rosin.

Mr. O'NEAL. What is the difference between gum rosin and wood

rosin?

Mr. BENNETT. Gum rosin is an excretion from the trees coming out

the side where they tap the trees.

Mr. O'NEAL. It does not say "tree" and it does not say "wood"

and that makes a distinction between this and wood rosin?
REPEAL THE NAVAL STORES ACT 11

Mr. BENNETT. Anybody in the chemical industry can tell you that

rosin taken out of the stumps is different than the gum. Today they

have tall oil rosin. The techniques that have taken place in the last

few years have made the Naval Stores Act so antiquated it is hard to

put in words. There has been more done with rosin than you can

ever think about. They are doing it every day, making worse competition for us, but we manage to take it. We are higher priced than

they are, but we have a better product.

Mr. BURTON. Mr. Chairman?

Mr. McMILLAN. Mr. Burton.

Mr. BURTON. Mr. Bennett, do you have any idea what the national

production of these rosin products is in pounds or gallons?

Mr. BENNETT. Ours?

Mr. BURTON. I mean the national production.

Mr. BENNETT. It runs into millions and millions of pounds. We

do not have it complete here. I know it runs into millions and millions

of pounds. In fact they have got so much they do not know what to

do with it at the present time. They use tall oil now in the production

of rosin.

Mr. BURTON. What was your production last year?

Mr. BENNETT. About 6 or 7 million pounds.

Mr. BURTON. Would you care to venture a calculated guess as to

what the national production was last year?

Mr. BENNETT. Of the rosins?

Mr. BURTON. Yes.

Mr. BENNETT. I would say it might be 150 billion pounds. I do

not know, it is large. There was an article on it.

Mr. BURTON. You said 150 billion pounds. Do you mean 150,000

tons?

Mr. BENNETT. 150,000 tons. Hundreds of thousands of tons.

I do not have the figure because we never got independent in the

product, sir.

Mr. BURTON. Are you going to close down any industries in the

South with your fossilized rosin competition?

Mr. BENNETT. Not at all. We helped them out, as a matter of

fact, because we go in there and upgrade the rosin it produces so it

can be used in certain areas.

Mr. BURTON. Are the industries in the South opposed to you

coming into participation under the Naval Stores Act?

Mr. BENNETT. N obody is opposing me on anything. Somebody

lodged a complaint against us using the words "fossilized rosin."

Mr. BURTON. Has the southern pine rosin industry opposed you on

this act? Have they opposed this bill?

Mr. BENNETT. Not that I know of.

Mr. BURTON. Your competition is not going to be such that, in

your judgment, it will hurt anybody that is manufacturing gum rosin

or stump rosin today?

Mr. BENNETT. It cannot hurt anybody. As I say, we have got

people like Hercules and Hayden Newport and others who can take

care of themselves. I say nobody protects us. We go out and

battle the market. I say we do not hurt them at all.

Mr. BURTON. Why do you say your rosin is superior to the gum

rosin and stump rosins produced in the South?

Mr. BENNETT. Because over a period of millions of years this rosin

has been changed, it has fossilized. The meeting point has been im-
12 REPEAL THE NAVAL STORES ACT

proved and all of the other products have been improved. In fact,

we have certain charts that run similar in curvature to the others,

but we have a superior product. It has parts in there that are not

even known. We do not know too much about the product after all

this time. That is why it has a high iodine number and does not

oxidize and our product never oxidizes highly; the others do.

Mr. O'NEAL. Did I understand you blended yours into the others?

Mr. BENNETT. That is right. It can be used with every known resin

of like solvency. That is what makes it so good. For tariff purposes

we have to be able to say fossilized rosin, which is the proper classification. There is no other classification. You can see that by the

coal up there. That is part of this whole raw material. It is something new. There are not many people around outside of the immediate industry that know about it.

Mr. BURTON. Are there any other fossilized rosin producers you

know of?

Mr. BENNETT. No. They tried, but they have to get rid of the

coal which is the big problem out there. This is why we are the only

ones so far.

We started this industry in 1944 when our first carload moved out,

and we were going along and nobody bothered us until 2 years ago,

to repeat myself, and this is why we come here. And we agree here

that the act is antiquated. It was needed years ago when there was

much fraud in the offering of rosin. I worked with the Standard

Chemical Co. years ago and they used to use rosin and there were

always arguments on the quality of it and the Department comes

along and sets standards. That is fine, but when they put that little

part in there and said you cannot use the word "rosin' when it is not

this rosin of this spec, and then along we come with a new industry and

they say "We will take criminal proceedings if you use that word 'rosin'

with 'fossilized'." That is not right.

Mr. BURTON. Mr. Chairman, we use criminal penilties if they used

the word "rosin."

I mentioned earlier in my testimony that the Department favors

another bill pending before another committee. In essence the other

bill tends to correct the situation applying to four or five other industries or minerals or whatever you want to call them. But this committee passed the Naval Stores Act.

Let's not wait for the Science and Astronautics Committee. They

are not as diligent as the House Committee on Agriculture as far as I

am concerned. This will merely delay it in my judgment. There

will be no action this year.

I would urge this committee to consider H.R. 7381 and act on something that is within our penumbra of jurisdiction.

Mr. TEAGUE. What is the word?

Mr. BURTON. Penumbra, scope, horizon or shadow. Do it now and

not merely delay and wait for some inactive committee to act.

Mr. MCMILLAN. Are there further questions?

Mr. O'NEAL. Mr. Bennett, have you argued with the Department

that, while your product did not come from a tree recently, it originlly

did come from a tree?

Mr. BENNETT. We explained the whole picture. They have it.

Mr. O'NEAL. But they were adamant.
REPEAL THE NAVAL STORES ACT 13

Mr. BENNETT. That is right. They said this is an act of Congress

and our hands are tied. We cannot do a thing about it.

As I say, that act is antiquated, with the scientific departments

of Hercules and the others who can police their own products better

than anybody can ever dream of.

Mr. O'NEAL. You could prove in a court that it did come from a

tree, could you not?

Mr. BENNETT. There it is right there and the metamorphosis of coal

takes place over millions of years—the conifers, the pine trees, the old

ancestral pines down there, and everything turns to coal except the

rosin in the tree.

Mr. O'NEAL. I say you could prove that in court, could you not?

Mr. BENNETT. Sure.

Mr. BURTON. Will the gentleman yield?

Mr. O'NEAL. Yes.

Mr. BURTON. Why would you want to put this company to the

expense it would cost in litigation to reinterpret an act passed by

this committee of Congress? He spent I am sure several thousand

dollars coming back here to talk to me on at least three occasions.

I know what it costs to fly from Washington to Salt Lake City.

He spent $300 to get back here to us this morning. Why subject

him to legal fees and all of this business about trying to win a court

case, because if he won a court case they would appeal and reappeal

it. I think we should correct our own mistakes.

I am sure my friend from Georgia is not trying to subject him to

that. Let's not go that round. That is not fair.

Mr. MCMILLAN. The committee can decide that question in executive session.

Are there any further questions?

Have you completed your statement?

Mr. BENNETT. I tell you gentlemen we have had no brief with

the Naval Stores Act. We never bothered them and they never

bothered us. We could go along if it was not for the fact our tariffs

would be upset.

One of your consul boys in Germany told me we were doing a

job over there like thousands of others to bring back good dollars

into this country. I said as long as we have good tariff protection3.8, 3.2, and 2.5 percent. This after I spent much time and money

bringing over coal to them and arguing with the Tariff Department.

It was different language but I managed to get by. We finally did

it—fossilized rosin, and the Naval Stores Act says you are a criminal

if you use that word "rosin" in there. I think that act is antiquated.

We came along long after this industry was established, in 1949.

So I say to you we are hurting nobody, that the Naval Stores Act

would not do anybody any good today because of the controls that

Hercules and Hayden Newport and others have over their rosin, and

the buyers of that have their own scientific departments, and nobody

buys quality rosin that is not rosin, I know. So this was written to

protect them at one time but they do not need protection. All it is

doing now is hurting us as far as our tariff setup is broad. That is it,

gentlemen.

Mr. MCMILLAN. Thank you, Mr. Bennett.

Is Mr. Grange here.
14 REPEAL THE NAVAL STORES ACT

STATEMENT OF GEORGE R. GRANGE, DEPUTY ADMINISTRATOR,

MARKETING SERVICES, CONSUMER AND MARKETING SERVICE,

U.S. DEPARTMENT OF AGRICULTURE, ACCOMPANIED BY S. E.

WRATHER, DIRECTOR, TOBACCO DIVISION, AND RONALD

CIPALLA, OFFICE OF GENERAL COUNSEL

Mr. GRANGE. I have with me Mr. Wrather and Mr. Cipalla, whom

I would like to have join me, with your permission.

Mr. BURTON. Could you have the witnesses identify themselves?

Are they with the Department of Agriculture?

Mr. McMILIAN. They are with the Department of Agriculture.

Mr. Grange, will you identify yourself?

Mr. GRANGE. Yes, I shall.

Mr. Chairman, we appreciate this opportunity to appear on this

bill. My name is George R. Grange. I am Deputy Administrator

for Marketing Services of the Consumer and Marketing Service. On

my right is Mr. S. E. Wrather, Director of the Tobacco Division of

our agency, which is the Division assigned the responsibility for the

administration of the Naval Stores Act. And on my left is Ronald

Cipalla

'

Office of General Counsel of the Department of Agriculture.

With your permission, sir, I would like to make some remarks

concerning the Department's proposal connected with the repeal of

the Naval Stores Act, and then if there are questions I would like to

have these two gentlemen help me if it is necessary in responding to

your questions.

I do not have a prepared statement, Mr. Chairman. Let me just

briefly try to give you the reasons for the Department's recommended

repeal for the Naval Stores Act. Then I would like to make a few

remark* concerning the subject which you have been discussing earlier

concerning the particular case that is now brought to your attention.

Mr..McMILLAN. Proceed as you like. We will be glad to hear

any statement you may care to make.

Mr. GRANGE. Thank you, sir.

The Department recommended the repeal of the Naval Stores Act

without any regard or without knowledge of the particular case you

have been discussing here earlier. I would like to make that clear

so yeti understand there was no connection between the two, because

the Department's recommendations for repeal of the Naval Stores

Act, the Standard Containers Act, the Wool Standards Act, and the

Tobacco Plant and Seed Export Act was made first 3 or 4 years ago

ith the objective of clearing the books and clearing the Department's

activities of some marketing laws which in our judgment had outlived

their usefulness. And because of changes that had taken place in the

30, 40, and 50 years that had transpired since these various laws have

been enacted, they were no longer needed today. Although the

amount of money being spent in administering these laws is not great,

a total of $113,000 this year, it was still our judgment in the interest

of both economy as well as making an effective contribution to the

marketing system that these laws should be repealed rather than

continued in effect.

It is for this reason, Mr. Burton, in the response from the Secretary

dated August 4 that we again reiterated our recommendation that

all five of these laws be repealed rather than just repealing the Naval

Stores Act itself.
REPEAL THE NAVAL STORES ACT 15

Also, as the Secretary's report stated, we do favor repeal of the

Naval Stores Act. We were not saying it has to be a package proposition but we certainly want to reiterate our original recommendation and the recommendation which we would continue to put before

the committee.

Mr. BURTON. May I just interrupt you to say that I would certainly support the Department on all of the recommendations that

were contained in your March 17 letter, one paragraph of which I

read into the record.

You pointed out that by repealing the Standard Containers Act,

the Tobacco Plant and Seed Exportation Act, the Naval Stores Act,

the Wool Standards Act, that you save $113,000, and I do not think

really any member of this committee would be opposed to that. The

only thing is that we do not have jurisdiction over all of those. There

is not any question but that we have jurisdiction over the Naval

Stores Act, and by Secretary Freeman's account $36,000 of the

$113,000 that would be saved by repeal of these others would be saved

by repeal of the Naval Stores Act.

While we cannot today or tomorrow or the next day act on all of

these others, this committee, Mr. Chairman, does have jurisdiction

over the Naval Stores Act.

I was not being critical of the Department in saying that—well,

I guess I was. In response to the question from the gentleman from

Georgia, I did say I think the Department's approach to this matter

in recommending against my bill and saying that you are for another

bill pending before another committee, I think you are delaying the

question. We can act on this one.

I recommend that you come out and support this bill and let's get

that one out of the way and then we will go to work on some of the

others, but we cannot act on all five of them at once.

Mr. MCMILLAN. We will take that question up in executive session

and let's hear what Mr. Grange has to say on this subject.

Mr. GRANGE. Thank you.

I do not think there is a misunderstanding between what I am saying

and what you are saying, Mr. Burton, except with this regard—and

I will not belabor this point, Mr. Chairman, I know you want to move

along.

The Department did support your bill H.R. 7381. We went on

to say that we also preferred action on the original recommendation

which would cover the other four acts too. We did not object to

the bill.

Specifically, with reference to the Naval Stores Act which is the

matter before the committee at this moment, the Naval Stores Act

contains three primary provisions. I would just like to cover these

briefly.

This goes to the merit of the act itself, now, without regard to the

particular case that you were discussing earlier.

One of the provisions is that it provides for standards for naval

stores which includes spirits of turpentine and rosin and authorizes

the Secretary of Agriculture to modify such standards and to establish new standards for naval stores. This is one provision—the establishment of standards.

I would like to come back to that in a moment after I outline the

other two.
16 REPEAL THE NAVAL STORES ACT

Secondly, it authorizes the Secretary of Agriculture to provide for

the analysis, classification, grading, and certification of naval stores

upon request and upon a cost recovery basis. So the second one is

the inspection of naval stores.

The third one is, under criminal penalty, it requires the use of the

official standards in interstate or foreign commerce and prohibits false

or misleading practice in such commerce in the sale of naval stores.

Now this special legislation in our regard is no longer needed because

the Department under the Agricultural Marketing Act of 1946 has

the authority to establish standards for all agricultural commodities,

including naval stores, and to provide inspection and grading services

for such commodities on a voluntary basis with fee to be charged to

recover the cost of providing the inspection.

In addition to this, the Agricultural Marketing Act of 1946, as it

was later amended I believe by the 83d Congress, provides that there

shall not be any false or fraudulent use made of any grade standards,,

that no one may falsely claim that a product has been inspected and

certified officially when in fact it has not been, and other safeguards

intended to protect the integrity of the standards and the official

inspection and grading service.

We provide voluntary inspection on about 75 percent of the rosin

and about 35 percent of the turpentine currently. The remainder of

the rosin and turpentine is not federally inspected and is not grade

labeled. Therefore, the mandatory use of the Federal standards for

these products is relatively meaningless because we do not know if

use is made of the standards on the uninspected portion of these

products. It would appear, therefore, that repeal of the act should

have no effect on the production and marketing of turpentine and

rosin and should not impair the grade standards and inspection services which are available.

Now:with regard to rosin, the official grade standard for rosin

consists simply of 13 different grades which show different colors of

the rosins and the grades are contained in a little box like this with 13

separate color standards ranging from very light to very dark. They

are visual aids and the rosin can be prepared and matched between

the two nearest ones to see which one it meets and which one it would

fail to meet.

These are the official standards for rosin. There are 80-some-odd

sets of these grades out for use within the industry. They may have

official certification performed by one of our licensed inspectors or

the company may do it on their own. This is a very common

technique.

Just to show there would be no change if we did it under the Agricultural Marketing Act of 1946, here are the official color standards

for honey under the Agricultural Marketing Act of 1946. It happens

that a number of the rosin colors are practically identical with some of

these honey color standards that go from light amber to water white,

white, and so on. It takes two of these boxes to cover the total

number of color standards on honey.

Just a couple other illustrations on our visual aids. I did not

bring this because of southeastern interests in this question but these

are the pimientos 

MT. MCMILLAN. What?

Mr. GRANGE. Pimientos.
REPEAL THE NAVAL STORES ACT 17

Nr. MCMILLAN. Pimento?

Mr. GRANGE. Yes. You take your pick as to the pronunciation.

This is published in the Federal Register as the official USDA color

orange and orange yellow to distinguish between the grades of

pimientos.

This is another one of our lima beans where we use a color paddle

and put the lima beans on the paddles to get the different color

graduations. So far as the standards, there could be no question that

these could be promulgated under the Agricultural Marketing Act of

1946 the same as they are now, could be revised if necessary, and

inspection and grading could be provided. There would be protection

against any false claims of official inspection and grading.

The difference would be two, I believe. First there would be no

requirement that the official grades be used in trading. This is

optional, but at present we are only inspecting 75 percent of the rosin

and 35 percent of the turpentine. The other difference would be that

there would be no restriction as to the use of word "rosin" versus the

word "resin" insofar as agricultural legislation is concerned. Any

limitation on the use of these terms would in all probability have to

go to the Federal Trade Act regarding the use of fraudulent, misleading, or deceptive terms for any product for sale in interstate commerce.

As to the case involving Mr. Bennett, I would like to say only this,

that the question of whether this is a violation of the Naval Stores

Act has been referred to the Department of Justice, as we are required to do when we have evidence that there is a violation of a

criminal statute. I am not acquainted with its current status so

far as the Department of Justice is concerned. The act as it is now

written says that rosin has to be made from either wood turpentine

or gum turpentine. Gum turpentine comes from a living tree by

definition, and wood turpentine comes from wood by definition in

the act.

Mr. O'NEAL. This is the distinction that would be involved in

the Parco Resin Co.? They get it from a dead stone, they cook the

stone. What would it be called?

Mr. GRANGE. it could be called rosin with some descriptive term

that would describe the processing performed on the rosin. The act

specifically provides that qualifying terms may be used in addition

to wood rosin and gum rosin.

Mr. O'NEAL. The word "prehistoric" perhaps?

Mr. GRANGE. No. This would get you in a different question.

First rosin has to come from a living tree or from a stump, let us say.

Then you can use an additional qualifying term if you have started

with rosin in the first place as defined in the act.

We are under some handicap in talking about the information we

have concerning the similarities and dissimilarities between this

fossilized product and regular rosin because it is a case that is out of

our hands so far as the Department of Agriculture is concerned, and

under our usual restrictions we are expected not to discuss the merits

or demerits or evidence or issues while it is in this status.

Mr. O'NEAL. Are you saying it is a question for the Department

of Justice rather than the Department of Agriculture?

Mr. GRANGE. The case has been referred to the Department of

Justice.

Mr. O'NEAL. How long ago?
18 REPEAL THE NAVAL STORES ACT

Mr. GRANGE. In the early part of the year, February perhaps.

Mr. O'NEAL. Have they come out with a ruling?

Mr. GRANGE. No. It is still under consideration in the Department.

Mr. BURTON. The law as presently written specifies that rosin must

come from a gum source or a tree stump source and when it comes to a

fossilized source that is out of your jurisdiction?

Mr. GRANGE. That is our interpretation, yes.

That completes my statement, Mr. Chairman. I will be glad to

respond to any further questions.

Mr. O'NEAL. I have a few questions.

As I understand you, and also from the letter from Mr. Freeman

dated August 4, what you are suggesting is a repeal of the Naval

Stores Act so that you might rely on the Agricultural Marketing Act

of 1946?

Mr. GRANGE. Yes, sir.

Mr. O'NEAL. Would that help Mr. Bennett in his problem? If you

were under the Agricultural Marketing Ac L it could not be argued that

his product is an agricultural product so this would not be helping him

at all, would it?

Mr. GRANGE. It would help him so far as the Department of Agriculture is concerned because we then would have no law that defined what was rosin.

Mr. O'NEAL. In other words, you could make your own ground

rules?

Mr. GRANGE. The ground rules then, I believe, would depend on

what the interpretation might be under the Federal Trade Act which,

as you know, does contain a general prohibition against describing any

article for sale in false or misleading terms. Whether this could be

construed to be false or misleading, I would have no idea.

Mr. O'NEAL. But you would have far greater—I would not say

power, but you would have far greater flexibility following your

suggestion?

Mr. GRANGE. Yes. To show you the flexibility, if the Naval Stores

Act were repealed and if we then promulgated the standards under the

Agricultural Marketing Act of 1946, as we would have to in order to

give them official status, we could, if we wished, define the product to

include the fossilized product along with the natural product.

Mr. O'NEAL. But you would not have to come back to Congress if

you made a change and that is why you like it better?

Mr. GRANGE. We would have that flexibility and could do it under

the language we have under the Agricultural Marketing Act of 1946.

Mr. MCMILLAN. As I understand your statement, the Department

of Agriculture would desire to have this entire package repealed but

they would not object to this bill of Mr. Burton's being enacted, which

would take care of only part of the problem, is that right?

Mr. GRANGE. Yes, Mr. Chairman, we support Mr. Burton's bill.

In addition, if we had our preference, of course, we think we can make

an equally good and strong case for the repeal of the other acts.

Mr. MCMILLAN. Do either of the other gentlemen desire to make a

statement?

Mr. WRATHER. NO.

Mr. CIPALLA. No.

Mr. MCMILLAN. Mr. Burton?

Mr. BURTON. NO.
REPEAL THE NAVAL STORES ACT 19

Mr. MCMILLAN. That is all. Thank you.

Mr. GRANGE. Thank you, Mr. Chairman.

Mr. O'NEAL. Mr. Chairman, I would like the privilege of introducing Mr. Smith.

Mr. MCMILLAN. Come to the table, Mr. Smith.

Mr. O'NEAL. I would like to say by way of introduction that I

just met Mr. Smith this morning myself. I did not know him prior

to today and did not know anything about his problem prior to today.

Mr. Smith is not one of my constituents but he lives just outside my

congressional district and for that reason I would like to present him

to the committee. He is an attorney for the American Turpentine

Farmers Association. We have been dealing here with naval stores

and if I might be permitted one brief moment of facetiousness, he

graduated from the Naval Academy at Annapolis. He also had a

complete legal education at the University of Maryland in Baltimore

and has been practicing law in Georgia since 1935 and has been an

attorney for the American Turpentine Farmers Association, which is a

cooperative, since its organization and its general counsel since 1937.

Mr. MCMILLAN. Mr. Smith we will be delighted to hear what you

have to say on this subject.

STATEMENT OF J. LUNDIE SMITH, REPRESENTING THE AMERICAN

TURPENTINE FARMERS ASSOCIATION

Mr. SMITH. Thank you.

I would like to say before I identify more particularly the people I

represent in the hearing of Mr. Bennett and to Mr. Burton that it

is no part of the purpose of this cooperative to create a closed shop.

We are not here asking this committee not to repeal this act in order

to freeze the present types and kinds of rosin.

The Naval Stores Act itself contains two relevant provisions. One

of them is that rosin includes gum rosin and wood rosin. The act

does not say that it is restricted to those two products.

Mr. Burton may feel that I am indulging in semantics. I would

like to illustrate I am not. There is a further provision of the act

that says: "The Secretary of Agriculture is authorized to establish

and promulgate standards for naval stores for which no standards

are herein provided."

This act was passed in 1923. I believe that I am correct in saying

that at that time there was no such product as tall oil rosin. Tall oil

rosin is a byproduct in the manufacture of paper from pine wood.

There is no mention at all of tall oil rosin.

Mr. O'NEAL. Would you spell that?

Mr. SMITH. Tall oil, t-a-1-1. It might be more properly pronounced tall oil, I suppose.

There is no mention of tall oil or tall oil rosin in the Naval Stores

Act and I just read to the committee a provision authorizing the

Secretary to establish and promulgate standards for new types of

rosin. The Secretary has already demonstrated that he is aware of

that power in permitting tall oil rosin to be sold in commerce and

labeled rosin. So there is nothing rigid about these classifications

and standards to the extent of admitting new products such as Mr.

Bennett's product.
20 REPEAL THE NAVAL STORES ACT

And I say, without any opportunity of consulting my clients beforehand, that there would be no objection to either amending the Naval

Stores Act if the Department of Justice persists in its indolence, nor

would there be objection if the Secretary of Agriculture promulgated

standards for fossilized rosin and included it in the Naval Stores Act.

So there is no competitive motive on our part to restrict Mr. Bennett.

I think the Department is wrong in its decision, first for the reason

Mr. O'Neal pointed out, that this coal was primarily wood; and second,

because of the provision in here enabling the Secretary to promulgate

new standards.

Mr. BURTON. Mr. Smith, you referred to the indolence of the

Justice Department. Do you not think they are so much involved in

civil rights and civil riots that it may be years before a decision is

reached by them in this matter?

Mr. SMITH. If I understood the witness correctly, they have had

it 5 years already. I think sometimes the dilatory tactics of lawyers

are pretty well advertised, but I think 5 years is a little bit long.

The people I here attempt to represent are the American Turpentine

Farmers Association

'

which is a cooperative marketing association

with some 4,000 to 4,500 members over the Southeast from South

Carolina to Louisiana. My clients are people engaged in the gum

naval stores business. The gum naval stores business, as distinct from

other types of naval stores business, consists of the production of crude

pine gum or oleoresin from which turpentine rosin is processed and this

pine gum is taken from the living pine tree by scarring it and causing

the tree to bleed, as it were. It is an agricultural commodity. No

other type of naval stores is an agricultural commodity. So it is

obvious at the beginning that if the Department of Agriculture repeals

or persuades the Congress to repeal the Naval Stores Act, and since the

Secretary would have no jurisdiction over nonagricultural commodities

under the Agricultural Marketing Act of 1946, we would have complete

bedlam in: that there would be absolutely no standards for naval stores

anywhere in the world.

I do not agree with the second witness who testified that this act is

obsolete. So, far from being obsolete, the authority that we now have

in this industry to sell our products as being federally inspected products, as being graded according to U.S. standards, those two features

are among our biggest selling points in the export business, and we sell

rosin from Antwerp to Australia. So, far from being obsolete, this act

is used and applied every day in the gum naval stores industry as well

as in other branches of the industry.

I would say in Mr. Bennett's hearing that he himself, if he carries

out my suggestion that the Secretary act under his powers here, or

that the Congress act by amendment, that he himself would value the

Naval Stores Act and ask this committee not to repeal it. Otherwise,

anybody could ship anything—that is an exaggeration, of course—

anybody could ship anything in the resinous family and call it rosin,

and he would not like it any better than we would.

Mr. BURTON. Mr. Chairman, will the gentleman yield at this point?

Mr. Smith, would you agree with Mr. Bennett's theory that the

fossilized rosins are superior in quality to the gum or stump rosins?

Maybe that is not a fair question. I will rephrase it: Is it comparable?

Mr. SMITH. I will embarrass myself more than you are. I never

heard of it until Mr. Bennett told me about it.
REPEAL THE NAVAL STORES ACT 21

Mr. BURTON. What you are saying about H.R. 7381 is that we

would be doing away with some Federal standards that have been

set for exportation. Would you oppose an amendment to my bill

that would keep the Federal standards, but would include fossilized

rosin?

Mr. SMITH. Not at all. This is not a closed corporation and nobody

is trying to make it so. I am not a chemist.

Mr. BURTON. My main interest in this bill is to qualify my industry

in Utah on the same basis yours is. I would not do it on the basis it

is superior or on the basis it is competitive. The Department of

Agriculture and others have in effect acknowledged this. Mr.

Chairman, it was not I who said the Naval Stores Act was archaic;

it was the Department. I just want to qualify my industry. That is

a fair thing to do, I think.

Are you against repeal of the Federal Standards Act simply because

it disqualifies my industry or are you willing to let my industry come

in and compete with the others under the Federal Standards Act?

Mr. SMITH. I will tell you in a few words why we oppose the repeal.

We oppose it because of the export feature where we use the Federal

inspection U.S. standards as a sales point. Second, we oppose it

because there would be absolute confusion to the point of bedlam in

the industry if these standards went down the drain. And third—

and this is one of the most important reasons—we do not want the

naval stores standards and grades turned over to anybody for administrative manipulation. Our relationships with the Department of

Agriculture at this time are the most cordial that you can imagine.

We have no criticism whatever of any of its administrative acts.

But unless somebody could guarantee the immorality of the present

personnel or their perpetual tenure, we do not want the question of

our standards made an administrative act in the Department of

Agriculture or any other department. There are a number of people

in the administrative agencies that we feel that anything that is new

is per se better than anything that exists. There is no more dangerous

animal in American than the eager beaver, and we do not want our

destinies entrusted to him. We have more confidence in this committee and in the Congress than we do in any administrative outfit

in the U.S. Government.

Mr. BURTON. Could I interpose this? I am advised by counsel

that the export standards would still exist with the repeal of the Naval

Stores Act and that the standards would still be in effect under the

Marketing Act of 1946.

Mr. SMITH. I think your counsel means, sir, that it is the present

intention of the present incumbent to retain them. I want the

authority of the Congress behind me to say they must be retained.

Mr. BURTON. Well, I think, as I understand it, Mr. Smith, the

1946 Marketing Act would still spell out the standards you want to

protect, and I admire you for trying to protect them.

Mr. O'NEAL. Will the gentleman yield?

Mr. BURTON. Yes.

Mr. O'NEAL. I call the gentleman's attention to the fact Mr.

Grange pointed out if we relied on the Agricultural Marketing Act—

in the first place I do not know if your product would be considered

as an agricultural product and would qualify—but the changes that

could be made from time to time could be made by the Department
22 REPEAL THE NAVAL STORES ACT

itself and this committee and the Congress would be relinquishing its

authority.

Mr. BURTON. I think that is a good point. With the chairman's

permission I would like to recall Mr. Grange with Mr. Smith so we

could straighten this out.

Mr. SMITH. Mr. Chairman, may I speak one moment further on

the committee counsel's statement. I would like the committee's

counsel to state whether or not standards for naval stores are specifically mentioned in the Agricultural Marketing Act or whether he feels

merely that the standards would be within the purview of the Agricultural Marketing Act?

Mr. MURRAY. I am relying on the report dated August 4, 1966,

from the Department of Agriculture on this bill; one paragraph of

which says:

Under the proposed legislation recommended by the Department, the provisions for establishment of naval stores standards and for the analysis, inspection,

classification, and grading services on a fee basis for rosin and turpentine would be

continued under the authority of the Agricultural Marketing Act of 1946.

Mr. SMITH. It would until somebody changes his mind, Mr. Chairman.

Mr. O'NEAL. Mr. Chairman, may I point out Mr. Heimburger is

nodding in agreement.

Mr. HEIMBURGER. Perhaps I had better make that oral. I was

nodding to the chairman that to the best of my recollection the Agricultural Marketing Act of 1946 does not stipulate what standards

are to be promulgated but gives the Secretary general authority to

develop and promulgate grades and standards for agricultural commodities. This was strengthened, as Mr. Grange pointed out, by a

later law which makes it a criminal offense for anybody to sell a

product, claiming it has been graded when it is not in fact so graded.

Mr.. SMITH. Of the three types of naval stores—gum naval stores,

wood naval stores, and the tall oil rosin—of those three only gum rosin,

the product processed by my clients 

Mr. O'NEAL. From the living tree?

Mr. SMITH. From the living tree, is the only one that is an agricultural commodity. Under the Agricultural Marketing Act the Secretary could promulgate standards regulating the gum naval stores and

leave the industrialist to sell high, wide, and handsome without any

restriction.

Mr. BURTON. As I understand your testimony, you are not opposed

to the fossilized rosin coming in the export business but you are

interested in maintaining standards?

Mr. SMITH. And keeping them within the grasp of this committee

and of the Congress.

Mr. BURTON. Will you say for the record you are not opposed to

the fossilized rosin industry coming in?

Mr. Simi H. I will say I am assuming the soundness of Mr. Bennett's

statement that this is a rosin.

Mr. BURTON. And you and I both have to assume that Mr. Bennett

is correct in saying that this fossilized rosin is of comparable quality

to your stump or gum rosin?

Mr. SMITH. Yes. I will say more than that. I will say if it is a

rosin, regardless of its superiority or quality, if it is a rosin it should

be in the Naval Stores Act.
REPEAL THE NAVAL STORES ACT 23

Mr. BURTON. Very good. Now, Mr. Smith, you have been introduced as and I am sure you are a very competent attorney. Are you

prepared now to offer this committee an alternative to an outright

repeal, which is what is contained in my bill, H.R. 7381. Can you

offer an alternative?

Mr. SMITH. I think nothing that has been said here this morning

would require more than just this: A determination by the Secretary

of Agriculture that the fossilized rosin is included.

Mr. BURTON. You are begging the question because the Secretary

in reading the law Mr. O'Neal read to us has determined he cannot

include fossilized rosin and it has been referred to the Department of

Justice. I do not want to wait for the Department of Justice to reach

a decision.

Mr. TEAGUE. Will the gentleman yield?

I do not think we should ask Mr. Smith to do our work. It is

simple to repeal or amend.

Mr. SMITH. If it is a rosin and an amendment to the Naval Stores

Act is necessary to include it where I have just said it should be

already then there would certainly be no objection.

Mr. BURTON. Did you not testify that the way the Naval Stores

Act is worded it is exclusive and the Secretary has determined I

guess on the best legal advice he could get that he cannot include

fossilized rosin. Is that true Mr. Grange?

Mr. GRANGE. Yes, that is true.

Mr. BURTON. The Secretary has already determined that. I think

this committee ought to give him some direction.

Mr. SMITH. All right sir.

Mr. O'NEAL. Might I ask what Mr. Grange has to say about the

omnibus paragraph Mr. Smith referred to?

Mr. SMITH. Rosin includes gum rosin and wood rosin but it is

not restricted to that.

Mr. O'NEAL. What is the provision you read?

Mr. SMITH (reading):

The Secretary of Agriculture is authorized to establish and promulgate standards for naval stores for which no standards are herein provided.

And "naval stores" means spirits of turpentine and rosin. It does

not say it means gum rosin or wood rosin or fossilized rosin.

Mr. GRANGE. We have promulgated other standards since the

passage of the act in 1923. The standards for tall rosin were promulgated July 26, 1950. By interpretation of what is meant by

"naval stores", the tall oil rosin is a byproduct of the papermaking

industry but it is still a product of wood and it has been our interpretation that the word "rosin" was intended to be the product from

a living tree, tree stump, or wood used in the making of paper. The

Department has promulgated other standards since 1923.

It is our interpretation that a product coming from a vein in the

coal even though it may have been deposited there from a predecessor

to a pine tree millions of years ago, is beyond the scope of the Naval

Stores Act. I recognize that this is subject to interpretation. It

is not completely black and white. It seemed rather clear to be the

interpretation we should place under the act and that is the interpretation under which we have been acting.

Mr. TEAGUE. Mr. Grange, you would have no difficulty, nor would

your legal department have any difficulty, in placing a different inter-
24 REPEAL THE NAVAL STORES ACT

pretation on the act should this committee amend rather than repeal

the act and where "rosin" is defined as including gum rosin and wood

rosin we should add "and that obtained from fossilized material" or

whatever the words are. You would have no objection to that?

Mr. GRANGE. No, sir.

Mr. BURTON. Will the gentleman yield?

Would you object to that, Mr. Smith?

Mr. SMITH. No sir.

Mr. BURTON. 11r. Bennett, would you object?

Mr. BENNETT. Yes, I would strongly object. We are an independent agency. We have our standards. Why should we be subjected to all the rules of the Department of Agriculture when we are

operating with good standards and we know what we have.

Mr. MCMILLAN. We are only trying to give you some status.

Mr. BENNETT. All we want is for them to know we have a fossilized

rosin and not have the Department of Justice come after us as criminals.

Mr. TEAGUE. Legislative processes are quite often a matter of

compromise.

Mr. BENNETT. I appreciate that.

Mr. TEAGUE. Would you rather have nothing if you cannot have

repeal or would you be a little satisfied if we amended the act?

Mr. BENNETT. Simply exclude Utah fossilized rosin.

Mr. MCMILLAN. You mean exclude you out?

Mr. BENNETT. That is right.

Mr. HEIMBURGER. It does not seem that would solve the gentleman's problem if the problem is tariff classification, because if fossilized

rosin is excluded it would be some indication that it is not rosin, so this

would not be an answer to it.

Mr.: BENNETT. This is a Utah fossilized rosin and the source is

wood.

Mr. O'NEAL. If we put the words in the act he would have to prove

it is fossilized rosin.

Mr. BURTON. According you you, Mr. Bennett, you have no fear

of meeting the standards set forth by Mr. Grange and Mr. Smith.

I am trying to figure out how we can cut you in.

Mr. BENNETT. We have to send samples in and there is no such

thing because this rosin is millions of years old.

Mr. SMITH. The Department of Agriculture will license an employee of Mr. Bennett's company, give him a set like the chairman

has, ask him to hold Mr. Bennett's samples up to the light and see

which rosin most nearly matches the color of the rosin that Mr.

Bennett makes.

Mr. O'NEAL. That is fixing a grade after he qualifies as a rosin.

Mr. SMITH. Yes.

Mr. BURTON. What could we do to put you on an equal footing

with the other people and preserve the present standards of rosin?

Mr. BENNETT. We are willing to let them keep the standards they

have but we do not want to be accused of doing something that is

against the law.

Mr. BURTON. Is the only way this could be done by outright repeal?

Mr. HEIMBURGER. No, I think it can be done by amending the

act. There are several ways it could be done. The start of the

definition reads: "When used in this chapter 'rosin' includes gum
REPEAL THE NAVAL STORES ACT 25

rosin and wood rosin." I think an amendment could be made there

including rosin from nonwood sources.

Mr. BURTON. What would be wrong with that, Mr. Bennett,

adding "rosin from nonwood sources"?

Mr. BENNETT. What happens after that? We are a mining

company. We dig it out and float it. Will we have to set up a

lab center to say 'This is the color" or "This is the color"? We

cannot afford to do it. Somebody put a claim against us that we

are using the word "rosin" and we want to get out of that.

Mr. O'NEAL. This is a voluntary program, is it not?

Mr. SMITH. In the gum industry there is a CCC loan program

and all rosin going in that program must be federally graded. Beyond

that it is voluntary.

Mr. TEAGUE. Then Mr. Bennett would not be required to come to

them to get graded, is that correct?

Mr. GRANGE. That is right. As far as getting inspection and

grading it is on a voluntary basis. The statute is vague as to standards if they do not come in for inspection and grading. Last year

about 76 percent of the rosin was officially inspected and graded.

Mr. BURTON. Mr. Grange, do you favor outright repeal rather

than the amendment offered by Mr. Teague?

Mr. TEAGUE. I have not offered any amendment. I suggested it.

Mr. GRANGE. Yes, sir.

Mr. BURTON. You favor outright repeal rather than an amendment that would say sources other than wood?

Mr. GRANGE. Yes, for this reason: It would, as far as I know,

take care of Mr. Bennett's problem assuming he has a legitimate

valid problem that should be corrected.

Mr. BURTON. The Department of Agriculture, then, favors outright repeal as against an amendment?

Mr. GRANGE. Yes. I do not like to disagree with Mr. Smith

because he said some kind things about us, but the Secretary of

Agriculture, under the Naval Stores Act, has the same discretionary

power to adopt standards, repeal standards, or change them as he

has under the Agricultural Marketing Act of 1946.

Mr. BURTON. That is an important thing to keep in mind.

Mr. SMITH. But that power is limited to agricultural commodities.

The only reason the Secretary of Agriculture has that power under

the Naval Stores Act is because it was specifically given to him and

that power is strictly limited. He does have some authority to

promulgate standards for new naval stores, new rosin. One of my

objections to repeal is that the regulatory powers of the Secretary of

Agriculture would be limited to telling my people, the gum rosin

people, what to do, and he would have no authority over the tall

oil rosin or wood rosin.

Mr. GRANGE. I do not agree with that. It is not in accord with the

interpretation our general counsel has given to the definition of

agricultural products under the Agricultural Marketing Act of 1946,

which is a very broad definition. It is my understanding that this

definition includes all products derived from any forestry product

source, and this would include both the tall oil rosin as well as the

wood rosin along with the gum rosin. If your narrow definition is

correct, Mr. Smith, I would agree with you that there would be a

problem of separating the gum rosin from the other rosins.

(
26 REPEAL THE NAVAL STORES ACT

Mr. SMITH. If the gentleman is correct the Secretary of Agriculture

can promulgate standards for this table, and I submit he cannot.

Mr. BURTON. Whether you tap a living pine to get resin or take a

stump and boil it or get it from the coalbin it still comes from a plant.

Mr. HEIMBURGER. I would like to ask IVIr. Grange or Mr. Cipalla

one question: Is my understanding of the Naval Stores Act correct in

this respect, that if a producer of rosin wishes to sell this without

reference to the U.S. standards he can do so without becoming subject

to the criminal provisions of the act?

Mr. CIPALLA. May I answer that?

Mr. GRANGE. When you say standards do you mean without

reference to the grades?

Mr. HEIMBURGER. Yes.

Mr. CIPALLA. Right, provided the product fell under the definition

of rosin under the act and under the regulations of the act, the term

"rosin" could be used in describing the product in advertising, selling

or shipping it.

Mr. HEIMBURGER. SO if we were to include rosin from nonwood

sources, or some such language, then he could describe this as rosin

and as long as he did not refer to any U.S. grade specifications he

could sell it without being in violation of the act?

Mr. GRANGE. Yes, sir.

Mr. SMITH. May I state for the record I do not agree with that.

Mr. MURRAY. The repeal of the act would save $36,000 a year in

administrative expenses, is that correct?

Mr. GRANGE. Yes.

Mr. MURRAY. And if it were repealed would you contemplate the

same standards promulgated under the Naval Stores Act would be

instituted under the Agricultural Marketing Act of 1946?

Mr. GRANGE. Yes.

Mr. SMITH. May I state that section 5, subsection (a) of the Naval

Stores Act gays:

The following Acts are hereby declared injurious to commerce in naval stores

and are hereby prohibited and made unlawful:

(a) The sale in commerce of any naval stores, or of anything offered as such,

except under or by reference to United States standards.

What I said was voluntary is the Federal inspection program.

That means the manufacturer assumes the responsibility for its being

in accordance with the United States grades and standards.

Mr. MCMILLAN. Thank you, gentlemen. We will go into executive

session.

(Thereupon, the subcommittee resolved itself into executive session.)