B-142279, MAR. 28, 1960

B-142279, MAR. 28, 1960

TO THE SECRETARY OF AGRICULTURE:

BY LETTER OF MARCH 11, 1960, THE ACTING SECRETARY REQUESTED OUR OPINION AS TO WHETHER THERE IS ANY LEGAL OBJECTION TO THE INSTITUTION OF A PROGRAM UNDER CLAUSE (3) OF SECTION 32, PUBLIC NO. 320, 74TH CONGRESS, AS AMENDED, 7 U.S.C. 612C, TO REESTABLISH THE PURCHASING POWER OF CRANBERRY PRODUCERS WHO WERE UNABLE TO MOVE THE GREATER PART OF THEIR 1959 CROP AS A RESULT OF WIDESPREAD PUBLICITY GIVEN TO THE POSSIBLE DELETERIOUS EFFECT ON THE HEALTH OF PERSONS WHO CONSUMED CRANBERRIES FROM BOGS ON WHICH AMINOTRIZOLE HAD BEEN USED. THE CIRCUMSTANCES INVOLVED, AS STATED IN THE ACTING SECRETARY'S LETTER AND ENCLOSURES THERETO, ARE ESSENTIALLY AS FOLLOWS:

CRANBERRY PRODUCERS AND THEIR MARKETING ASSOCIATIONS HAVE ON HAND LARGE SUPPLIES OF BERRIES FROM THEIR 1959 PRODUCTION, THE GREAT BULK OF WHICH WOULD NORMALLY HAVE BEEN MARKETED DURING THE OCTOBER-DECEMBER SEASON. THE 1959 MARKET FOR CRANBERRIES WAS LOST DUE, IN PART, TO THE NECESSITY OF SECURING CLEARANCE UNDER PROCEDURES ESTABLISHED IN NOVEMBER BY THE SECRETARY OF HEALTH, EDUCATION, AND WELFARE FOR THE MARKETING OF THESE BERRIES AND, IN GREATER PART, TO A CESSATION OF CONSUMER DEMAND RESULTING FROM FEAR ON THE PART OF THE CONSUMING PUBLIC CAUSED BY WIDESPREAD PUBLICITY GIVEN TO THE USE OF AMINOTRIAZOLE ON CERTAIN CRANBERRY BOGS AND POSSIBLE DELETERIOUS EFFECTS ON THE HEALTH OF PERSONS WHO MIGHT CONSUME CRANBERRIES FROM SUCH BOGS. AS A RESULT, THE PURCHASING POWER OF THESE PRODUCERS HAS BEEN SERIOUSLY IMPAIRED THROUGH INABILITY TO MARKET THEIR NORMAL PRODUCTION FOR DOMESTIC CONSUMPTION.

YOUR DEPARTMENT HAS GIVEN CONSIDERATION TO THE USE OF FUNDS APPROPRIATED BY SECTION 32 OF PUBLIC NO. 320, AS AMENDED, TO FINANCE PROGRAMS IN AID OF THE PRODUCERS. SECTION 32, AS AMENDED, PROVIDES, IN PART, THAT:

"THERE IS APPROPRIATED FOR EACH FISCAL YEAR BEGINNING WITH THE FISCAL YEAR ENDING JUNE 30, 1936 AN AMOUNT EQUAL TO 30 PERCENTUM OF THE GROSS RECEIPTS FROM DUTIES COLLECTED UNDER THE CUSTOMS LAWS DURING THE PERIOD JANUARY 1 TO DECEMBER 31, BOTH INCLUSIVE, PRECEDING THE BEGINNING OF EACH SUCH FISCAL YEAR. SUCH SUMS SHALL BE MAINTAINED IN A SEPARATE FUND AND SHALL BE USED BY THE SECRETARY OF AGRICULTURE ONLY TO (1) ENCOURAGE THE EXPORTATION OF AGRICULTURAL COMMODITIES AND PRODUCTS THEREOF BY THE PAYMENT OF BENEFITS IN CONNECTION WITH THE EXPORTATION THEREOF OR OF INDEMNITIES FOR LOSSES INCURRED IN CONNECTION WITH SUCH EXPORTATION OR BY PAYMENTS TO PRODUCERS IN CONNECTION WITH THE PRODUCTION OF THAT PART OF ANY AGRICULTURAL COMMODITY REQUIRED FOR DOMESTIC CONSUMPTION; (2) ENCOURAGE THE DOMESTIC CONSUMPTION OF SUCH COMMODITIES OR PRODUCTS BY DIVERTING THEM, BY THE PAYMENT OF BENEFITS OR INDEMNITIES OR BY OTHER MEANS, FROM THE NORMAL CHANNELS OF TRADE AND COMMERCE OR BY INCREASING THEIR UTILIZATION THROUGH BENEFITS, INDEMNITIES, DONATIONS OR BY OTHER MEANS, AMONG PERSONS IN LOW INCOME GROUPS AS DETERMINED BY THE SECRETARY OF AGRICULTURE; AND (3) REESTABLISH FARMERS' PURCHASING POWER BY MAKING PAYMENTS IN CONNECTION WITH THE NORMAL PRODUCTION OF ANY AGRICULTURAL COMMODITY FOR DOMESTIC CONSUMPTION. DETERMINATIONS BY THE SECRETARY AS TO WHAT CONSTITUTES DIVERSION AND WHAT CONSTITUTES NORMAL CHANNELS OF TRADE AND COMMERCE AND WHAT CONSTITUTES NORMAL PRODUCTION FOR DOMESTIC CONSUMPTION SHALL BE FINAL.'

THE ACTING SECRETARY POINTS OUT THAT PROGRAMS UNDER CLAUSES (1) AND (2), ABOVE, WOULD NOT BE SUFFICIENTLY EFFECTIVE, SINCE IT IS ESTIMATED THAT LESS THAN 15 PERCENT OF AVAILABLE SUPPLIES COULD BE EXPORTED OR DISPOSED OF THROUGH DISTRIBUTION IN RELIEF OUTLETS AND SCHOOL LUNCH PROGRAMS. IS STATED THAT NO MEASURABLE EXPORT DEMAND EXISTS FOR CRANBERRIES AND THAT IT IS QUESTIONABLE WHETHER RELIEF AGENCIES WOULD ACCEPT DONATIONS OF ANY SUBSTANTIAL QUANTITIES OF CRANBERRY OR CRANBERRY PRODUCTS IN VIEW OF THE FEAR WHICH HAS BEEN GENERATED IN THE PUBLIC MIND. IT IS FURTHER POINTED OUT THAT BECAUSE OF THE PERISHABLE NATURE OF CRANBERRIES, ANY PROGRAM UNDER CLAUSES (1) OR (2) INSTITUTED AT THIS TIME WOULD HAVE TO TREAT WITH BERRIES IN PROCESSED FORM WHICH WOULD RESULT IN LESS THAN 26 PERCENT OF FUNDS EXPENDED ON SUCH A PROGRAM BY THE GOVERNMENT REACHING THE GROWER FOR HIS CRANBERRIES. IT IS THEREFORE CONCLUDED THAT A PROGRAM PURSUANT TO CLAUSE (3) OFFERS THE BEST SOLUTION OF THE PROBLEM AS THE OBJECTIVE COULD BE MORE FULLY ACCOMPLISHED AT A LESSER EXPENDITURE OF FUNDS, INASMUCH AS THE ENTIRE BENEFITS OF THE EXPENDITURE OF SECTION 32 FUNDS WOULD BE RECEIVED BY THE GROWER.

FROM THE INFORMATION FURNISHED, THE BASIC FEATURES OF THE PROGRAM CONTEMPLATED MAY BE DESCRIBED AS FOLLOWS:

IT HAS BEEN ADMINISTRATIVELY DETERMINED THAT THE ENTIRE 1959 PRODUCTION OF CRANBERRIES, AGGREGATING 1,252,000 BARRELS, CONSTITUTES NORMAL PRODUCTION FOR DOMESTIC CONSUMPTION. PAYMENT WILL BE MADE TO EACH PRODUCER ON THE QUANTITY OF BERRIES WHICH HE HARVESTED IN 1959, EXCLUDING THE QUANTITY FOUND CONTAMINATED OR ORDERED DESTROYED BY THE FOOD AND DRUG ADMINISTRATION, SUCH PAYMENT NOT TO EXCEED $8.02 TIMES THE NUMBER OF BARRELS OF CRANBERRIES PRODUCED BY HIM. THIS MAXIMUM PAYMENT REPRESENTS THE DIFFERENCE BETWEEN $10.34, THE PRICE ADMINISTRATIVELY DETERMINED AS BEING THE AVERAGE PRICE WHICH PRODUCERS MUST RECEIVE ON THEIR 1,252,000 BARREL PRODUCTION TO EQUAL THE AVERAGE VALUE OF THEIR TOTAL PRODUCTION OF THE TWO PRECEDING YEARS AND $2.32, THE AVERAGE PRICE WHICH IT IS ESTIMATED PRODUCERS WILL RECEIVE FROM ALL SOURCES (EXCLUDING PAYMENTS UNDER THE PROPOSED PROGRAM) IN CONNECTION WITH THE TOTAL DISPOSITION OF THEIR 1959 PRODUCTION. AN INITIAL PAYMENT OF $4 PER BARREL IS TO BE MADE PROMPTLY AND, UPON A SHOWING BY A PRODUCER THAT HE HAS DISPOSED OF ALL CRANBERRIES HELD, IN FRESH OR FROZEN FORM, BY HIM OR ON HIS BEHALF, A FURTHER PAYMENT WILL BE MADE TO HIM EQUAL TO THE DIFFERENCE BETWEEN THE AVERAGE RATE PER BARREL WHICH HE RECEIVED FROM ALL SOURCES FOR HIS CRANBERRIES, INCLUDING THE PAYMENT PREVIOUSLY MADE, AND $10.34 PER BARREL. IN NO EVENT IS THE TOTAL PAYMENT TO EXCEED THE MAXIMUM RATE OF $8.02 PER BARREL. IT IS OUR UNDERSTANDING THAT SINCE THE MARKET WILL NOT ABSORB ALL AVAILABLE SUPPLIES, A SIGNIFICANT--- IF NOT SUBSTANTIAL--- PORTION OF THE SUPPLY WILL BE APPROVED FOR DESTRUCTION IN ORDER TO AVOID EXCESSIVE INVENTORIES IN PROCESSED OR FROZEN FORM BEING CARRIED FORWARD TO THE NEXT CROP YEAR THEREBY ADVERSELY AFFECTING PRODUCER INCOME IN THAT YEAR.

DOUBT AS TO THE PROPRIETY OF UTILIZING SECTION 32, CLAUSE (3), FUNDS AROSE BY VIRTUE OF THE INTERRELATIONSHIP BETWEEN SECTION 32 AND THE AGRICULTURAL ACT OF 1949, AS AMENDED, AS SET FORTH IN THE FOLLOWING QUOTE FROM THE ACTING SECRETARY'S LETTER:

"THERE IS FOR CONSIDERATION THE RELATIONSHIP BETWEEN SECTION 32, UPON WHICH THIS PROPOSED ACTION IS BASED, AND THE AGRICULTURAL ACT OF 1949, AS AMENDED. UNDER SECTION 301 OF THE AGRICULTURAL ACT OF 1949 (7 U.S.C. 1447), THE SECRETARY IS AUTHORIZED TO MAKE AVAILABLE THROUGH ,LOANS, PURCHASES, OR OTHER OPERATIONS" PRICE SUPPORT TO PRODUCERS FOR ANY NONBASIC AGRICULTURAL COMMODITY NOT DESIGNATED IN TITLE II AT A LEVEL NOT IN EXCESS OF 90 PERCENTUM OF THE PARITY PRICE OF THE COMMODITY. CRANBERRIES ARE AN AGRICULTURAL COMMODITY WHICH COMES WITHIN THE PURVIEW OF THIS SECTION. SECTION 401 OF THAT ACT PROVIDES THAT THE SECRETARY SHALL PROVIDE THE PRICE SUPPORT AUTHORIZED OR REQUIRED THEREIN THROUGH THE COMMODITY CREDIT CORPORATION AND OTHER MEANS AVAILABLE TO HIM.

"IT HAS BEEN THE POSITION OF THIS DEPARTMENT THAT SECTION 32 FUNDS AND AUTHORIZATIONS ARE AMONG THE "OTHER MEANS" AVAILABLE TO THE SECRETARY TO CARRY OUT PRICE SUPPORT AND IF HE USES SUCH FUNDS FOR THIS PURPOSE HE MAY DO SO TO THE EXTENT THAT THE PARTICULAR PRICE SUPPORT OPERATIONS MEET THE REQUIREMENTS, LIMITATIONS AND OBJECTIVES OF BOTH THE AGRICULTURAL ACT OF 1949 AND SECTION 32.

"IT HAS ALSO BEEN OUR INTERPRETATION THAT THE WORDS "OTHER OPERATIONS" CONTAINED IN THE PHRASE ,LOANS, PURCHASES, OR OTHER OPERATIONS," AS USED IN THE AGRICULTURAL ACT OF 1949 AND PRIOR PRICE SUPPORT STATUTES, WOULD NOT INCLUDE A METHOD OF DIRECT PAYMENTS TO PRODUCERS, SINCE THIS WOULD NOT SUPPORT THE PRICES PRODUCERS RECEIVED IN THE MARKET PLACE FOR COMMODITIES WHICH THEY WERE MARKETING BUT WOULD RESULT IN SUCH PRICES TO FALL BELOW THE SUPPORT LEVEL. HOWEVER, THE WORDS ,OTHER OPERATIONS" WOULD INCLUDE A METHOD OF PRICE SUPPORT INVOLVING PAYMENTS TO PROCESSORS OR DEALERS WHEREBY THEY WOULD BE IN A POSITION TO MAINTAIN AT PROPER LEVELS THE PRICES WHICH THEY PAY TO PRODUCERS. THIS LONG-STANDING INTERPRETATION HAS BEEN UNDERSTOOD AND ACCEPTED BY THE CONGRESS, AND LEGISLATION HAS BEEN ENACTED IN RELIANCE THEREON. 1) ACCORDINGLY, IN EFFECTUATING PRICE SUPPORT FOR A COMMODITY AT LEVELS ANNOUNCED BY THE SECRETARY PURSUANT TO THE AGRICULTURAL ACT OF 1949, PROGRAMS

"1) SECTION 4 (A) OF THE ACT OF JULY 1, 1941, AS AMENDED, 55 STAT. 498, DIRECTED PRICE SUPPORT THROUGH "A COMMODITY LOAN, PURCHASE OR OTHER OPERATION.' THE DEPARTMENT'S INTERPRETATION OF ,OTHER OPERATION" WAS GIVEN TO CONGRESS IN HEARINGS ON S. 2522, 81ST CONGRESS. SEE HEARINGS BEFORE THE COMMITTEE ON AGRICULTURE AND FORESTRY, UNITED STATES SENATE, 81ST CONG., 1ST SESS., ON RECOMMENDATION OF SUBCOMMITTEE ON PRICE SUPPORT PROGRAM (1949), PP. 120, 121, WHEREIN THE DEPARTMENT'S INTERPRETATION AND SENATOR ANDERSON'S COMMENTS THEREON ARE SET FORTH. SECTION 202 (A) OF THE AGRICULTURAL ACT OF 1949 (62 STAT. 1242, 1252) AUTHORIZED SUPPORTS "THROUGH LOANS, PURCHASES, PAYMENTS AND OTHER OPERATIONS.' THE AGRICULTURAL ACT OF 1949 DROPPED "PAYMENTS" FROM THE AUTHORIZED MEANS.'

HAVE BEEN INSTITUTED UNDER CLAUSE (2) OF SECTION 32 WHICH WOULD ALSO ENCOURAGE THE DOMESTIC CONSUMPTION OF SUCH AGRICULTURAL COMMODITY BY DIVERTING IT FROM THE NORMAL CHANNELS OF TRADE AND COMMERCE BY PURCHASES AND DONATIONS OF QUANTITIES THEREOF FOR RELIEF PURPOSES. NO PROGRAM PURSUANT TO CLAUSE (3) HAS BEEN INSTITUTED IN THE PAST 17 YEARS, LARGELY BECAUSE THERE AROSE NO NECESSITY DURING THAT TIME TO INVOKE THE AUTHORIZATION CONTAINED IN THIS CLAUSE, AND, WHILE IT IS NOW BEING INVOKED, THIS IS NOT BEING DONE FOR THE PURPOSES OF ANY PRICE SUPPORT PROGRAM FORMULATED UNDER THE AGRICULTURAL ACT OF 1949. THERE HAS BEEN NO PRICE SUPPORT PROGRAM OR LEVEL OF SUPPORT ANNOUNCED FOR CRANBERRIES AND NONE IS INTENDED.

"BECAUSE OF THE INTERRELATIONSHIP OF SECTION 32 AND THE AGRICULTURAL ACT OF 1949 THE QUESTION MAY ARISE WHETHER THE AGRICULTURAL ACT OF 1949, IN NOT AUTHORIZING PAYMENTS TO PRODUCERS FOR PRICE SUPPORT PURPOSES, IMPLIEDLY REPEALS CLAUSE (3) OF SECTION 32, AND WOULD PRECLUDE PAYMENTS TO PRODUCERS, EITHER DIRECTLY OR INDIRECTLY THROUGH THEIR MARKETING AGENCIES, FOR PURPOSES SET FORTH IN SECTION 32. WE BELIEVE THAT THERE IS NO SUCH REPEAL AND THAT WHILE SECTION 32 MAY BE USED TO IMPLEMENT PRICE SUPPORT PURSUANT TO THE AGRICULTURAL ACT OF 1949, IT ALSO MAY BE UTILIZED ON ITS OWN TERMS IN FULFILLMENT OF ITS OWN PURPOSES SEPARATE AND APART FROM SUCH OTHER ACT.'

WE AGREE THAT THE ACT OF 1949 DOES NOT REPEAL CLAUSE (3) OF SECTION 32 BY IMPLICATION. WHILE SECTION 32 FUNDS MAY PROPERLY BE USED TO FINANCE PRICE SUPPORT PROGRAMS, THAT IS NOT TO SAY THAT THEY MUST BE USED EXCLUSIVELY FOR THAT PURPOSE. THE RE-ESTABLISHMENT OF FARMER PURCHASING POWER CAN BE ACCOMPLISHED THROUGH MEANS OTHER THAN PRICE SUPPORT. AND SINCE DIRECT PAYMENTS TO PRODUCERS UNDER PRICE SUPPORT PROGRAMS ARE PRECLUDED ON THE GROUND THAT SUCH PAYMENTS TEND TO DEPRESS PRICES RATHER THAN SUPPORT THEM, A PROGRAM INVOLVING DIRECT PAYMENTS TO PRODUCERS MAY NOT BE SAID TO BE A PRICE SUPPORT PROGRAM. THE PURPOSE OF THE PROGRAM UNDER CONSIDERATION INVOLVING, AS IT DOES, DIRECT PAYMENTS TO PRODUCERS IS, THEREFORE, NOT ONE OF PRICE SUPPORT BUT RATHER TO MEET A UNIQUE NEED AS TO A SPECIFIC EXISTING CROP FOR WHICH THERE IS NO MARKET AND THERE IS THUS FOR CONSIDERATION ONLY THE QUESTION OF WHETHER IT FALLS WITHIN THE SCOPE OF THE APPROPRIATION LANGUAGE INVOLVED, IRRESPECTIVE OF THE 1949 ACT.

WHILE THE PROPOSED PROGRAM OBVIOUSLY WILL RE-ESTABLISH THE PURCHASING POWER OF THE FARMERS CONCERNED THROUGH PAYMENTS IN CONNECTION WITH THE NORMAL PRODUCTION OF AN AGRICULTURAL COMMODITY FOR DOMESTIC CONSUMPTION, THERE IS CONSIDERABLE DOUBT AS TO WHETHER CLAUSE (3) OF SECTION 32 WAS INTENDED FOR THE TYPE OF SITUATION HERE INVOLVED. THE LEGISLATIVE HISTORY OF CLAUSE (3) ITSELF DOES NOT FURNISH SUCH INDICATION AS TO THE TYPES OF PROGRAMS CONGRESS CONTEMPLATED THEREUNDER. HOWEVER, CLAUSE (3) WAS ENACTED DURING A PERIOD OF GROWING CONCERN OVER THE FACT THAT THE PURCHASING POWER OF THE NET INCOME OF FARMERS WAS MUCH LOWER THAN THAT OF PERSONS NOT ON FARMS, DUE LARGELY TO DEPRESSED PRICES PREVAILING FOR AGRICULTURAL COMMODITIES. AND IT APPEARS THAT IT WAS THE INTENTION OF CONGRESS GENERALLY TO RE-ESTABLISH FARMERS' PURCHASING POWER THROUGH PROGRAMS THAT WOULD INDUCE FARMERS TO VOLUNTARILY CURTAIL PRODUCTION THEREBY INCREASING THE PRICES THEY WOULD RECEIVE FOR THEIR PRODUCE. SEE 7 U.S.C. 601, 602 (1) AND (2) AND 16 U.S.C. 590G (A). THE ENTIRE BASIS FOR RE-ESTABLISHING PURCHASING POWER APPEARS TO BE FOUNDED UPON THE CONCEPT OF RAISING THE LEVEL OF COMMODITY PRICES RATHER THAN BY DIRECTLY REIMBURSING FARMERS FOR ANY LOSS OF PURCHASING POWER SUSTAINED. IT IS CLEAR THAT THE PROPOSED PAYMENTS TO CRANBERRY GROWERS ARE NOT TO BE MADE FOR THE PURPOSE MAINTAINING THE PRICE LEVEL OF CRANBERRIES. THE PROPOSED PAYMENTS ARE, MORE THAN ANYTHING ELSE, IN THE NATURE OF INDEMNIFICATIONS OF THE GROWERS FOR LOSSES SUSTAINED BY THEM. WE RECOGNIZE THAT THE LOSS SUFFERED WAS IN LARGE PART DUE TO ACTIONS ON THE PART OF THE GOVERNMENT AND THAT THE GROWERS, TO A LARGE EXTENT, WERE NOT TO BLAME FOR THE SITUATION THAT DEVELOPED. BUT EQUITY ON THE SIDE OF THE PRODUCERS IS NOT OF ITSELF SUFFICIENT TO JUSTIFY THE USE OF AN APPROPRIATION FOR A PURPOSE FOR WHICH IT IS NOT AVAILABLE.

ON THE BASIS OF OUR EXAMINATION OF THE PERTINENT LAWS AND THEIR LEGISLATIVE HISTORIES, WE ARE OF THE OPINION THAT THE AUTHORITY FOR THE PROPOSED PROGRAM IS NOT FREE FROM DOUBT. YET, THE LANGUAGE OF CLAUSE (3) IS BROAD AND WE HAVE FOUND NO CONCLUSIVE STATEMENTS AS TO LEGISLATIVE INTENT WHICH WOULD SUPPORT THE CONCLUSION THAT THE PROPOSED PROGRAM CANNOT BE CARRIED OUT UNDER CLAUSE (3).

ACCORDINGLY, SINCE THE PROPOSED PAYMENTS ARE IN FACT, IN ACCORD WITH THE PURPOSE FOR WHICH CLAUSE (3) FUNDS WERE APPROPRIATED, ALBEIT THEY ARE TO BE MADE UNDER A PROGRAM OF A TYPE APPARENTLY NOT DEFINITELY CONTEMPLATED BY THE CONGRESS WHEN CLAUSE (3) WAS ENACTED, WE WOULD NOT BE REQUIRED TO OBJECT TO THE PROPOSED USE OF CLAUSE (3) FUNDS UNDER THE PROGRAM. WE WISH TO EMPHASIZE, HOWEVER, THAT OUR VIEWS ON THE USE OF THESE FUNDS FOR THIS PURPOSE RELATE SOLELY TO THE LEGALITY OF SUCH USE AND SHOULD NOT BE CONSTRUED AS AN APPROVAL OF THE DETAILS OF THE PLAN.

ALTHOUGH, BECAUSE OF THE BROAD LANGUAGE OF CLAUSE (3) AND THE ABSENCE OF ANYTHING SPECIFICALLY TO THE CONTRARY IN THE RELATED LEGISLATIVE HISTORY, WE HAVE CONCLUDED THAT THE PROPOSED PROGRAM IS NOT LEGALLY OBJECTIONABLE, NEVERTHELESS, BECAUSE OF THE UNPRECEDENTED SITUATION WE RECOMMEND THAT THE APPROPRIATE COMMITTEES OF CONGRESS BE ADVISED OF THE PLAN BEFORE IT IS PUT INTO EFFECT.