B-153956, MAY 20, 1964

B-153956, MAY 20, 1964

TO THE SECRETARY OF AGRICULTURE:

YOUR LETTER OF APRIL 14, 1964, REQUESTS A DECISION ON THE QUESTION OF THE ELIGIBILITY OF SPINNABLE COTTON WASTE, SUCH AS COMBER NOIL AND CARD STRIPS, IN MILL OWNED INVENTORY, FOR PAYMENT UNDER SECTION 348 OF THE AGRICULTURAL ADJUSTMENT ACT OF 1938, AS AMENDED BY SECTION 101 OF THE AGRICULTURAL ACT OF 1964, APPROVED APRIL 11, 1964, PUB.L. 88-297, 78 STAT. 173. THIS SECTION PROVIDES IN PART:

"IN ORDER TO MAINTAIN AND EXPAND DOMESTIC CONSUMPTION OF UPLAND COTTON PRODUCED IN THE UNITED STATES AND TO PREVENT DISCRIMINATION AGAINST THE DOMESTIC USERS OF SUCH COTTON, NOTWITHSTANDING ANY OTHER PROVISION OF LAW, THE COMMODITY CREDIT CORPORATION, UNDER SUCH RULES AND REGULATIONS AS THE SECRETARY MAY PRESCRIBE, IS AUTHORIZED AND DIRECTED FOR THE PERIOD BEGINNING WITH THE DATE OF ENACTMENT OF THIS SECTION AND ENDING JULY 31, 1966, TO MAKE PAYMENTS THROUGH THE ISSUANCE OF PAYMENT-IN-KIND CERTIFICATES TO PERSONS OTHER THAN PRODUCERS IN SUCH AMOUNTS AND SUBJECT TO SUCH TERMS AND CONDITIONS AS THE SECRETARY DETERMINES WILL ELIMINATE INEQUITIES DUE TO DIFFERENCES IN THE COST OF RAW COTTON BETWEEN DOMESTIC AND FOREIGN USERS OF SUCH COTTON, INCLUDING SUCH PAYMENTS AS MAY BE NECESSARY TO MAKE RAW COTTON IN INVENTORY ON THE DATE OF ENACTMENT OF THIS SECTION AVAILABLE FOR CONSUMPTION AT PRICES CONSISTENT WITH THE PURPOSES OF THIS SECTION. * * *"

YOUR LETTER DISCLOSES THE FOLLOWING PERTINENT FACTS:

COTTON PRODUCERS HAUL THEIR COTTON IN LOOSE, BULK FORM TO THE COTTON GINS WHERE THE SEED IS REMOVED AND THE COTTON IS COMPRESSED INTO BALES, WRAPPED, AND BOUND WITH STEEL BANDS. THESE BALES CONSTITUTE RAW COTTON IN THE FORM MARKETED BY THE PRODUCER AND BY THE VARIOUS HANDLERS IN THE EXPORT AND DOMESTIC TRADE. WHEN THE RAW BALED COTTON IS DELIVERED TO A MILL, THE BALES ARE FIRST BROKEN OPEN AND THE COTTON IS FED INTO OPENING MACHINES FOR THE PURPOSE OF "OPENING UP" AND LOOSENING THE COTTON AND REMOVING AS MUCH OF THE DIRT AS POSSIBLE. THEN THE COTTON IS FED INTO A PICKER-LAP MACHINE WHICH FURTHER REMOVES CHAFFS, LEAVES, MOTHS, FLIES, ETC., AND FLUFFS THE COMPRESSED COTTON WHICH EMERGES FROM THIS OPERATION AS CLEAN WHOLE COTTON IN ROLLED FORM KNOWN AS PICKER LAPS. THE PICKER LAPS ARE THEN MOVED TO THE CARDING MACHINES WHERE THEY ARE PROCESSED INTO SLIVER LAPS. LOW-QUALITY FIBERS ARE PULLED OUT IN THIS PROCESS AS A BY- PRODUCT WASTE AND ARE KNOWN AS CARD STRIPS. THE SLIVER LAPS ARE THEN PROCESSED THROUGH COMBIN OPERATIONS AND THE BY-PRODUCT WASTE FROM THIS OPERATION IS KNOWN AS COMBER NOILS. THE PRODUCT OF THE COMBER MACHINE IS KNOWN AS COMBER SILK SLIVER, WHICH IS THEN PROCESSED THROUGH 9-INCH LAP WINDERS IN A DRAWING MACHINE AND COMES OUT IN A FORM KNOWN AS DRAWING SLIVERS. THE BY-PRODUCT WASTE FROM THIS MACHINE IS KNOWN AS SPINNER LAPS. THE 9-INCH DRAWING SLIVER LAP THEN IS MOVED OVER TO A ROVING FRAME WHERE IT IS TWISTED INTO ROVING. WASTE FROM THIS MACHINE IS KNOWN AS ROVING WASTE. ROVING IS THEN TWISTED ON THE SPINNING FRAMES INTO YARN.

THE CARD STRIP WASTE CONTAINS THE SHORT LOW-QUALITY FIBERS AND, GENERALLY, THE WASTE DERIVED FROM EACH OF THE SUBSEQUENT PROCESSES IS OF BETTER QUALITY THAN THAT OF THE IMMEDIATELY PRECEDING PROCESS. THE MILLS MAY FEED SOME OF THE CARD STRIPS, COMBER NOILS AND OTHER SPINNABLE WASTE BACK INTO THE VARIOUS MACHINES FOR REPROCESSING, DEPENDING UPON THE ULTIMATE END PRODUCT FOR WHICH THE YARN IS DESIRED. SOME OF THE WASTE IS BALED AND SOLD BY THE MILLS TO OTHER PROCESSORS FOR USE IN MANUFACTURING VARIOUS PRODUCTS FOR WHICH THE PARTICULAR TYPE OF WASTE MAY BE SUITABLE.

YOU STATE THAT THE INTERPRETATION AND APPLICATION OF THE PHRASE "RAW COTTON IN INVENTORY" USED IN SECTION 348 WOULD APPEAR TO HINGE BASICALLY UPON THE MEANING OF THE WORDS "RAW COTTON.'

YOU POINT OUT IN YOUR LETTER THAT THE TERM "RAW COTTON" HAS A COMMONLY ACCEPTED MEANING BOTH WITHIN THE GOVERNMENT, FOR PURPOSES OF ADMINISTRATION OF VARIOUS PROGRAMS, AND WITHIN THE TRADE AND THAT SPINNABLE COTTON WASTE IS NOT INCLUDED IN THAT TERM.

FURTHER, YOU STATE THAT THROUGHOUT THE HEARINGS ON THE PROPOSED COTTON LEGISLATION, REFERENCES WERE MADE, BY MEMBERS OF VARIOUS SEGMENTS OF THE COTTON TRADE, BY THE UNDERSECRETARY OF AGRICULTURE, AND BY MEMBERS OF CONGRESS, TO BALES "OPENED" BY DOMESTIC MILLS FOR USE OR CONSUMPTION. YOU REFER TO, AND QUOTE, PERTINENT PARTS OF THESE HEARINGS AND STATE THAT IT WOULD SEEM (FROM THE MENTIONED AND QUOTED PORTIONS OF THE HEARINGS) TO HAVE BEEN GENERALLY UNDERSTOOD BY THE SPONSORS AND THE SUPPORTERS OF THE BILL (H.R. 6196) THAT "RAW COTTON IN INVENTORY" FOR PURPOSES OF EQUALIZATION PAYMENTS, WOULD ONLY APPLY TO COTTON THAT HAS NOT YET BEEN "OPENED UP.'

YOU STATE THAT THE QUESTION WHETHER SPINNABLE MILL WASTE IS TO BE CLASSED AS RAW COTTON, ELIGIBLE FOR SUBSIDY PAYMENTS UNDER SECTION 348, OR WHETHER IT IS CLASSED AS ANY OF THE OTHER PRODUCTS OF THE COTTON MILLING INDUSTRY, SUCH AS YARNS, GRAY GOODS, AND PIECE GOODS NOT ELIGIBLE FOR SUCH SUBSIDY PAYMENTS, ARISES FROM THE FOLLOWING BRIEF COLLOQUY BETWEEN SENATORS TALMADGE AND EASTLAND DURING THE SENATE DEBATES ON H.R. 6196, REPORTED IN 41 CONG.REC. 4475 (DAILY ED. MARCH 6, 1964):

"MR. TALMADGE. MR. PRESIDENT, SECTION 101 OF THE BILL DIRECTS PAYMENTS TO BE MADE ON RAW COTTON IN INVENTORY ON THE DATE OF ENACTMENT OF THE BILL --- PAGE 8, LINES 17-18--- TO ASSURE THAT THE CHANGE IN THE COTTON PROGRAM WILL NOT CAUSE SERIOUS AND IRREPARABLE FINANCIAL LOSSES TO THOSE PERSONS WHO MAY FIND THEMSELVES WITH INVENTORIES OF RAW COTTON IN BALES ON HAND WHEN THE BILL IS ENACTED. I WANT TO MAKE CERTAIN THAT THIS LANGUAGE WILL BE INTERPRETED TO APPLY TO ALL GRADES OF SPINNABLE RAW COTTON FIBER IN BALES WHICH INCLUDES BALED COTTON COMBER NOILS AND BALED COTTON CARD STRIPS, POPULARLY KNOWN AS COMBER AND STRIP. THESE GRADES OF RAW COTTON CONSTITUTE COTTON FIBERS WHICH HAVE BEEN SEPARATED BY COMBING AND CARDING AND ARE PACKED IN STANDARD PRESSED BALES WHICH ARE USED FOR THE PRODUCTION OF CERTAIN TYPES OF YARN AND CLOTH IN THE SAME MANNER AS OTHER GRADES OF RAW COTTON. ALTHOUGH THE QUANTITY OF BALED COTTON COMBER AND STRIPS IS VERY SMALL IN COMPARISON WITH THE TOTAL QUANTITY OF RAW COTTON, THERE ARE A NUMBER OF MARKETING FIRMS AND MILLS WHICH ARE CONCERNED PRINCIPALLY OR ENTIRELY WITH THESE GRADES OF RAW COTTON, AND WHOSE LOSSES WOULD BE DISASTROUS IF THEY WERE NOT GIVEN THE SAME PROTECTION WITH RESPECT TO THEIR RAW COTTON IN INVENTORY. I INQUIRE, THEREFORE, WHETHER YOU AGREE WITH MY INTERPRETATION THAT IT IS THE INTENT OF THIS SECTION TO COVER BALED COTTON COMBER NOILS AND BALED COTTON CARD STRIPS IN INVENTORY IN THE SAME MANNER AS OTHER BALED RAW COTTON, FOR THE PURPOSE OF INVENTORY PAYMENTS.

"MR. EASTLAND. MR. PRESIDENT, THE DISTINGUISHED SENATOR IS ABSOLUTELY CORRECT, AND THIS SECTION WILL COVER BALED COTTON COMBER AND STRIPS IN THE SAME MANNER AS ANY OTHER BALED RAW COTTON IN INVENTORY.'

IT MAY WELL BE THAT THE TERM "RAW COTTON" HAS HAD A COMMONLY ACCEPTED MEANING BOTH WITHIN THE GOVERNMENT AND WITHIN THE TRADE, AND THAT WITHIN THE GOVERNMENT AND THE TRADE "SPINNABLE COTTON WASTE" WAS NOT CONSIDERED TO BE "RAW COTTON.' HOWEVER, THE MEANING OF THE TERM "RAW COTTON" IN A STATUTE WOULD DEPEND UPON THE INTENT OF CONGRESS AS DISCLOSED BY THE LEGISLATIVE HISTORY OF THE STATUTE INVOLVED. THUS, WHILE "SPINNABLE COTTON WASTE" MAY NOT BE CONSIDERED "RAW COTTON" FOR CERTAIN PURPOSES, IT MAY BE CONSIDERED "RAW COTTON" FOR PURPOSES OF THE STATUTE INVOLVED HERE IF THE LEGISLATIVE HISTORY OF THAT STATUTE DISCLOSES THAT THE CONGRESS SO INTENDED.

FROM THOSE PORTIONS OF THE HEARINGS ON THE PROPOSED COTTON LEGISLATION MENTIONED AND QUOTED IN YOUR LETTER, IT COULD BE INFERRED THAT "RAW COTTON IN INVENTORY" FOR PURPOSES OF EQUALIZATION PAYMENTS WOULD APPLY ONLY TO BALES OF COTTON THAT HAD NOT YET BEEN "OPENED UP.' HOWEVER, IN CONNECTION WITH THE MATTER, NOTE THE FOLLOWING DISCUSSION BETWEEN UNDERSECRETARY OF AGRICULTURE MURPHY AND CONGRESSMAN MCINTIRE IN SERIAL B, PAGE 227, HOUSE HEARINGS ON H.R. 14, H.R. 151, H.R. 2000 AND H.R. 2495 (SUBSEQUENTLY REPLACED BY HR. 6196).

"MR. MCINTIRE. THEN LET ME CONCLUDE ON THIS: WHENEVER THIS PAYMENT IS APPLICABLE THEN FOR THE FABRIC, FROM THAT POINT ON IT IS GOING TO BE A MATTER OF JUDGMENT AS TO THE PAYMENT. AND ALL OF THE TALKING ABOUT WHETHER IT ARISES IN THE WAREHOUSE OR SOMEWHERE ELSE--- IF IT IS NOT ON THE MILL FLOOR--- MEANS THE MILL WOULD HAVE TO ABSORB THIS DIFFERENTIAL AS A FINANCIAL LOSS. AND FROM THAT POSITION CLEAR TO THE FABRIC THAT IS UNSOLD THERE IS THIS JUDGMENT THAT IS GOING TO BE MADE, IS THAT RIGHT?

"MR. MURPHY. THE MILLS WILL HAVE TO ABSORB THE DIFFERENTIAL ON THE COTTON THAT HAS BEEN WOVEN OR SPUN BEFORE THE EFFECTIVE DATE. THEY WOULD NOT HAVE TO ABSORB THE DIFFERENTIAL ON ANY COTTON THAT WAS RAW COTTON ON THE EFFECTIVE DATE.'

FROM THE ABOVE-QUOTED STATEMENT, IT MIGHT BE UNDERSTOOD THAT THE PHRASE "RAW COTTON IN INVENTORY" FOR PURPOSES OF EQUALIZATION PAYMENTS UNDER THE BILL WOULD APPLY TO RAW COTTON THAT HAD NOT BEEN SPUN OR WOVEN, IN OTHER WORDS COTTON FIBERS THAT HAD NOT BEEN PROCESSED INTO YARN OR CLOTH.

IN ANY EVENT, AS INDICATED ABOVE, SENATOR EASTLAND, WHO WAS SENATE FLOOR MANAGER OF THE COTTON SECTION OF THE BILL, IN ANSWER TO SENATOR TALMADGE'S QUESTION DURING THE FLOOR DEBATE ON THE BILL, AGREED THAT SECTION 348 WOULD COVER "BALED COTTON COMBER AND STRIPS IN THE SAME MANNER AS ANY OTHER BALED RAW COTTON IN INVENTORY.' AND THERE APPEARS TO HAVE BEEN NO OBJECTION TO THE ANSWER GIVEN BY SENATOR EASTLAND.

IN CONNECTION WITH CONGRESSIONAL INTENT THE COURTS HAVE EXCEPTED FROM THE GENERAL RULE EXCLUDING THE USE OF STATEMENTS IN DEBATE OF INDIVIDUAL LEGISLATORS AS TO THE MEANING OF THE BILL, THE STATEMENTS OF THE MEMBER OF THE COMMITTEE IN CHARGE OF THE BILL. HIS REMARKS UPON PRESENTING THE BILL AND THE ANSWERS MADE BY HIM TO QUESTIONS ASKED WILL BE CONSIDERED BY THE COURTS IN CONSTRUING PROVISIONS OF THE BILL SUBSEQUENTLY ENACTED INTO LAW. IT HAS BEEN HELD THAT THESE STATEMENTS ARE IN THE NATURE OF SUPPLEMENTAL COMMITTEE REPORTS AND ARE ENTITLED TO THE SAME WEIGHT AFFORDED FORMAL COMMITTEE REPORTS. SEE SECTION 5012, SUTHERLAND, STATUTORY CONSTRUCTION, 3RD EDITION. CF. 39 COMP. GEN. 883.

THUS, UNDER THE FOREGOING RULE OF STATUTORY CONSTRUCTION THE ANSWER OF SENATOR EASTLAND, THE SENATE FLOOR MANAGER OF THE COTTON SECTION OF H.R. 6196, TO THE QUESTION OF SENATOR TALMADGE SHOULD BE GIVEN GREAT WEIGHT IN DETERMINING THE LEGISLATIVE INTENT OF THE LANGUAGE INVOLVED, PARTICULARLY SINCE THERE APPEARS TO HAVE BEEN NO OBJECTION TO THE EXPLANATION GIVEN. HENCE, IT IS OUR VIEW THAT THE TERM "RAW COTTON" AS USED IN SECTION 348 OF THE AGRICULTURAL ADJUSTMENT ACT OF 1938 AS AMENDED BY SECTION 101 OF THE AGRICULTURAL ACT OF 1964 WAS INTENDED TO INCLUDE SPINNABLE COTTON WASTE, SUCH AS COMBER NOIL AND CARD STRIPS IN MILL OWNED INVENTORY ON THE DATE OF THE ENACTMENT OF SUCH SECTION.

ACCORDINGLY, SPINNABLE COTTON WASTE, SUCH AS COMBER NOIL AND CARD STRIPS, IN MILL OWNED INVENTORY ON THE SPECIFIED DATE, WOULD BE ELIGIBLE FOR PAYMENTS UNDER SECTION 348 OF THE AGRICULTURAL ADJUSTMENT ACT OF 1938, AS AMENDED BY SECTION 101 OF THE AGRICULTURAL ACT OF 1964.