Dr. CLARKSON. I did not state that right. Just to sell to him is not evidence of interstate commerce, because he may handle your carcasses, and handle them within the State, but if you are going to supply a Federal plant with meat for processing, for sausage, for hams, and for all of that sort of thing, then that is evidence of the movement of your carcasses into channels of interstate commerce and that is a sufficient showing on that point to justify your request for Federal inspection.

Mr. POAGE. Did you ever turn down a packinghouse when they requested Federal inspection, on the ground that they were not selling in interstate commerce?

Dr. CLARKSON. On the ground that their proposal did not show that they were going to move their product in interstate commerce? Mr. POAGE. Yes.

Dr. CLARKSON. I do not know. I presume that we may have.

Mr. POAGE. How could you have done so? If they had had a good lawyer, he would be able to plead that they expected to sell somebody in interstate commerce.

You do not have any recollection of ever having turned down anybody in the State of California on the ground that they had failed to plead that they were going to hope to sell in interstate commerce, have you?

Dr. CLARKSON. I do not remember.

Dr. MILLER. It works like this: The applicant makes out a form. One of the questions concerns his intentions to sell in interstate commerce. And, if So, it would not be turned down.

Mr. POAGE. That is right. You never have had an application turned down on the grounds that he did not show that he was going to do business in interstate commerce?

Dr. MILLER. So long as the application clearly stated his intention. Mr. POAGE. And every application you have ever had from the State of California clearly showed that he had the intention of doing business in interstate commerce, did it not?

Dr. MILLER. I do not know.

Mr. POAGE. As a matter of fact, have you turned down any application in any State where the applicant said that he was going to do business in interstate commerce?

Dr. MILLER. There are those cases where the applicant does not intend to do that.

Mr. POAGE. Why does the applicant indicate that? Why does he ever indicate that?"

Dr. MILLER. An applicant who needs Federal inspection needs it to sell to federally inspected plants, to sell to someone for shipment interstate, to sell to a governmental agency.

Mr. POAGE. That is right. Why, then, would anybody ever apply if he did not intend to do those things? Why should he apply to you-he gains nothing by applying to you?

Dr. MILLER. I think that I can sum it up. He would like to have the mark of inspection as an advertising device. That is just what happens sometimes.

Mr. POAGE. I come back then to the question-I am curious about this thing can you get it from your records-I do not expect you to

have it here but I do think that you might tell us whether you actually remember ever having turned down one single application because it did not show an attempt to do business in interstate com

merce.

Dr. MILLER. I am not sure that I can find such a file, but I know that it has happened.

Mr. POAGE. If you would get the file and show us just how many have happened in the last 20 years, it would help. I want to get this in the record. I want the names of those you turned down.

Dr. CLARKSON. I think there is one aspect of this that leads to quite some confusion. We have had quite a number of cases down through the years. I cannot think of a specific instance of rejection of an application, but a city and a State may adopt an ordinance stating that they will allow distribution in the city of only those meats which are inspected by their own force or which are federally inspected, or if they have a State system, which are State inspected. Then some operator who is outside of that city, but who has no intention of sending his products interstate wants to get them into the city, so he applies for Federal inspection. There is no ground for us to respond to that kind of an application.

(The data referred to above is not available and therefore cannot be supplied.)

Mr. POAGE. After all, all he has to do is to sell to someone in Shreveport, La., or offer to trade with him.

Dr. CLARKSON. And he qualifies. That may be, but that was not his intention that was not really what he wanted.

Mr. POAGE. He could testify that he intends to do so, in all good faith. If may be that he intends to do it for the specific purpose of qualifying. There is nothing in your law that says why he is going to engage in interstate commerce. He may do it to get the certificate. All he has to do is say that he will do that, to qualify.

Dr. CLARKSON. Most of these cases come to light and this factor is made known in the course of correspondence, or in the course of conversation. When we get right down to an application we may find that we have not had to refuse any, but we know that the situation has arisen from time to time.

Mr. POAGE. I would want to see if you have actually turned down any applications and if you turned down any from the State of California.

Mr. HEIMBURGER. Dr. Clarkson, after you receive an application which shows on its face that the applicant would be eligible for Federal inspection, do you make some investigation to see if he actually does have a prospect of shipping in interstate commerce, and do you require that any percentage of his production go into interstate commerce?

Dr. CLARKSON. There is no stated evidence that we would require, unless we had some collateral information to indicate otherwise that his intent was not in accord with his statement.

Mr. HEIMBURGER. Suppose you had reason to believe that he did not have any prospect of selling meat across State lines, would you conduct an inquiry?

Dr. CLARKSON. We would discuss it with him; yes.

Mr. HEIMBURGER. I know the answer to this, but

Mr. POAGE. Before you get to that, I want to go a little further. There is not a single thing that you can do, as I understand it, if I want to run a packing plant in Waco, Tex., and I never sell one pound outside of the county, but I decide I want Federal inspection, and I am willing to pay for it, and I am going to offer somebody in Shreveport, La., steaks at 15 cents a pound, and he takes me up on that offer, "Yes, I will buy the steaks at 15 cents a pound if you have Federal inspection," and then I can, in all good faith, in perfect honesty, tell you that I have a prospective customer in Shreveport, and there is not a thing in the world that you can do about it.

Dr. CLARKSON. Nothing in the world.

Mr. POAGE. How can anybody who has sense enough to read and can fill in an application fail to qualify? It may cost me $2 or $3 to do it, but I can still get your inspection. You cannot keep me out because of the interstate commerce clause, can you?

Mr. HEIMBURGER. I want to ask this for my own interest.

When a plant has been approved and is receiving Federal inspection, do you inspect all of the output of that plant, or only that part which he designates is going into interstate commerce?

Dr. CLARKSON. We inspect all of it.

Mr. HEIMBURGER. That is what I thought. That leaves me just as far in the dark as I was.

Dr. Boyd, may I inquire of you how many State, but non-Federal, plants are in California?

Dr. BOYD. There are 365 plants, approximately.

Mr. HEIMBURGER. They are under State, but not under Federal inspection?

Dr. BOYD. Yes.

Mr. HEIMBURGER. What would you do if all of these plants applied tomorrow for Federal inspection?

Dr. CLARKSON. Well, that is a question that can only be answered in one way. We would have to evaluate each of these applications as we would if only one of them came in. There is no way, under the law, where we can turn one down because we think there are too many of them.

Mr. HEIMBURGER. In other words, you would try to provide 365 new inspectors for California?

Dr. CLARKSON. We would have to shift our force. That might cause some slowdown in other plants. We would have to provide the number of inspectors that are needed. It would not be 365 inspectors, or whatever the number is.

Mr. HEIMBURGER. I understand that.

Dr. CLARKSON. We sometimes have one inspector for several plants; sometimes we have a number of inspectors for one plant, depending upon the size of the business.

Mr. HAGEN. I want to commend Mr. Poage and Mr. Heimburger on their analysis of this problem.

It has been stated here by the Department witnesses, mere intent to sell to a Federal house is a sufficient qualification for Federal inspection assuming the application is made and the applicant's plant meets Federal standards.

Dr. CLARKSON. The physical product of the plant has to move in to the federally inspected plant and it cannot be without being federally inspected. When it is in there, it is in the channels of interstate commerce.

Mr. HAGEN. Let us take a hypothetical example. Mr. Jarvis has a Federal house. I have a State house. I can visualize that maybe 3 months from now I might have some beef stew or something left over that I would like to sell to Mr. Jarvis. So I want a Federal license. On that kind of a showing can I get one?

Dr. CLARKSON. You are moving products into his establishment? Mr. HAGEN. Into a Federal house. Presumably this intent alone provides the Federal incident entitling me to Federal inspection. Dr. CLARKSON. That would be moving into channels of interstate commerce. And you cannot go in there unless you have Federal inspection.

Mr. HAGEN. But could I get it on the basis that I anticipate 3 months from now I will make a sale to him without any firm showing in that regard.

Dr. CLARKSON. I do not know of any reason why you could not. What keeps going through my mind is this, that you want to sell him the carcass he can buy the carcass and distribute it within the State of origin, but he cannot bring it into that plant.

Mr. HAGEN. That is right. I intend to sell them in a way to get them into his plant.

Dr. CLARKSON. That satisfies the reasonable intention of moving your product into interstate commerce.

Mr. HAGEN. Let us say that I got my license and made only one sale in 3 years, would you have the authority to revoke my grant on that basis, when you know that my plant is just the same physically?

Dr. CLARKSON. If it is established that there is no interstate business, we have no authority to continue with the inspection. I do not know of any case where it has happened.

Mr. HAGEN. You know of no such case?

Dr. CLARKSON. None that I know of.

Mr. HAGEN. Would you discontinue it on the basis I was no longer engaging in interstate commerce?

Dr. MILLER. The plant owner can very quickly solve the question by saying that he is in the course of opening up business across the State line or in a Government plant. There is no level of interstate business that the plant must conduct to get the inspection. It is enough that he needs it to stay in business. There could be a period during which he would have no customer who would qualify him technically. The fact that he continues on with the inspection, and that he states he intends to continue to engage in that kind of business, in other words, in response to this theoretical situation you mentioned, we would raise the question, but say that there would be cases that could satisfy the question immediately, just as I said earlier, by telling us that he intends to open up the kind of business that would qualify him

for this.

Mr. HAGEN. To get back to Mr. Poage's point, I am not sure that you have answered it unequivocally. As to this applicant, do you go back of his stated intention to engage in some kind of interstate transaction?

Dr. MILLER. I endeavored to talk to the situation that you identified, as I remember it. We have a packer here who has the inspection and for a long period of time he has not sold in interstate commerce.

Mr. HAGEN. That is the question I presented. You said that you would not yank his permit.

Dr. MILLER. That is right.

Mr. HAGEN. Though he is no longer demonstrably in interstate business.

Dr. MILLER. That is correct.

Mr. HAGEN. But to get back to Mr. Poage's question, do you go back of this man's stated intention to engage in Federal transaction? Dr. MILLER. You are asking if we would go back of it?

Mr. HAGEN. Yes.

Dr. MILLER. I say that is not the rule to go back. We accept his statement on its face.

Mr. HAGEN. There is nothing required of him to prove it or anything like that?

Dr. MILLER. That is right, because there is this practical situation that we know from experience that a packer will not normally go to the expense of qualifying for the inspection unless he needs it. It is not only this first expense of putting his plant in shape, but he has an inspector under that plan; he is operating under control that normally is not fascinating to a plant operator who does not need the inspection.

Mr. BREEDING. As a businessman you could not affort to ask for this Federal inspection, because if you did then you would jeopardize the other business with which you trade?

Mr. JARVIS. I could still sell the State houses.

Mr. BREEDING. In other words, would not most of the packing plants in the State have to be recognized by the Federal Government before you could ask for Federal inspection?

Mr. JARVIS. The sheer numbers alone, the 366 plants versus 164, I believe it is, the first being the State and the second the Federal, cuts down my source of supply. This, also, cuts down on the number of plants that can bid on this Army, Navy, and whatnot business. By the pure mechanics of competition the Government can buy at a cheaper price, because these State houses have times when they can afford to sell cheaper, because they have an oversupply of these products, and being a State house in my particular business, unless this bill is recognized, we still have to remain State, because we have had experience over the last good many years, 20 years to be exact, or a little over, during periods of short supplies, when some of the larger packers, who have their own supply houses, for the restaurant trade and the like, where we would have been in one bad shape if we had not been just State.

Mr. HAGEN. I want to ask one more question of Dr. Clarkson.

Mr. POAGE. I am not stopping Mr. Jarvis, but Dr. Clarkson said that he could remain until 12 o'clock, and he has remained 40 minutes over. I am just excusing Dr. Clarkson.

Mr. HAGEN. I want to ask Dr. Clarkson or Dr. Miller one question. What costs are involved in getting and keeping the Federal inspection in the plant? Are there any permit fees involved?