INTERGOVERNMENTAL RELATIONS SUBCOMMITTEE

[H. Rept. No. 445, 88th Cong., 1st sess.]

CONSUMER PROTECTION ACTIVITIES OF STATE GOVERNMENTS (PART 1-THE REGULATION OF DRUGS AND RELATED PRODUCTS)

Seventh Report by the Committee on Government Operations (Submitted to the Speaker June 24, 1963)

This is the second in a series of reports resulting from the subcommittee's study of consumer protection activities at all levels of government. An earlier report (H. Rept. No. 1241, 87th Cong., 2d sess.) summarized the consumer protection activities of Federal departments and agencies.

This report, which is based upon a questionnaire survey, describes the consumer protection activities reported by States for the regulation of drugs and related products such as therapeutic devices, cosmetics, human and veterinary biologics, and hazardous household substances. It contains information on the legal authority, administrative arrangements, expenditures, personnel, laboratory equipment and facilities, work programs and intergovernmental relations and problems reported by the respective States in connection with these activities.

The report provides valuable information previously unavailable to Government officials and the public.

[H. Rept. No. 921, 88th Cong., 1st sess.]

CONSUMER PROTECTION ACTIVITIES OF STATE GOVERNMENTS (PART 2-THE REGULATION OF FOODS AND RELATED PRODUCTS)

Seventeenth Report of the Committee on Government Operations. (Submitted to the Speaker November 22, 1963)

This report is the third in the subcommittee's overall study of consumer protection activities of Federal, State, and local governments and is the second dealing with the activities of State governments. It describes the consumer protection activities for the regulation of foods and related products reported by the States in response to a subcommittee questionnaire. These include the inspection and/or grading of specific commodities, such as meat, poultry, eggs, fresh fruits and vegetables, dairy products, and seafoods; the regulation of food-handling establishments, such as restaurants, processing plants, and distribution and storage facilities; and the regulation of certain

potentially dangerous food-related products such as pesticides, food additives, and medicated animal foods.

The report contains information on the legal authority, administrative arrangements, expenditures, personnel, laboratory equipment and facilities, work programs, and intergovernmental relations and problems reported by the respective States in connection with these activities.

This report contains information previously unavailable to Government officials and the public.

[Subcommittee print, October 1964]

OPERATIONS OF BILLIE SOL ESTES

This print was issued as a subcommittee report during the 88th Congress. It was approved by the full committee during the 1st session of the 89th Congress.

The 436-page report provides a detailed account of significant activities of Billie Sol Estes involving programs or personnel of the Federal Government. The subcommittee investigation disclosed that Estes had obtained contracts for storage of Government grain by submitting false financial statements and that inadequate regulations and procedures, lack of alertness and poor judgment contributed to the success of his misrepresentations. The subcommittee found that irregularities in Estes' operations had been investigated many times by agencies of the Federal Government, beginning at least as early as 1953, and concluded that there was an almost total lack of effective coordination and communication between or within the departments, agencies, and subunits involved.

RECOMMENDATIONS

IMPROVING COORDINATION AMONG AND WITHIN FEDERAL AGENCIES CONDUCTING AUDITING AND INVESTIGATIVE WORK (Recommendation No. 1):

The subcommittee's investigation disclosed a serious lack of effective coordination and communication among Federal units engaged in auditing and investigative activities.

The subcommittee recommends that the President authorize and direct a comprehensive review of Federal audit and investigative activities with a view to securing improved coordination and communication both among and within Federal departments and agencies. The subcommittee believes that such a review should include--but not be limited to consideration of appropriate actions designed to promote the following objectives:

(a) To insure that information coming to the attention of Federal agencies or personnel from outside sources is promptly referred to all agencies of the Federal Government that might have a potential interest in it or responsibility for taking action concerning it. Efforts should be made to better inform Federal employees, particularly those engaged in auditing and investigative activities, concerning

the types of information that may be significant to other agencies. Federal employees should be encouraged and instructed to regard themselves as having a responsibility for the public interest generally, in addition to the specific duties assigned by their particular agency.

(b) To insure that Federal employees are aware of and make appropriate use of sources of information available within the Federal Government.

(c) Where evidence of irregularities may be of potential interest to more than one Federal agency, appropriate measures should be taken to insure proper coordination of Federal investigative activity with a view to avoiding both unnecessary duplication of effort and inadvertent failure to cover significant matters. This would include such measures as joint investigations, where desirable, temporary assignment of personnel with special experience or qualifications to assist other agencies, joint determinations concerning priorities where one agency's work might conflict with another, etc.

(d) In planning, conducting, and assigning priorities to investigative work, greater emphasis should be placed on giving advance consideration to the relative importance of criminal prosecutions which may result and on obtaining greater coordination between personnel responsible for investigative work and personnel responsible for the conduct of prosecutions or litigation.

The subcommittee requests that it be informed of the action taken with respect to this recommendation.

RESULTS. The subcommittee has been advised that it may expect a reply in the near future concerning action taken with respect to this recommendation.

ACTION TO RECOVER PROFITS DERIVED FROM STORAGE CONTRACTS (Recommendation No. 2):

Billie Sol Estes secured approval of contracts for storage of Government grain by misrepresenting his financial condition. Since the Government was induced by fraud to grant these contracts, the subcommittee recommends that appropriate legal action be taken with a view to recovering, insofar as feasible, profits derived from them.

RESULTS. The Department of Justice has taken legal action to recover sums paid out under grain storage agreements with Billie Sol Estes and the matter is awaiting trial.

LEGISLATION SPECIFICALLY PROHIBITING SALE OF FRAUDULENT COMMERCIAL PAPER TO NATIONAL BANKS (Recommendation No. 3):

Because of a possible loophole in Federal law, the sale of fraudulent commercial paper to a national bank probably is not a viola

tion of Federal law in the absence of use of the mail, interstate transportation, or knowledge or participation by an officer or employee of the bank. The subcommittee recommends that the appropriate committees of the Congress give consideration to making it a specific violation of Federal law to knowingly sell fraudulent commercial paper to national banks, without regard to whether or not use of the mails, interstate transportation, or knowledge or participation by an officer or employee of the bank is involved.

RESULTS. This recommendation has been brought to the attention of the appropriate committees of Congress.

REVIEW OF POLICIES AND PROCEDURES WITH RESPECT TO ASSIGNMENT OF PROCEEDS OF GOVERNMENT CONTRACTS (Recommendation No. 4):

The subcommittee's investigation indicated that it has been the practice of the Department of Agriculture to allow assignment of the proceeds of contracts with the Department to third parties without considering whether or not such assignments operate to the benefit or detriment of the Government. The subcommittee recommends that the Department of Agriculture reexamine its policies and procedures with respect to the assignment of proceeds of Government contracts with a view to eliminating assignments which are not in the best interests of the Government.

RESULTS. The Department of Agriculture made the following report to the subcommittee:

It is the policy of CCC to permit assignments of moneys due or to become due under any contract, except where it is determined in advance of the issuance of notices, announcements and regulations, or the negotiation of contracts, that to permit such assignments in connection with a particular program would hamper operations. CCC in allowing assignments follows the requirements of the Assignment of Claims Act of 1940, except that it also permits assignments to other than financing institutions subject to the approval of the contracting officer or other authorized official.

In reviewing this policy, we have concluded that the approval of an assignment to other than a bank, trust company, Federal lending agency, or other financing institution should be based on a determination that the assignment is in the best interests of CCC. We deem it imperative, therefore, that each Notice of Assignment be carefully examined to determine that the assignee has indicated thereon his proper status (financing institution or other person or firm), and that any questions with respect thereto be resolved before the assignment is acknowledged or approved. Instructions to this effect were issued to all offices concerned on January 7, 1965.