act became effective, what has been the progression here; has there been a steady increase of this percentage?

Mr. FRAZIER. The act went into effect in 1959, and I believe 1960 was the first full year of operation of the industry under the act. So, the first full year of operation of the industry under the act until the most recent year would be the picture of what has taken place.

Mr. ZWACH. Do you feel that this is the trend, that this will continue?

Mr. FRAZIER. Yes, fortunately, I do.

Mr. ZWACH. That is all, Mr. Chairman.

Mr. PURCELL. Thank you gentlemen very much.

We will now call Mr. Edward Dunkelberger, who represents the National Canners Association.

STATEMENT OF EDWARD DUNKELBERGER, COVINGTON & BURLING, ON BEHALF OF THE NATIONAL CANNERS ASSOCIATION

Mr. DUNKELBERGER. Thank you, Mr. Chairman.

My name is Edward Dunkelberger. I am a member of the firm of Covington and Burling and am appearing today on behalf of the National Canners Association, a nonprofit trade association whose almost 600 members having canning plants in 44 of the 50 States pack approximately 85 per cent of our national production of canned fruits, vegetables, meats, sea foods and specialties.

The members of the National Canners Association who pack canned poultry products have been fully subject to the requirements of the Federal Poultry Products Inspection Act ever since it became effective after enactment 10 years ago. Canned poultry and poultry products are prepared from federally inspected poultry, are packed under continuous Federal inspection, and are distributed widely in interstate and foreign commerce. Indeed, the canning industry supported the enactment of the Poultry Products Inspection Act of 1957, as it has many other Federal laws designed to assure that consumers will receive a safe, wholesome, and truthfully labeled food supply.

There can be no dispute as to the salutary effects of the Poultry Products Inspection Act for consumers, manufacturers, and producers, nor can there be any question that requirements equivalent to those imposed under the Federal act should be applicable to all poultry and poultry products sold for human consumption in this country. The National Canners Association endorses and supports the enactment of Federal legislation that will achieve that purpose.

We believe that H.R. 15146 would be an important and effective forward step in consumer protection, and that at the same time, it would protect those companies now under Federal inspection against the possibility of unfair competition from purely intrastate firms. The canning industry also strongly endorses those provisions of the bill that will prevent the sale of imported poultry products not produced in accordance with the requirements of the Federal act.

While the National Canners Association supports H.R. 15146, we would like to urge upon this committee the adoption of a few-but we believe vitally important-amendments. These concern three aspects

of the bill that have received little attention or interest, but which we raise, we submit, substantial problems of legislative intent, public policy, and constitutionally limitations.

Our initial-and primary-concern is with section 11 of the bill, in particular, that portion which would become section 11(b) of the act and which appears at page 27 of H.R. 15146. This section provides that companies regulated by the act would be required to maintain business records which will fully disclose "all transactions involved in their businesses," and to afford to representatives of the Secretary of Agriculture access to their places of business and opportunity to examine "the facilities, inventory, and records thereof." The section goes on to authorize the Secretary's representative to copy all records and to take samples of inventory upon payment of their fair market value. The inspection authority conferred under these provisions could scarcely be more sweeping; it has no counterpart in other Federal legislation regulating food products, prior to the enactment of similar language in the 1967 amendments to the Meat Inspection Act. The recordkeeping and inspection requirements would extend without limit not only to the receipt, handling, processing, or shipment of poultry or poultry products but also to corporate matters, sales and pricing data, personnel records, research data, and to all other records in each business location and corporate office, regardless of whether they have anything to do with poultry transactions. The language of this provision goes so far as to require a corporation engaging in any activities subject to the act to maintain and disclose records relating to all of the other lines of business in which the corporation is engaged.

This unlimited inspection authority in section 11 (b) of the act, as it would be amended, may be contrasted with the language of section 704 of the Federal Food, Drug, and Cosmetic Act, which provides for the inspection of all plants producing food for shipment in interstate commerce. As amended in 1953, this section authorizes FDA investigators to enter at reasonable times, any factory, warehouse, or establishment in which foods are manufactured, processed, packed, or held for introduction into interstate commerce, and to inspect at reasonable times and within reasonable limits and in a reasonable manner, such factory, warehouse, or establishment and "all pertinent equipment, finished and unfinished materials, containers, and labeling therein."

The legislative history of the 1953 amendments to section 704 made it clear that this inspection authority, which was deemed by Congress to be wholly adequate for the protection of the public, did not extend to the documents, records, and files in food, drug, and cosmetic company plants and offices. In 1962 limited records' inspection authority was enacted for prescription drug plants.

Of even greater significance to Congress' consideration of the inspection provisions of H.R. 15146 are the Supreme Court decisions of last June in See v. Seattle and Camara v. The Municipal Court of the City and County of San Francisco, in which the Court held that fourth amendment prohibition against unreasonable search and seizure extends to governmental inspections of residential and commercial property. In those decisions the Supreme Court condemned warrantless

compulsory inspection of business establishments and held that a business proprietor can legally refuse to admit a Government inspector unless he is armed with a search warrant. As the Court stated in See:

We therefore conclude that administrative entry, without consent, upon the portions of commercial premises which are not open to the public may only be compelled through prosecution or physical force within the framework of a warrant procedure. (387 U.S. at 545.)

There can be no question that these cases-decided less than a year ago-have direct application to Federal statutes authorizing food plant inspection. The FDA issued a press release shortly after the Court's action stating that the decisions called for abrupt change in its inspection procedures. Food and drug inspectors were instructed to apply to U.S. district courts for inspection warrants whenever owners or managers of business plants refused to consent to an inspection voluntarily.

Indeed, the U.S. Court of Appeals for the Third Circuit has already held that Camara and See are fully applicable to the FDA's inspection authority under section 704 of that act and that the fourth amendment as interpreted in these Supreme Court decisions applies to business records. United States v. Stanack Sales Co., Inc., paragraph 40, 284 Food, Drug, Cosmetic Law Reports (3d Cir., Jan. 5, 1968). In spite of the fact that section 704 grants FDA access to certain prescription drug plant records, as we have already noted, the court held that such access could not be obtained without a subpena or search warrant that delimited the confines of the search by designating the needed documents.

The constitutional problems raised under the Food, Drug, and Cosmetic Act are increased geometrically by H.R. 15146 which, unlike the former act, would authorize unlimited access to company records. Refusal by a company to permit such inspection would apparently be dealt with in one of two ways: The Secretary could either refuse to provide plant and product inspection, thus rendering any interstate shipment of poultry from the plant in violation, or he could prosecute the offending company or individuals for a criminal violation under section 12(a). In either case the constitutional limitations announced in Camara and See-and applied in Stanack-would come into play, to require that such penalties could be imposed only if the inspector refused access to records had a search warrant or subpena which designated the records he wished to see.

It is no answer to say that the Secretary need not insist on his right to inspect all records without limit, but that he may establish that right as a condition of the company's right to ship poultry products in interstate commerce. The Court stated in See that it did not reach the question of how the fourth amendment prohibition should be applied in those instances where inspection is required prior to operating a business or marketing a product. But the Court's opinion leaves no doubt that the Government can never insist on unlimited search of premises and records without a warrant.

The Supreme Court has repeatedly ruled that Congress may not erode constitutional rights indirectly by imposing conditions any more than it can by affirmative command. As the Court said in Gomillion v. Lightfoot, 364 U.S. 339, 347-348 (1960), "a constitutional power (such as regulation of interstate commerce) cannot be used by way of

a condition to attain an unconstitutional result." Since "constitutional rights would be of little value if they could be thus indirectly denied."

The inspection provisions of H.R. 15146 are, of course, based on similar language in last year's amendments to the Meat Inspection Act. Serious concern was expressed in the Senate and House concerning this extremely broad recordkeeping and inspection provision. Congressman Purcell stated that it was the intent of the House that:

[T]he Secretary of Agriculture shall issue regulations setting forth specifically what records shall be kept and under what circumstances they are to be made available to duly authorized representatives of the Secretary, and to define in such regulations, after notice and hearings, the reasonable terms and conditions whereby such inspections may be made in conformance with applicable constitutional requirements.

This intention and understanding was also reflected in Senate debate and was explicitly set forth in the conference report.

Thus, the legislative history of this meat inspection provision makes it clear that Congress recognized its constitutional difficulties. Congress sought to cure them by directing the Secretary to provide by regulation some of the particularity that was missing from the statutory language, in the light of the requirements of the fourth amendment.

But the promulgation of such regulations would not in itself satisfy the requirements of the fourth amendment. In Camara and See the Supreme Court expressly invoked the numerous cases in which Federal courts have refused to uphold subpenas demanding company records that are unduly broad and do not specify with particularity the records to be produced or examined.

The Court in See emphasized that even though a statute grants a right of access to corporate records, the Government agency "must delimit the confines of a search by designating the needed documents in a formal subpena." 387 U.S. at 544-45. The opinion goes on to hold that it is "these rather minimal limitations on administrative action which we think are constitutionally required in the case of investigative entry upon commercial establishments." And the court of appeals has now expressly held in Stanack that this same requirement of designation applies to a search warrant granting access to business records.

We strongly urge that this committee write into H.R. 15146 at least minimal constitutional limitations along this line, instead of delegating to the Secretary the sole responsibility for interpreting and applying the fourth amendment to hopelessly broad statutory language. The bill could be amended to authorize the Secretary to adopt regulations specifying which company records would be relevant to the effective enforcement of the act and the accomplishment of the statutory purposes. These regulations should also specify the terms and conditions under which specific records might be sought by inspection warrant or subpena.

If an inspector then deemed it necessary to see certain records of a company, he could present his request to the company, designating with particularity which records he wished to see. If the company did not believe that such records were within the type specified by the Secretary in regulations as necessary for enforcement of the act, or if for any reason questioned the inspector's authority, it could refuse

inspection until such time as the inspector obtained a search warrant or subpena.

This three part approach of (1) administrative specification by regulation of what records should be kept and made available for effective enforcement of the act, (2) designation by the inspector of what particular company records he wishes to see, and (3) the use of search warrants and subpenas when access is denied, would not only meet the requirements of the fourth amendment, but would also provide an effective means for achieving the statutory purpose. Attached to our statement is suggested language that would carry out this approach.

We would like to emphasize that the National Canners Association does not rest the need for these proposed revisions on any anticipation that the Department will act improperly under the act or engage in unlimited ransaking of files. Indeed, the industry's experience demonstrates that the Department has exercised its powers reasonably and with diligence. Nonetheless, the possibility for abuse does exist under the present form of the bill, and the Supreme Court has made it clear that the type of inspection contemplated by the bill will not be tolerated. It is for this reason, and this reason alone, that the proposal to salvage the inspection provisions has been submitted. As to rulemaking procedure:

There is another respect in which the bill can be materially improved. The Poultry Products Inspection Act does not now, nor would it after enactment of H.R. 15146, provide for hearings and a record in the event of disagreement as to the wisdom or propriety of any of the many kinds of administrative regulations promulgated under the act. There is no requirement that such regulations be based upon substantial evidence, nor is there any provision for findings, indeed, for any record, upon which judicial review can be sought if necessary. The requirement for a hearing, at which the officer who desires to promulgate detailed regulations must appear and present for the record the facts upon which their need and reasonableness is based, is an important and now well-established procedural safeguard. Where Congress deems it to be necessary and in the public interest to delegate to an administrative agency the formulation of substantive regulations, it has in recent years recognized that such delegation of its legislative power must be accompanied by at least minimum procedural safeguards for those who will be governed by the regulations. The Federal Food, Drug and Cosmetic Act of 1938 contains a carefully considered procedural framework in section 701(e), (f), and (g), which provides for public notice of rulemaking, an opportunity for comments by interested persons, and the publication of a regulation after consideration of these comments. If a person who is adversely affected by the regulation objects within 30 days and demands a hearing, a hearing will be held if the objection raises factual issues. Any interested person may appear at the hearing and present evidence. The final regulation must be based on substantial evidence in the hearing record. Judicial review is provided for any person adversely affected by the final regulation.

This procedure has proved to be beneficial and workable for all concerned. It applies to the promulgation of food standards, food