INTERPRETATION AND LEGISLATIVE HISTORY OF SECTION 22

To answer the question, we have no judicial interpretations, but we do have the cumulative interpretations by Congress and the executive branch as section 22 emerged and evolved in the shifting agricultural and trade policies and a succession of amendments over the past 30 years. It is, of course, clear that in construing statutory language the ultimate objective is to ascertain the intention of Congress, see, e.g., United States v. Stone and Downer Co., 274 U.S. 244, 252 (1927), and that in determining the congressional purpose and meaning reference may be had to the legislative history, including the pattern of prior enactments and informed congressional discussion', and to administrative interpretations, especially of any agency which suggested the enactments or which is charged with its administration. Particularly is this so where, as here, the language in question ("program," "operation," "loan," or "purchase") is not defined in the statute and is not made up of terms of art. United States v. American Trucking Associations, 310 U.S.

534, 543, 545 (1940).10

We have concluded that the history of the development of section 22 to its present form demonstrates beyond doubt that the programs and operations embraced by section 22 are those price support and adjustment programs of the Department of Agriculture which are designed to support or stabilize the prices of specific agricultural commodities and products.

Agricultural Adjustment Act, 1933

The Agricultural Adjustment Act was enacted in 1933. In the prior years, there had developed a great disparity between prices of farm products and other products, so that the exchange value of farm products for industrial goods had fallen far below the pre-World War I average. This effect on farm income was even greater in respect of our export products, such as cotton, wheat, tobacco, and rice, of which the contraction of export demand built up huge surpluses on the domestic market, further depressing prices and farmer income and purchasing power.

11

The Agricultural Adjustment Act 1 sought to correct this economic condition by control of farm production and marketing, in order to bring supplies into line with demand at prices which would afford farmers a return commensurate with their income during the 5 prewar years, 48 Stat. 31 (1933), sections 1 and 2. Control of production was to be accomplished by making rental or benefit payments to farmers who voluntarily curtailed production of seven basic commodities.12 The payments were to be financed by a processing tax on the first domestic processing of the commodities, whether domestic or imported.

The marketing controls, aimed at giving the agricultural producer more nearly his fair share of the national income, were to be achieved by Government licensing of, or market agreements with, processors, associations of producers, and others engaged in the handling in interstate commerce of any agricultural commodity or product (not merely the seven basic commodities which were subject to production control).

There is very little judicial interpretation of any phases of sec. 22. United States v. The Best Foods, Inc., 47 CCPA (Customs) 163 (1960), affirming, 158 F. Supp. 583 (Cust. Ct. 1957), dealt with a proclamation under sec. 22 imposing both a fee and a quota restriction upon the importation of peanuts. It was held that sec. 22 authorized the imposition of a fee or a quota but not both. The opinion below noted that peanuts are one of the so-called basic farm crops, and that production was limited under a program established by congressional authority, 158 F. Supp. at 585.

In C. Tennant, Sons & Co. v. Dill, 158 F. Supp. 63 (U.S.D.C., S.D. N.Y. 1957), the court upheld a proclamation under sec. 22 restricting the importation of tung oil from Paraguay (which was not a GATT signatory) and denied plaintiff the benefit of the GATT "en route" exemption. The court noted that tung oil was the subject of a Department of Agriculture price support program.

7 United States v. C.I.O., 335 U.S. 106, 112 (1948), construing the word "expenditure" by a labor union. United States v. American Trucking Association, 310 U.S. 534, 549. A statement by an agency representative presented to a legislative committee during hearings on proposed legislation is entitled to the weight which the Supreme Court has given to contemporaneous interpretations of an administrative agency affected by a statute, particularly where the agency actively sponsored the particular provisions. The statement is highly relevant and material evidence of a general understanding. Shapiro v. United States, 335 U.S. 1, 12, fn. 13 (1948).

Billings v. Truesdell, 321 U.S. 542, 552–553 (1944); Roland Co. v. Walling, 326 U.S. 657, 677 (1946); United States v. Public Utilities Commission, 345 U.S. 295, 314–315 (1953).

10 In this case, the Supreme Court construed the unmodified word "employee" in the Motor Carrier Act provision for ICC regulation of qualifications and maximum hours as not meaning all employees, but only those whose duties affect safety of operations, relying upon the legislative history and contemporary agency interpretations. The Court stated that, when a literal reading of the language used would lead to a result "plainly at variance with the policy of the legislation as a whole," the purpose must govern. 11 Act of May 12, 1933, 48 Stat. 31.

12 Defined in sec. 11, as wheat, cotton, field corn, hogs, rice, tobacco, and milk and its products.

Amendments 1935, section 22 enacted

In 1935, a number of amendments were made to the Agricultural Adjustment Act, 13 including:

(1) An increase in the Secretary of Agriculture's power of production cont, ol by authorizing payments to dispose of surpluses of the seven basic commodities by exportation at world prices, diversion to relief channels, and conversion into low-cost byproducts.14

(2) Section 32, appropriating 30 percent of the customs revenue each year for use of the Secretary of Agriculture in encouraging and supporting exportation, domestic consumption by diversion from normal channels of trade, and adjustments in quantity planted or produced for market, of any farm commodity (not merely the basic seven commodities).

(3) Section 31, adding new section 22 of the Agricultural Adjustment Act,15 providing for quantitative control by the President of imports which might interfere with any program or operation undertaken under this title (the Agricultural Adjustment Act),16 or which might substantially reduce the amount of any product processed in the United States from any commodity as to which an adjustment program is in operation under this title.

As introduced by its sponsor Congressman Boileau, at the request of dairy farmers, the first version of section 22 was regarded as an adjunct of the agricultural adjustment program which would be called into play where the attainment of parity price for farmers was being jeopardized.1

The House Committee on Agriculture expressly recognized this to be the purpose.

"Efforts to restore agricultural prices in this country will not be wholly successful if competitive foreign imported articles are allowed to take the domestic market away from the domestic products. To obviate that danger and to provide the necessary flexibility in order that whatever restriction of imports is required may not be absolute and may be adjusted to meet the situations as they arise the bill (sec. 30) adds a new section to the Agricultural Adjustment Act (sec. 22) authorizing certain limitations on imports in connection with the agricultural adjustment program.

*

*

*

"*** Congress cannot now ascertain and provide specifically for the varieties of circumstances under which and the commodities the importation of which will endanger the effort to attain parity price. Accordingly, under limitations, it can confer the power to ascertain the requisite facts and provide what shall be done when they are found. ***" (H. Rept. 2141, 74th Cong., 1st sess. (1935). pp. 21-22.)

The Senate Committee on Agriculture and Forestry dropped the provision from the bill,18 but it was restored (in about the same form) on the floor of the Senate in an amendment by Senator La Follette, who said:

***We have embarked upon a program of endeavoring, by the Agricultural Adjustment Act, to lift the domestic prices of certain agricultural commodities named therein to the parity price, or fair-exchange-value price.

"Mr President, having adopted that policy, it would be not only futile but inconsistent for us to permit imports to be brought into this country to break the prices of the commodities which are affected by the Agricultural Adjustment Act, and which we are endeavoring to lift to the fair exchange value of the parity price.

15 Public Law 320, 74th Cong., approved Aug. 24, 1935, sec. 31, 49 Stat. 773.

16 The act of June 16, 1933, 48 Stat. 199, sec. 8(a), provided in part that title I of the act of May 12, 1933, 48 Stat. 31, may for all purposes be referred to as the "Agricultural Adjustment Act.

17 79 Congressional Record 9467-9469:

"It provides for all commodities upon which there is a program in operation. It does not necessarily mean a processing-tax program. Any kind of a program carried out under the Agricultural Adjustment Act would be sufficient. For instance, in the case of butter, which is a basic commodity, there is no. processing tax, but if the Agricultural Department should enter into a program of buying butter for the pur pose of relieving bad conditions in the market, that would be a program put into effect under the provisions of this title, and in that case the President would be compelled, if he found that the importations of butter were affecting the price, to either put on a tax or impose a quota, or in some other way restrict the importa tion of that commodity. If butter, for instance, is selling at 10 cents below parity, and we can prove that there have been millions of pounds of butter imported into this country since the first of the year, and if we can show that this importation of butter has caused the price of butter to be below parity, as I believe we can, then there is no discretion left in the President, because under those circumstances he shall cause this investigation to be made." Id. 9468.

18 As explained by the chairman, Senator Smith, because the committee thought it stood in the way of concluding trade agreements and would retard recovery of the export business. 79 Congressional Record 10934.

"Mr. President, unless some such amendment as this is adopted and written into the law, it seems to me perfectly obvious that on the one hand we will be endeavoring to lift the domestic prices of agricultural commodities under the Agricultural Adjustment Act and with the other hand we will be permitting imports to come into this country to such a degree as to destroy and defeat our entire effort to give the farmer a parity price for his commodities. Therefore, I hope that a majority of the Senate will find that this amendment appeals to their logic under all the circumstances." *** 79 Congressional Record 11497–11498. Senator Vandenberg echoed this sentiment and purpose, saying:

"I submit, as a matter of elementary mathematics and elementary logic, that, if we are going to rely upon the artificial effort to create parity prices for the American farmer by the process and method to which this legislation is dedicated, we must also be prepared to give the American farmer the full control of his own domestic market or the whole scheme is going to break down." 79 Congressional Record 11500.

Indeed, proposed section 22 was likened to section 3(e) of the National Industrial Recovery Act (act of June 16, 1933, 48 Stat. 196) which authorized the President, after Tariff Commission investigation, to curtail or condition imports which might otherwise render ineffective an industry code or agreement (designed to maintain the process of domestic prices). 79 Congressional Record 11502. And, section 22 was described by one of its supporters, Senator Bailey, as clearly "not protective tariff" and "not analogous to the ordinary doctrine of protection," but special protection in connection with the special legislation imposing domestic taxes to elevate the prices of raw materials. 79 Congressional Record 11499.

The Senate adopted the La Follette amendment and the conference committee accepted it (with minor changes of no bearing on the substance) without discussion in the report.19

Executive Order 7233, 1935

Following the enactment of section 22, the President issued Executive Order No. 7233, November 23, 1935, which placed initial responsibility for action under section 22 in the Secretary of Agriculture (a provision later made part of the statute by the 1950 amendment, 64 stat. 261).

The Butler Case, 1936

On January 6, 1936, the Supreme Court in United States v. Butler, 297 U.S. 1 (1936), held that the production control and processing tax provisions of the agricultural adjustment program were unconstitutional, on the ground that the control of agricultural production was an area of power reserved to the States, beyond the delegated powers of the Federal Government, and that the processing tax fell as an incident to an unconstitutional end.

Amendments, 1936, Soil Conservation and Domestic Allotment Act.

Because control of agricultural production was thought to be an essential of the adjustment program, the Congress immediately set about relegislating the controls by means it felt were constitutional. The vehicle was an amendment of the Soil Conservation Act of 1935 (49 Stat. 163) which had five named objectives, three of which were aimed to improve soil fertility and conserve use of land, and two of which were to assure a stable supply of agricultural commodities at prices fair to producers and consumers, and to reestablish as rapidly as practicable the ratio between purchasing power of farm income and nonfarm income that prevailed in the 5-year August 1909-July 1914 period. The means were to be a temporary 2-year program, until the States had a chance to legislate, addressed to the first three objectives, under which the Secretary of Agriculture would make payments directly to farmers who undertook a voluntary program of crop control for soil conservation purposes. The temporary national program was to be followed by a long-range State program for all five objectives, supported by Federal grants.20 The whole program would be financed out of general funds in place of the invalidated processing tax. This amendment was labeled the "Soil Conservation and Domestic Allotment Act," act of February 29, 1936, 49 Stat. 1152.

19 H. Rept. 1757, 74th Cong., 1st sess. (1935).

20 Only one State ever submitted a plan under this authority and, under temporary extensions of the temporary national program, direct payments were made to farmers, geared to the curtailment of production. With the change in production policy brought about by World War II, discussed infra, these payments practically disappeared. The authority for them still exists, made permanent by Public Law 87-703 (1962), which also repealed the provisions for submission of plans by the States. See S. Rept. 1787, 87th Cong., 2d sess. re H.R. 12391, 1962 Cong. and Admin. News, p. 3199.

Included in the amendment was a provision amending section 22 of the Agricultural Adjustment Act, which added the programs under the Soil Conservation and Domestic Allotment Act to the programs protected by section 22. There was practically no debate on this provision, but the few comments made indicate that the original intention of section 22 was simply being carried over. There were expressions of concern by Representatives Woodruff and Andresen that there was inconsistency between a policy of crop reduction and large scale importation of the same commodities, 80 Congressional Record 2506, 2386; and Chairman Jones of the House Committee on Agriculture said:

80

***This simply makes the import quota provision, which I think everyone is in favor of, available under this act as it was under the A.A.A. ** Congressional Record 2547.

Agricultural Marketing Agreement Act, 1937

In the Butler case, supra, the Supreme Court had dealt with, and struck down, only the production control provisions of the Agricultural Adjustment Act. Nevertheless, some U.S. district courts had proceeded to rely on the decision as carrying with it and invalidating the marketing agreements and marketing orders provisions of the act. To save these provisions from an argument of inseparability and to give them a basis to stand on their intrinsic constitutional validity,22 Congress reenacted those portions of the Agricultural Adjustment Act which did not relate to the invalidated production control program.23 The statute was called the "Agricultural Marketing Agreement Act of 1937," and section 1(k) thereof reenacted section 22 of the Agricultural Adjustment Act without change. Amendments, 1940

In 1940, several changes were made in section 22 by the act of January 25, 1940, 54 Stat. 17. The most important change, for this discussion, was extending the protection of section 22 to programs under section 32 of Public Law No. 320, 74th Congress (7 U.S.C. 612c).24 Section 32 of Public Law No. 320 provided that an amount equal to 30 percent of the gross annual customs receipts was to be made available for use by the Secretary of Agriculture in encouraging exportation of agricultural commodities and products, encouraging domestic consumption by diversion from normal commercial channels or by donation to low income groups, and reestablishing farmers' purchasing power in connection with normal production. The section has been the source of authority for many of the disposal programs for surplus agricultural commodities and products. In extending the coverage of section 22 to operations under section 32 of Public Law No. 320, both the House and Senate committee reports said:

"Originally the protection afforded by section 22 was applicable only to programs carried out under the Agricultural Adjustment Act (of 1933). Later the protection afforded by section 22 was extended to farm programs carried out under the provisions of the Soil Conservation and Domestic Allotment Act. Programs for the benefit of our farmers are also being carried out under section 32 of Public, No. 320, approved August 24, 1935, as well as under the Agricultural Adjustment Act (of 1933) and the Soil Conservation and Domestic Allotment Act. Under the provisions of the bill, the protection afforded by section 22 * * * would be extended to programs carried out under section 32 of Public No. 320. As in the case of certain other farm programs, some of those carried out under the provisions of section 32 involve the support of domestic prices at levels higher than the prices that would make the export portion of a crop fully competitive in the low-priced world market. It is clearly necessary for the successful operation of such programs that some means, such as is provided in section 22, be available to prevent a backwash of low-priced exports into a higher priced domestic market." House Report 1166, 76th Congress, 1st session (1939), pp. 1-2; Senate Report 1043, 76th Congress, 1st session (1939), pp. 1-2.

"In explaining the administration's position, and its understanding of the proposal, Secretary of Agriculture Wallace wrote in a letter dated August 5,

1939:

As you know, one of the objectives of several of the existing farm programs is to support the domestic price of certain agricultural commodities at levels above those that would make the export portion of the crops fully competitive in the low-priced world market. Another objective is to maintain our fair share

n S. Rept. 565, 75th Cong., 1st sess. (1937), p. 2.

H. Rept. 468, 75th Cong., 1st sess. (1937), pp. 1-2.

Act of June 3, 1937, 50 Stat. 246.

24 As discussed above, Public Law No. 320, 74th Cong. (1935) was the act which in sec. 31, enacted the original sec. 22 of the Agricultural Adjustment Act of 1933 (see note 13, supra).

of the world's exports. Taken together these effects of the farm programs are protecting American farmers against the full fury of the storms now raging in the world markets. The successful operation of such programs requires, of course, that some means be available to prevent a backwash of low-priced exports from coming into, and breaking, the higher priced domestic market. The purpose of section 22 *** is to provide this kind of protection." ***25 84 Congressional Record 11162.

Amendments, 1948

In 1948, the Congress placed another and fourth category of program under the protection of section 22.

The

By that time a change had taken place in the farm program and policy. pre-World War II emphasis on "scarcity economics" to achieve parity prices had shifted, under the war and postwar demands for agricultural products, to "the objectives of abundant production" and the aim that "parity of income should take the place of parity of prices." 26 The emphasis had moved to the use of price support measures,27 designed to stimulate production by protecting the farmer against the possibility that increased planting swould lead to oversupply and consequently depressed prices.28

This shift in emphasis necessitated an amendment of section 22, if it appeared that price supports were to be continued. Most of the mandatory price support operations were scheduled to expire at the end of 1948, as a result of the official termination of hostilities in 1946. Congress intervened and enacted the Agricultural Act of 1948 (62 Stat. 1247), which continued and expanded the price support program for a 2-year period.29

Previously, section 22 had not been considered to be an adjunct to the pricesupport operations as distinguished from the adjustment program. Secretary of Agriculture explained in requesting revision of section 22:

As the "The field within which the authority granted by section 22 may be exercised is so limited that the authority cannot be of much aid to the Department of Agriculture in discharging its price-support obligations in this period of adjustment. If a program of the Department is not undertaken pursuant to one of the three statutes referred to in section 22, the authority conferred by that section may not be utilized to control the importation of an article the importation of which is materially interfering with the successful operation of the program by the Department." (H. Rept. 1776, 80th Cong., 2d sess. (1948), p. 6.)

Congress remedied the deficiency by including an amendment of section 22 in the Agricultural Act of 1948, supra, which made the section applicable to "any loan, purchase, or other program or operation undertaken by the Department of Agriculture, or any agency operating under its direction."

Of this amendment, the Senate Committee on Agriculture and Forestry said: "Section 22 of the Agricultural Adjustment Act of 1933 is amended to include any commodity subject to price-support operations under the provisions whereby the President may take corrective action upon finding that imports are rendering or tending to render any particular price-support program ineffective." (S. Rept. 1295, 80th Cong., 2d sess. (1948), p. 7.)

The House Committee on Agriculture said:

"The bill is designed to strengthen price-support programs for American agricultural commodities and to prevent their disruption through excessive imports of foreign commodities." (H. Rept. 1776, 80th Cong., 2d sess. (1948), p. 6.)

Senator Aiken, chairman of the Senate committee, repeated this statement on the floor of the Senate (94 Congressional Record 8307). And Chairman Hope of the House committee observed to the House:

"You can very easily see the reason for the provision. There is no logic and no reason in supporting the price of an agricultural commodity in this country 25 Among other changes effected by the 1940 amendment to sec. 22 was the provision permitting applica tion of the section when it appeared that imports are "practically certain" to interfere with a program, and equipping the President with a choice of remedies, i.e., to impose either a quota or an import fee. 26 Long-Range Agricultural Policy and Program," S. Rept. 895, 80th Cong., 2d sess., pp. 22-23.

27 Of production controls and marketing quotas, it was said, these "are adapted to a few special commodi. ties which lend themselves to long storage, but otherwise their usefulness is limited to emergency condi tions." Id. p. 23.

25 The price support programs were built upon such legislation as the Agricultural Adjustment Act of 1938 (act of Feb. 16, 1938, 52 Stat. 31, as amended), which authorized the Secretary of Agriculture to make nonrecourse loans to farmers with the commodities subject to the program as security, and amendments to legislation dealing with wartime price control and economic stabilization activities.

29 The price support program enacted is explained in the conference report, H. Rept. 2448, 80th Cong., 2d sess. (1948), pp. 17-18.