Estes stated that he would challenge a cancellation. He had the right to appeal the cancellation, first to a committee of review, and then to the courts. If a decision in the committee of review is against the Government, the Government cannot appeal. The fact that Estes and others were thus given this fair opportunity to establish their claims before final cancellation could reasonably be expected to substantially strengthen the Department's position before a committee of review composed of farmers from the area.

3. The decision of January 6 was made in the light of what was known then, not what we know now.

It is my considered judgment that the rights and interests of the Government could not have been impaired by this granting of extra time in which citizens could try to establish their rights unless it could be charged that the delaying action was intended to provide some kind of a loophole through which Estes could avoid a cancellation of the allotments. But such a charge is completely disproved by events that followed.

Between January 10 and 12, 1962, visits to Texas were made by representatives of the General Counsel's Office, Cotton Division, and Southwest Area Office to examine records of the State and county committees to ascertain procedure used by them and for other relevant information.

Might I ad lib at this point that Estes claimed strongly that the county committees and that Marshall had advised him that he was acting properly.

A report was filed on facts but made no recommendation. Only this month did we discover that a third man had sent in a report which obviously had no effect on Department action, and to which I will refer later in this testimony.

There was, however, a procedure developed during January that enabled the Department to get definitive proof that because the Estes sales had not been bona fide the allotment transfers based on those sales should be canceled. The sellers of the land were required to prove that a bona fide sale had taken place by certifying under oath that the purchaser had made the substantial first downpayment, and that such downpayment was bona fide in every respect. This certification requires specific assurance that no agreement exists for the return of the payment to the purchaser, that the seller had not supplied or arranged to supply funds for the payment, that the displaced owner remained personally liable for completing payment at the originally agreed purchase price, and that he is not in default in the contract and is the bona fide owner of the farm subject only to the vendor's lien. The CHAIRMAN. Do I understand that those are your regulations now?

Secretary FREEMAN. That is the certificate that was sent out on this occasion, each one.

The CHAIRMAN. Which occasion?

Secretary FREEMAN. On January 31, and it was sent out through the State office to everyone who had received a transferred eminent domain allotment.

Senator CURTIS. What year?

Secretary FREEMAN. It was sent out on January 31 of 1962. I beg your pardon.

Senator CURTIS. When were they returned?

Secretary FREEMAN. They had no returnable date.
Senator CURTIs. When did you get the first one back?

Secretary FREEMAN. I would have to check in relation to the return of the first ones, because one came back from Texas, as I recall. I think some did come from New Mexico.

Senator CURTIS. Of course, they would come from where the displaced farmer lived.

Senator ERVIN. No, where the purchaser lived.

Secretary FREEMAN. They would come from where the seller lived. These were filled out by the seller, and would come from the county where the seller lived and they were not filled out by the purchaser, Senator.

Senator CURTIS. Would they be filled out by Estes?

Secretary FREEMAN. These would have been filled out by Estes; yes, sir. They could have, but they were not.

Senator JACKSON. Mr. Secretary, this requirement was laid down before the information about Billie Sol Estes came to light? Secretary FREEMAN. Yes, Senator Jackson, it was.

It was on January 31, 1962.

The CHAIRMAN. I think that counsel tells me this went into the record this morning, this document.

Secretary FREEMAN. We have a list here of the seller's certifications that were returned.

The CHAIRMAN. Well, I will let that be inserted in the record at this point.

(The document referred to is as follows:)

To: The Secretary.

MAY 29, 1962.

From: Administrator. (Signed) H. D. Godfrey. Subject: Seller's certification of bona fide sale of land in connection with sale and lease-back cases.

There have been submitted in connection with acreage allotments transferred from the "eminent domain pool" certifications by the sellers of lands to displaced owners purporting to show bona fide sales to such displaced owners. are the following cases:

Included

The Texas and New Mexico State ASC Committees have recommended that these certifications be disapproved, except that the Texas committee, in connection with the Chandler cases recommends that sufficient investigation be made to make sure that the purchasers used their own funds to make the first installment payments on the lands.

As the result of a careful study of all documents submitted, we propose that all certifications submitted by the above named be disapproved. The reasons for disapproval are as follows: Chandler C

not usua

the sales contract as contained in the deeds are

provision for amortization of cost of clear

ing the land which was cited as $20 per acre; (2) the seller obtained a leaseback of the land for a 20-year period; (3) the entire rental payments are to be made by the seller during the first 2 years of the lease and these payments approximate the indebtedness assumed by the displaced owners as their purchase price of the uncleared land; and (4) all of the contractual arrangements were not furnished with the seller's certification as evidenced by a transcript of statements by Fred Chandler, Sr., and Hubert Kephart at a meeting with the Texas State ASC Committee on April 25, 1962, to the effect that the seller reserved the right to buy back for $75, an acre of land on which any well was drilled and that there was in existence a verbal agreement between the parties, the terms of which were not disclosed.

Raymond Williams, John T. Kelley, Gordon Parks, Lillie Mae and J. W. Hill, and Lindol Barker: The seller's certifications are based on contracts which are different from those in effect at the time the transfers were made (renegotiated contracts).

Joyce Gray: The reason for disapproval is that the seller's certification was reworded by Gray and he did not submit for consideration contractual arrangements which were in effect at the time the transfers were made as we required. O. A. Thorp: The displaced owner has not made any payments toward the purchase price of the land.

In addition to the above cases, certifications were submitted by Don Vinson of Reeves County, Tex., and Dr. Truett L. Maddox of Otero County, N. Mex. Since we have requested additional investigations in connection with this group of cases, we are not taking final action on them at this time. However, with respect to the cases tabulated above, we should like to proceed to have the sellers notified of the disapproval of the certifications and have issued notices of excess acreages and marketing quota penalties due.

Your signature below will indicate your approval to our proceeding in this

manner.

Concurred in: ASCS-DASCO/EWBayol:jcm/5–25–62/DASCO-271.

cc: Cotton Div., S.W. Area, C&AP Div., OGC, Oils & Peanut Div., Mr. Co & Mr. Frazier ORVILLE L. FREEMAN, Secretary.

May 31, 1962

Secretary FREEMAN. May I correct myself, Mr. Chairman, that there were some returned from Texas, but none returned from Texas by Mr. Estes.

The CHAIRMAN. Very well, let the record reflect whatever are the facts.

You can prepare that and let it be inserted in the record.

(The information referred to above was subsequently received and is as follows:)

Subject: Sellers certifications filed in connection with transfers of pooled allotments

NOTE. The above seller's certifications of bona fide sale of land were timely filed and are all seller's certifications which were timely filed. The seller's certifications filed by Don Vinson and Truett L. Maddox are under investigation and have not been approved or disapproved. Seller's certifications filed by all other producers listed above have been disapproved because they do not establish a bona fide sale of land. Mr. G. V. Clayton (not listed above) filed a modified seller's certification after the time allowed for filing had expired and his certification was not considered for approval because it was untimely filed.

Secretary FREEMAN. The means of determining bona fide sales could not have been instituted before the first annual payments were due. But since most of these installments had become due in December 1961, instructions were issued from Washington on January 31, 1962, directing the Texas State committee obtain such certifications from all of the sellers involved-including Estes-and to arrange for cancellation of the 1961 allotments in the event such certification was not obtained.

The CHAIRMAN. Now, Estes sent in no certifications?

Secretary FREEMAN. Estes did not return any; no, sir.

The State offices thereafter instructed the county committees to follow this procedure.

Estes never expected the requisite seller certification with respect to any of the transactions and the 1961 allotments therefore were duly canceled and excess acreage assessments imposed in the total amount of $554,162.71.

There is one remaining question some of you may ask with regard to this final certification requirements through which the Department was able to arrive at a clear and definitive cancellation of the Estes allotments. The instructions to obtain such certification were issued on January 31, 1962, but they contained no deadline by which time the certifications were due. It was apparently assumed that the approach of the planting season was sufficient for this purpose. I believe that good administration should have required that a reasonable time limit should have been a part of the instructions issued on January 31.

May I now turn to membership on the Cotton Advisory Committee.

MEMBERSHIP ON THE COTTON ADVISORY COMMITTEE

Among the serious problems relating to this case is the matter of Estes' membership on the Cotton Advisory Committee.

The Cotton Advisory Committee was formed in 1960, as an informal group to advise Senator Kennedy, under the chairmanship of Dr. Alexander Nunn, of Birmingham, Ala. After I became Secretary of Agriculture I asked Dr. Nunn to continue this same group to advise me with respect to cotton problems. The Committee was thus continued on an informal basis in the sense that the expenses of its members were not paid by Government. Dr. Nunn maintained the membership lists and actually issued the invitations to serve on the Committee.

The CHAIRMAN. This was all voluntary, and informal?

Secretary FREEMAN. Informal and voluntary.

The CHAIRMAN. Such a committee was in existence when you came in office?

Secretary FREEMAN. Yes, sir.

Estes was recommended for membership on the committee in January 1961 by Senator Ralph Yarborough, and this recommendation was transmitted to Dr. Nunn. In June 1961, Dr. Nunn made a number of suggestions about membership on the committee recommending the addition of several persons in order to give the committee a broader geographical representation.

Among these suggested additions was Estes, who was described as "highly thought of." It was noted that the Southwest should have

additional representation on the Committee. With the concurrence of the USDA, Dr. Nunn invited Estes to become a member of the Committee, and he was added, along with several other new members, as of July 11, 1961. The persons considering Estes' qualifications had no knowledge of the pending cotton allotment investigation that was requested on July 5.

The Agricultural Act of 1961 specifically authorized the appointment of advisory committees and Department established a regular procedure for the selection of members, their investigation before appointment, the designation of an official USDA representative to serve, provision of secretary services and expenses, and other provisions for the effective utilization of such committees. These committees are not concerned with operations. They are advisory only, and their advice is sought on matters of board policy relating to farm programs.

I added the word "board" before "policy." In the fall of 1961, it was decided to convert the informal Cotton Advisory Committee into an official Committee under the new act, and it was also decided to retain as members all of the former members who desired to continue. Accordingly, investigative checks of the members were begun. This office incidentally passes on personnel matters, within the Department of Agriculture, such as civil service questions, questions of proper conduct, and things of that kind.

The report which came from the Office of Personnel and the Chief of the Review and Adjudication Division read as follows, and I quote:

The attached memorandum summary from Mr. Huelskamp of an Agricutural Stabilization Conservation Service investigation made regarding subject is sufficiently derogatory in nature that I recommend against subject's appointment. Continuing the quotation:

I realize that he has not yet been tried for the alleged offenses and may not be guilty of any wrongdoing. However, since the matter has been referred for consideration of prosecution it appears advisable to drop his name from consideration until this matter is cleared up.

The date of this memorandum was November 21, 1961.

Senator MUNDT. Have you read us the entire memorandum or are these just excerpts?

Secretary FREEMAN. I have read on this occasion-this is the entire memorandum from Mr. Francis as he quoted Mr. Huelskamp, Senator Mundt.

The CHAIRMAN. May I submit for identification, either by you or by Mr. Godfrey, or any of you who can identify this letter, this memorandum to which you refer, and I will place it in the record at this point in full, if I can get it identified.

Do you have a copy of it there?

Secretary FREEMAN. If the chairman wishes, this is the memorandum from Mr. Robertson and from John E. Francis; attached to it is the report from Mr. Huelskamp.

The CHAIRMAN. The letter and memorandum may be printed in the record at this point, so that we can have it in full, as identified by the Secretary.

Secretary FREEMAN. To respond to Senator Mundt's question

The CHAIRMAN. If I may, let me ask you, if on your copy of the memorandum, there is some handwriting on the bottom, "Mr. Francis (through Carl Barnes)."