Ah, the diagnostic is only for OUTPUT/EXTEND for an F-type with RECORD CONTAINS 
0.

Since it doesn't produce a diagnostic message in your case, I think you are OK 
going forward, but I'd not code it like that.

Also, your FD:

FD  SMF-RECORDS-IN
    RECORDING MODE S
    LABEL RECORDS ARE STANDARD
    BLOCK CONTAINS 32760 CHARACTERS
    RECORD CONTAINS 14 TO 32760 CHARACTERS
    DATA RECORDS ARE SMF-MIN-REC
                     SMF-TYPE14-REC
                     SMF-TYPE17-REC
                     SMF-TYPE65-REC
                     SMF-MAX-REC.

Can be simplified:

FD  SMF-RECORDS-IN
    RECORDING MODE S
    RECORD CONTAINS 0.

BLOCK CONTAINS is irrelevant for an input file (it is already in blocks, you 
can't change it, or get it changed).

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