The CHAIRMAN. Mr. Chairman, will you identify yourself for the record, please, sir?

STATEMENT OF FRANK W. McCULLOCH, CHAIRMAN; STUART ROTHMAN, GENERAL COUNSEL; AND OGDEN FIELDS, EXECUTIVE SECRETARY, NATIONAL LABOR RELATIONS BOARD

Mr. McCULLOCH. I am Frank W. McCulloch, Chairman of the National Labor Relations Board, Mr. Chairman.

The CHAIRMAN. And Mr. Rothman?

Mr. ROTHMAN. I am Stuart Rothman, the General Counsel of the National Labor Relations Board.

The CHAIRMAN. Gentlemen, you appear here in support of what plan?

Mr. McCULLOCH. Plan No. 5, Mr. Chairman.

The CHAIRMAN. Plan No. 5?

Mr. McCULLOCH. Yes, sir.

The CHAIRMAN. There is presently no pending resolution of disapproval to plan No. 5. Whether one will be filed or introduced we do not know. But since we had the opportunity to hold hearings at this time we thought we might as well hear testimony on Reorganization Plan No. 5 and get that in the record. Then, of course, if no resolution is filed, why, we will not have wasted much time in the record of these hearings. Some of the other plans are controversial and the record here will reflect the reason possibly why no resolution of disapproval was filed in this instance.

All right, Mr. McCulloch. Do you wish to make a statement first? Mr. McCULLOCH. I would be pleased to, Mr. Chairman.

The CHAIRMAN. Do you have a prepared statement or do you just wish to speak extemporaneously?

Mr. McCULLOCH. The Board has a prepared statement which I would like to submit for the record, but I shall not take your time to read that prepared statement.

The CHAIRMAN. Very good.

Your prepared statement may be printed in the record in full at this point.

(The prepared statement of Mr. McCulloch is as follows:)

STATEMENT OF NATIONAL LABOR RELATIONS BOARD IN SUPPORT OF REORGANIZATION PLAN NO. 5

The National Labor Relations Board is glad to give its full support to Reorganization Plan No. 5 of 1961, as prepared by President Kennedy and transmitted to the Senate and the House of Representatives on May 24, 1961, pursuant to the provisions of the Reorganization Act of 1949, as amended.

We are unanimously of the opinion that this plan, if permitted to become effective, will promote the better execution of the laws, the more effective, economical, and efficient management of our agency, and the more expeditious administration of the Board's public business.

Because of the central importance to the Nation's economy and the public generally, as well as to employers and employees, of the Labor-Management Relations Act of 1947 as amended, which it is the duty of our agency to administer, we therefore respectfully urge that this plan 5 have the favorable consideration of this committee.

PROVISIONS OF THE PLAN

Plan 5 authorizes the Board to delegate any of its decisional functions to a division of the Board, an individual Board member, a hearing examiner (traditionally called a trial examiner at the Board), or an employee or employee board, subject to the provisions of section 7 (a) of the Administrative Procedure Act (60 Stat. 241). The plan, however, reserves to the Board as a whole the discretionary right to review any such delegated action or decision upon its own initiative or upon a request for review by a party or intervenor demonstrating to the satisfaction of the Board under rules prescribed by it the desirability of having the matter reviewed at the top level. Under the plan, the vote of one less than a majority of the Board may also bring such an action to the full Board for review. In the absence of Board review, the actions taken under the foregoing delegation will be deemed the actions of the Board.

INITIAL DECISIONS BY TRIAL EXAMINERS-CERTIORARI REVIEW

The primary objective of plan 5 is to permit the Board to delegate to trial examiners the authority to make initial decisions in unfair labor practice cases, subject to a discretionary review by the Board on the certiorari basis. Instead of being required as now automatically to grant a full, de novo review to every contested trial examiner's intermediate report, the Board would be permitted to grant such review only where the parties established the merit of such review on the basis of standards formulated by the Board.

Board review could thus be limited to cases in which there are, in the judgment of at least two members of the Board, demonstrable errors of fact or failures to accord fair procedure and to cases presenting substantial, novel, or important questions of law or administrative policy. In all other cases, where Board review is not sought or is denied in the exercise of the Board's discretion, the trial examiners' reports would become final decisions and be deemed actions of the Board.

Parties would thus have full opportunity to seek Board review for good cause in all cases, and even where this is denied, they would have full right to court review of the final Board action.

The plan would likewise permit the Board, by requiring more specific exceptions and references to the record, to confine the issues in cases reviewed by it to those which the parties set forth with particularity. Time-consuming analysis of entire records to discover the basis of generalized exceptions may thus be eliminated.

JUSTIFICATIONS FOR DELEGATION

The reasons for converting the full Board review of trial examiners' reports in unfair labor practice cases from an automatic to a discretionary basis are compelling.

First and foremost is that experience has proven the general acceptability of those reports.

Next it is clear that discretionary review of the trial examiners' work will speed decisionmaking and help substantially in meeting the serious problem of delay.

In addition such delegation is essential to relieve the Board of a part of its crushing workload. The Board, as presently organized, cannot possibly continue to cope with the magnitude of its caseload if it must review all contested cases in full.

The merit of these last two conclusions, however, is not enough to sustain the burden of delegation in the case of the National Labor Relations Board if the substantial majority of the decisions of trial examiners have not proven to be acceptable to the Board, the parties, and to the courts.

Cutting delay and reducing the load to permit the Board to function expeditiously are not enough if a substantial majority of trial examiners' decisions cannot stand alone-if they are not acceptable in their own right-but require full review and support by at least three Presidential appointees before meriting respect.

If review by a Board is deemed essential before all such decisions are acceptable, then regard for speed and the Board's overwhelming caseload will not save the day. These problems, then, would have to be solved in other ways. The fact is, however, that the substantial majority of decisions of trial examiners do merit respect and have proven acceptable.

ACCEPTABILITY

The record of the acceptability of trial examiners' work speaks for itself. Disposition of trial examiners' intermediate reports in unfair labor practice cases

It is evident from the above study covering three representative fiscal years that approximately 76 percent of the findings of fact, conclusions of law, and recommendations of trial examiners are either accepted without review being sought by the parties or upon review are affirmed by the Board in full.

Approximately another 14 percent are affirmed in part. This amounts to approximately 90 percent being accepted or affirmed, in whole or in part.

The remaining 10 percent constitute reversals in about 7 percent and remands in 3 percent of the cases.

Such affirmation has not been the product of cursory review. A legal assistant to a Board member, working under a supervisory legal assistant of the same member makes a full and detailed reading and analysis of the hearing record, the intermediate report, the exceptions thereto, and the briefs.

The report, exceptions and briefs are then read by the Chief Counsel to such member and the member himself.

These four confer on the case.

The case is then discussed with two other Chief Counsels and two Board members who, as members of a three-man panel, have studied the report, exceptions, and briefs for participation in the case as signatories.

This makes a total, so far, of eight.

Thereafter, four more are added to this group when the panel's draft of the decision is referred for clearance to the two members not on the panel and their respective Chief Counsels, which entails their study of the report, exceptions, and briefs.

This adds up to at least 1 legal assistant, 1 supervisor, 5 Chief Counsels, and 5 Board members, or a minimum of 12 involved in each case.

Further, under the Board's rules, this review procedure is provided in every case in which exceptions are filed to trial examiners' reports.

And any Board member, whether a panel or a "clearing" Member may call the case up for full five-man Board discussion which further intensifies the review. Now, the essential point to this is that with all this review, year after year the percentage of Board affirmation of trial examiners' decisions, in whole or in part, remains approximately the same.

And year after year approximately 75 percent of the cases are decided by threemember panels and 25 percent are brought to the full five-man Board for discussion and decision.

This same 25 percent of cases arising to the Full Board occurs year in and year out because of the novelty of the case or its difficulty or complexity or because the trial examiner's error on the facts or law or because the Board wants. to reappraise a policy.

The common thread is that such cases warrant full Board treatment whether or not the trial examiner is finally affirmed or reversed, in whole or in part.

Now, it is precisely these same kinds of cases that the Board will fully consider if review is made discretionary rather than automatic-they will be reviewed because they are new or important or tough-or because the trial examiner's decision was clearly erroneous.

However complicated the National Labor Relations Act may be, after 26 years years of accumulated knowledge, testing, and experience by the Board and the courts, the problems or the patterns of action and the solutions thereto gradually divide into the normal or routine, and the unusual or new.

It is therefore wasteful of time and money to continue any longer the automatic review of all cases where discretionary review will assure justice.

It is also wasteful because so many of our cases hinge on questions of credibility of witnesses who testify before the trial examiner and are unlike those of other regulatory agencies where the inferences and conclusions to be drawn depend largely on expert or opinion testimony and economic and technological data. Thus, in an opinion of the U.S. Court of Appeals for the 10th Circuit, the court stated: "It is obvious that the issues arising in a Labor Board case, charging unfair labor practices, differ materially from those arising in a rate hearing case before the Federal Power Commission, such as we have here. In a Labor Board case the facts are always in sharp conflict and the credibility of witnesses many times involved." [Italic added.] Colorado Interstate Gas Co. v. Federal Power Commission (209 F. 2d 717, 723, reversed on other grounds, 348 V.S 492). Great reliance is placed by the Board and the courts upon the credibility findings of the trial examiner since it is only he who heard the witnesses and watched them testify, and it is precisely because the trial examiner's resolutions of credibility are so seldom overturned by the Board that the run-of-the-mine unfair labor practice cases are for all practical purposes decided at the trial examiner's level.

The landmark Supreme Court case on the weight which the agency must give to the intermediate report is Universal Camera Corp. v. N.L.R.B. (340 U.S. 474, 495). In that opinion, after pointing out that both the Administrative Procedure Act and the Labor-Management Relations Act "evince a purpose to increase the importance of examiners in the administrative process," the Supreme Court concluded that, "High standards of public administration counsel that we attribute to the Labor Board's examiners both due regard for the responsibility which Congress imposes on them and the competence to discharge it."

In 1950, the Board stated it will adopt a trial examiner's findings based upon his credibility resolutions unless a clear preponderance of all the relevant evidence shows them to be incorrect. Standard Dry Wall Products (91 NLRB 544545, enfd. 188 F. 2d 362 (C.A. 3)). Since the Board members themselves have no opportunity to observe the witnesses and are rarely in a position to disturb a trial examiner's credibility resolutions, the result is that in many cases the Board's ultimate conclusion is largely shaped by the trial examiner's appraisal of the conflicting testimony.

In spite of the breadth of the act and the variety of unfair labor practices it is designed to prevent, a substantial majority of the types or patterns of violation are predictable and recurrent. Thus with the expertness resulting from experience in handling the typical, crude or unimaginative violations, trial examiners seldom err in their judgment in such cases.

The general competence of the Board's trial examiners is evidenced by their record before the Board and the courts. Circuit Court and Supreme Court decisions are replete with express commendation of the Board's examiners and their competence is repeatedly stated by prominent members of the bar. The pressure to maintain and improve the high quality of the trial examiners' work will be even greater under the proposed delegation.

Many witnesses who only recently appeared before the subcommittee of the House of Representatives studying the operations of the National Labor Relations Board (known as the Pucinski subcommittee), including members of the labor bar representing employers and unions, and the Advisory Panel on the Labor-Management relations law established by the Senate in 1959 have expressed their support for the principle of the proposed reorganization plan, whereby trial examiners' decisions will be final, subject to limited review by the Board.

Once trial examiners' decisions are awarded a degree of finality, they will no longer be viewed by the parties as an invitation to the filing of pro forma exceptions and as merely a way station on the road to full review by the Board.

Under the planned delegation, it will require well founded and documented exceptions to warrant review. The decisions of trial examiners we believe, will then achieve the same kind of respect accorded to the decisions of trial judges in the judicial field.

Finally, in addition to the possibility of full Board review if only two of the five Board members in their discretion vote to grant it, a most effective safety valve is always available-review of the decisions of trial examiners and the Board by the circuit courts of appeal and the Supreme Court of the United States. Review by the circuit court is a matter of right under our act.

In the past 25 years the decisions of the Board have been contested in approximately 2,087 cases in the U.S. courts of appeals and in 131 cases in the U.S. Supreme Court. This tremendous number of cases in the Federal courts exceeds, by a very substantial margin, the total for all other Federal administrative agencies combined. It is pertinent to note at this point that in almost every one of these 2,000 cases the initial decision was made by a trial examiner.

The Board will be sensitive to the obvious need to grant review in every truly meritorious case so that in such cases the courts will rarely be deprived of the Board's own determination and rationale.

DELAY

An immediate, important, and practical benefit of making trial examiner decisions subject to review on limited grounds would be the substantial saving of time in decision making.

For example, the median time from the filing of unfair labor practice charges to Board decisions in 57 cases issued in March 1961 was 402 days. The period between a trial examiner's intermediate report and Board decision consumed 195 days, or almost one-half, of this total. Under the proposal to make the trial examiner's intermediate report the final Board decision, virtually all of the 195day period would automatically be eliminated, thereby making is possible to issue an unfair labor practice decision in about 190 days.

The following table shows the actual median days required for decision and the estimated cut in time under discretionary review:

Estimated comparison in median days of decisional time table in complaint cases under present review procedures and under delegation

Present procedures, automatic review, July 1960 to March 1961:

Opposition to request filed__

240

Request denied, permitting trial examiners' decision to stand_.
Saving in time__

260

140

Assume request for review is granted:

Request for review filed___.

220

Opposition to request filed__.

240

300

Board decision (affirming, modifying or reversing trial).

With the reduction in backlog in the Trial Examiners' Division, it is estimated that the average time from close of hearing to issuance of the trial examiner's decision will be cut from the present 100 days to 60 days, or a reduction from filing of charge to the trial examiner's decision to 150 days. This, in turn would cut the time where review is sought and denied from 260 days to 220