The CHAIRMAN. Did you have in mind to testify later before the committee?

Senator CASE of South Dakota. Yes, I do.

The CHAIRMAN. I suggest at the moment, if you have questions, you might ask the witness the questions and then we will hear your testimony later on or hear your statement.

Senator CASE of South Dakota. I should like to ask Dean Landis why, when you spoke of the rulemaking, why did you suggest that that be delegated to a board of employees?

Mr. LANDIS. I didn't suggest that. I think a board of employees in certain situations would be very desirable.

Let me take the particular illustration I gave; namely the manner in which registration statements are filed. I think if you pick the director and the assistant director, maybe two assistant directors of the registration division, they will be the people who would be expert in that field and, in substance, I suppose actually it is delegated to them now.

Senator CASE of South Dakota. Why did you suggest a board of employees rather than single employees?

Mr. LANDIS. Because in the Interstate Commerce Commission that device is employed with regard to a number of matters. Boards of employees have handled a series of different matters in the Interstate Commerce Commission. That is the only place that I know of where the device of the board of employees is utilized.

Senator CASE of South Dakota. But in the reorganization plan you contemplate that cases of a life and death sentence so far as application of a license should be assigned to an individual, but I am interested in the fact you go back to the board idea when you propose the formation of rules.

Mr. LANDIS. Well, in these cases that you speak of, the licenses, they are matters that come under section 7 of the Administrative Procedures Act and they go to a hearing examiner now.

Senator CASE of South Dakota. They do, but when they go to a hearing examiner now, there is a mandatory right of review to the party concerned.

Mr. LANDIS. That is right.

Senator CASE of South Dakota. And you are proposing to destroy that mandatory right of review with a single man making the decision, unless a number, one less than a majority of the board or commission, calls for the review?

Mr. LANDIS. That is right.

Senator CASE of South Dakota. Well, it would occur to me that if you think there is some value in having a board, rather than a single individual make the rules that there is some value in having a mandatory right of review preserved for the persons whose life or death will be determined by the single examiner or single commissioner.

Mr. LANDIS. Well, I should think that if the case is important that naturally the discretionary right of review would be exercised and would be granted, but there are many minor matters that don't really call for an expensive procedure of that nature.

Senator CASE of South Dakota. Then you rest upon the fact that a number of one less than a majority could call for a review? Mr. LANDIS. That is right.

Senator CASE of South Dakota. And you used the term "minority." Do you have in mind that the boards would divide on party affiliation? Mr. LANDIS. No, I don't, because my experience has been that the.. boards don't do that type of thing; they don't divide on party affiliation. They divide, but they divide usually on social and philosophical considerations, rather than on party considerations. However, in most of these agencies a requirement exists that no more than a majority shall be from one party and if party affiliation is important, the minority can always insist upon full action by the board.

Senator ČASE of South Dakota. Now, of course, I expected you to suggest that possibility that the minority might represent one party, but supposing the minority-let's say on the Board of seven that there were four that were members of one political party, but that the minority consisted of one of an opposite political party, one of a minority political party and one independent. Don't you think that would destroy the reliance of these orders placed upon the advice of one less than the majority given the right to call for a review?

Mr. LANDIS. Well, I would say this, that it is rather unusual that that kind of a thing exists. I have seen it where you have one independent on a board. I have seen that situation.

Senator CASE of South Dakota. So that with one independent on a board, the so-called political minority party might not actually have one less than a majority of the entire Board.

Mr. LANDIS. That is correct. I will agree, but I don't think the political considerations are the important considerations.

Senator CASE of South Dakota. They may not be important or they may not be the only thing to consider, but does not the possibility exist with the naming of a Chairman in the discretion of the Chief Executive, that that would tend to emphasize the political affiliation of the membership of the Commission or the Board.

Mr. LANDIS. I don't think so because these plans don't affect the situation, as it exists today, where the President names the Chairman of the Board.

Senator CASE of South Dakota. That is all of the questions.

The CHAIRMAN. Senator Javits, you were away and I made use of the time by letting Senator Case ask some questions. Since you have returned now, it is your witness and you may proceed.

Senator JAVITS. Thank you.

I had the privilege of questioning Dean Landis at the hearing before the Banking and Currency Committee, so I will not repeat that except ask whether you do adopt your direct and cross-examination, as it were, as given before the subcommittee on Banking and Currency. Mr. LANDIS. Yes, I think so, Senator.

Senator JAVITS. I have this one point to ask you: What do you think of the legal question involved in delegating rulemaking power through a reorganization plan? The rulemaking power was given to the Commission by action of the Congress, passed by two Houses, signed by the President, and here we would authorize them to delegate it by a rather different proceeding which can be nullified by one House, but is not tantamount to passing a mandatory statute. Are you satisfied that legally the Reorganization Act permits us to do any such organic thing as that?

Mr. LANDIS. I think so because the Reorganization Act of 1949 specifically carries in it the right for the President to submit plans delegating authority from or permitting the delegation of authority. It is specifically there.

Senator JAVITS. This is, of course, quite a substantive act that would be performed, you agree, with that?

Mr. LANDIS. It depends on how much it is exercised.

Senator JAVITS. We give the power. This is one of the fundamental differences between us. I am against giving these agencies, especially the SEC, the authority to delegate rulemaking because I think this is a very fundamental organic power which they have and which they ought to exercise and take the responsibility for in the public interest and they say they are not going to use it very much or they are going to use it only in minor cases. Well, if they are only going to use it in minor cases, why give them the power to delegate because I think it is too sacred in terms of people to give them that power.

I have one other question. You said a good deal about delay and I couldn't agree with you more, that we have to find some way of eliminating delays in the SEC. I know how hurtful it is. I represent the State which has the greatest security market in the world. What I am worried about is whether you will cure the delay by delegation because I have seen staffs which could delay you out of your ears a lot more than commissions which are at least subject to getting beaten over the head by the press and radio and television and by us. You can get some very great delay down the line of the staff until you just scream with anguish, especially if you can't go over their heads until the end of the proceeding. You remember we went into that and you felt that the Commission could at any time come and just pick up a proceeding wherever it was. Nonetheless we would be giving you the power to say that the Commission should go nowhere near the thing unless at the very end, according to the rules and regulations of the Commission, two Commissioners or a minority of the Commission say they may do it So I can see where that would lead to delay far more intolerable than the delay you have and give the power not to a Commissioner, but to a staff member, to hold you up until he did what you wanted. Until then your proceeding is just not going to be ground out of that division. I want to get your comments on that. That is a pretty practical thing and you know I have been a very practical practicing lawyer just like you.

Mr. LANDIS. I know what I would do if I ran into that kind of a situation. I simply would petition the Commission to take some action.

Senator JAVITS. Do you contemplate the rules of the Commission will permit petitions during the pendency of it? You know you can't do that in an appeal from a court unless you want to get a writ of prohibition because of jurisdiction or charge him with prejudice. You are stuck. I have seen judges hold decisions for months and months and years and you can't do anything about it.

Mr. LANDIS. Well, I think that, of course, is true in many judicial actions, but I think one of the greatest causes for delay is the inability, very frequently, of a hearing examiner to decide an interlocutory matter and that has to go back to the Commission and then the hearing starts again.

Senator JAVITS. I would just like to spread my own views on the record, after hearing all of the Commissioners and the Chairman of the Commission and, incidentally, I have no criticism of them, they are men of the highest character that testified with frankness and indeed great knowledge of their subject-it is just a difference in public policy. I would say, one, that I would be against giving them the power to delegate the rulemaking authority and, two, that I believe that by retaining the rulemaking authority they would make it possible for us to allow them to delegate uncontested proceedings and the exercise of administrative powers in noncontroversial cases because then they could, by their own rules, define what those are. Thereby, I think, they could materially cut their workload in specific instances, which were testified to, but without running into what I consider to be the real dangers that I have indicated in my discussions with Dean Landis.

I thank you, Mr. Chairman.

The CHAIRMAN. Senator Gruening?

Senator GRUENING. No questions.

The Chairman. Thank you very much. We appreciate your presence and your presentation. There will be inserted in the record at this point a letter from Mr. Landis, responding to a request from the committee, relative to the effect of section 7(a) of the Administrative Procedure Act of 1946, as amended, on the agencies concerned if Reorganization Plans 1 to 4 of 1961 become effective.

(The letter is as follows:)

Hon. JOHN L. MCCLELLAN,
U.S. Senate, Washington, D.C.

THE WHITE HOUSE, Washington, June 12, 1961.

DEAR SENATOR MCCLELLAN: Thank you for your letter of June 7, 1961, having reference to the effect of section 7(a) of the Administrative Procedure Act should the reorganization plans for the various agencies become effective. I apologize for not having replied earlier, but I have found myself unavoidably detained in New York for the last several days.

The reorganization plans submitted by the President contain a provision in section 1(a) "that nothing herein contained should be deemed to supersede the provisions of section 7(a), of the Administrative Procedure Act (60 Stat. 241), as amended." Under section 7(a) of the Administrative Procedure Act, in certain cases of rulemaking and adjudication, there must preside at the taking of evidence (1) the agency, (2) one or more members of the body which comprises the agency, or (3) one or more examiners appointed pursuant to the Administrative Procedure Act. Since section 1 of the reorganization plans submitted to Congress provides that the agencies may delegate their functions to employees and employee boards, it was necessary to preserve the limitations of section 7(a), which, in effect, means that in those cases required by the act to be heard by the agency, members thereof or hearing examiners, no delegation can be made to employees or employee boards pursuant to these reorganization plans. The delegations to employees and to employee boards contemplated by the plans will therefore have to be accomplished in those instances where there is no requirement that the provisions of section 7(a) govern.

For those cases required to be heard within the limitations of section 7(a), therefore, operation under the reorganization plans will be the same as in the past, excepting only that the agencies concerned may, under the plans, delegate to panels or to individual commissioners the function of presiding at the taking of evidence in full accordance with section 7(a) of the Administrative Procedure Act. Thus, these plans complement section 7(a) of the Act.

Very truly yours,

JAMES M. LANDIS,

Special Assistant to the President.

The CHAIRMAN. Senator Case, will you come around, please. Senator CASE of South Dakota. Mr. Chairman, I have only three copies of my statement.

The CHAIRMAN. All right, Senator. Identify yourself for the record and proceed.

STATEMENT OF HON. FRANCIS CASE, U.S. SENATOR FROM THE STATE OF SOUTH DAKOTA

Senator CASE. I am Senator Case of South Dakota. I introduced Senate Resolution 142, with my colleague Senator Mundt as a cosponsor, relative to the Federal Communications Commission Reorganization Plan No. 2 and as a cosponsor joined Senator Mundt in his introduction of Senate Resolution 143 relative to Reorganization Plan No. 3 relating to the Civil Aeronautics Board.

Mr. Chairman, I appear today in opposition to Reorganization Plans Nos. 2 and 3, which were submitted to the Congress on April 27, 1961, and May 3, 1961, relating to the Federal Communications Commission and the Civil Aeronautics Board, respectively. Both of these proposals ostensibly provide for greater efficiency in the dispatch of business. I would say they may expedite action, but whether so or not, in my opinion they tend to defeat the fundamental purposes of these agencies. These proposals will become effective 60 days from the date of submission unless a majority vote in opposition is adopted in either house.

At the outset, let me say my opposition to Reorganization Plan No. 2 is not prompted by disagreement with the Federal Communication Commission Chairman's recent statement with respect to television programs before the National Association of Broadcasters. I think possibly these programs serve a far greater public purpose than was accorded in the opinion of the Chairman, as expressed at that time, but I couldn't disagree that there shouldn't be improvement, as much as possible, from time to time.

Agency reorganization should be a continuing objective, as bureaucratic rigidity has a tendency to override administrative flexibility. Nevertheless, reorganization proposals should be carefully examined to see whether they will in fact cure the alleged problems they are intended to solve and, more importantly, whether such proposals are consistent with our fundamental concepts.

The plan proposed for the FCC is comprised of three parts:

First, the authority to delegate; second, the transfer of functions to the Chairman; third, abolition of the review staff.

Since the plans must be adopted or rejected in toto, all parts should be carefully considered.

One of the inherent dangers in a broad delegation of powers is that the delegating authority may become isolated or at least inaccessible to the actual operating level. Further, present authority exists in the Federal Communications Commission to make assignment or referral (47, sec. 155 (d)) to an individual Commissioner or Commissioners or to a board composed of one or more employees of the Commission. But under the plan the Commission has a discretionary right to review actions taken by those to whom authority has been delegated. Three votes, in the case of the Federal Communications Commission,