one less than the majority, would be required to bring the action before the Commission for review.

Since the law states that not more than four members of the Commission shall be members of the same party, this provision would appear to pay lipservice to the bipartisan character of the Commission. But in practice there is no such assurance that one member, much less three, will be members of the minority party. I mean, speaking of minority party, politically. That was the point I discussed in interrogation of Dean Landis. Thus the protection given in the provision is something less than real. The net effect, therefore, would be to tend to transform the Federal Communications Commission, an independent regulatory agency, into an arm of the executive, which has the authority of appointment, and the designation of Chairman.

Not only does this proposal do violence to the concept of bipartisanship and independence, but it runs contrary, also, to a basic procedural concept of review. The plan proposed, plan No. 2, would deny the right of aggrieved parties to even one administrative review of the presiding officer's initial decision and to present oral argument in this review. Under the present law, and adjudicatory matter is heard by a hearing examiner as established by section 11 of the Administrative Procedure Act and the examiner's decision is subject to review as a matter of right by the full Commission (sec. 409 (b)). So also all rulemaking or other regulatory actions by subordinates are subject to review as a matter of right (sec. 5(d) (2)).

Under the present law, the Commission may delegate all of its business except the Commission's decisionmaking functions in cases of adjudication (sec. 5(d) (2)). Thus, Reorganization Plan No. 2 in basic effect merely adds to present broad powers the power to delegate the Commission's decisionmaking functions in cases of adjudication. But it destroys any right of review to persons aggrieved. The danger is that the Commission, under the press of its many responsibilities, will not exercise the discretion it has to review these adjudicatory decisions and other important matters. Parties would be forced to depend upon the opinion of any one of 15 examiners, 7 individual commissioners, and an unlimited number of employees or boards of employees to whom their cases might be assigned. I hope the committee will give careful consideration to that fact that it isn't merely to the 7 individual commissioners that cases might be assigned, but also to any one of 15 examiners and to an unlimited number of employees or boards of employees.

An aggrieved party should have at least some automatic right of review by one or more of the commissioners themselves.

The CHAIRMAN. Does this plan deny that now altogether?

Senator CASE of South Dakota. It does, unless a number, one less than the majority of the commissioners, votes to exercise the right, and with a board of seven, three could require the review, but if only one or two of the commissioners asked for review, it would be ineffectual.

The CHAIRMAN. What I am trying to understand is this: I am an aggrieved party. The examiner made a ruling against me; it is adverse and I am aggrieved. I want to get some relief under this plan. To whom I do appeal? How do I find out whether I can get relief?

Senator CASE of South Dakota. The plan says, in paragraph (d): With respect to delegation of any of the functions as provided in subsection (a) of this section, the Commission shall retain a discretionary right to review the action of any such individual commissioner, hearing examiner or employee or employee board upon its own initiative or upon petition of a party to or an intervenor in such action within such time and in such manner as the Commission shall, by rule prescribe, Provided, however, That the vote of the majority of the Commission, less one member thereof, shall be sufficient to bring any such action before the Commission for review.

The CHAIRMAN. As I understand, under the plan the Commission can still, in its discretion, make rules that could provide where one could be heard?

Senator CASE of South Dakota. The Commission obviously could, by a majority vote or by more than a majority or up to one less than a majority, but with a board of seven members or a commission of seven members it would require at least three of the Commission to request it.

The CHAIRMAN. What I am trying to get fixed in my mind is, What is the limit of my right as an aggrieved person? Now, as to discretion, you explained that, but what is my right to demand it?

Senator CASE of South Dakota. You have no right to require a review. There is no mandatory right to review by one commissioner, as there is in the present law.

The CHAIRMAN. In other words, my rights are limited. Now I do have a right to review?

Senator CASE of South Dakota. You have a mandatory right to a review by one member of the Commission. That is my understanding. If you feel aggrieved, you have a right of one review by at least one Commissioner. That is my understanding of the present law. That would be destroyed by the plan.

The CHAIRMAN. It is my understanding that some of these plans before us take away rights that an aggrieved person now has.

Senator CASE of South Dakota. That is my interpretation of the plan.

The CHAIRMAN. That is why we must have it clearly before us here. The Senate needs to know exactly what rights that now exist are being limited, restricted, or taken away. What rights will participants have litigants before the Commission have when these plans go into effect?

Senator CASE of South Dakota. I think that the plan destroys that mandatory review which an aggrieved party feels he has today under section 409. An aggrieved party should at least have some automatic right of review by one or more of the Commissioners themselves. The Commissioners are charged with the enforcement of the Communications Act and establishment of policy. No serious burden is imposed by demanding or requiring no decision become final until at least one or three Commissioners review the matter, if requested by an aggrieved party, and essential to this right of review should be the right of oral argument before the individual Commission or panel. The benefits of the right to oral argument are well established procedurally and judicially.

I want now to discuss the transfer of functions to the Chairman. Reorganization Plan No. 2 gives the Chairman virtually unlimited discretion in the assignment of cases to agency personnel, including the Commissioners themselves.

The Chairman, under present law, is the chief executive officer of the Commission and in this capacity exercises broad authority on behalf of the Commission. That his authority is not complete is not justification for adding to it.

The role of the FCC demands that its status as lawmaker, judge, and executive should be specially treated. The vast powers granted to the independent agencies were conferred with the intent that these agencies should be neither executive nor legislative, but in fact independent.

Historically the Federal Communications Commission was established in 1934 as a successor to the Federal Radio Commission. The hearings and reports on the legislation passed in the 69th Congress which resulted in the Radio Commission support this position. Strong differences of opinion and lengthy hard-fought disputes preceded and followed the 1926 legislation. The report of the Senate Committee on Interstate and Foreign Commerce, Senator C. C. Dill, chairman, in 1926, has special significance in the evaluation of the reorganization proposal plan No. 2.

Senate Report 772, 69th Congress, 1st session, May 6, 1926, at page 2, on the regulation of radio transmission, read as follows:

After consideration of the facts given your committee at the hearings, the committee decided that the importance of radio and particularly the probable influence it will develop to be in the social, political, and economic life of the American people, and the many new and complex problems its administration presents, demand that Congress establish an entirely independent body to take charge of the regulation of radio communication in all its forms.

The exercise of this power is fraught with such great possibilities that it should not be entrusted to any one man nor to any administrative department of the Government. This regulatory power should be as free from political influence or arbitrary control as possible. A commission which would meet only occasionally would gain only a cursory and incomplete knowledge of radio problems. It would necessarily be largely dependent on the administrative authority; namely, the Secretary of Commerce, for expert knowledge it would require.

I was interested in noting the remarks of the then Secretary of Commerce Hoover at the House hearing (cited in minority views of Ewin L. Davis, H. Rept. No. 464, 69th Cong., 1st sess.): The minority views, as per page 20, House Report 464the remarks of Mr. Davis, quoting Mr. Hoover:

464-these are

The bill as originally introduced provided for the establishment of a national Radio Commission, consisting of nine members to be appointed by the President

When Secretary Hoover appeared before the Committee on Merchant Marine and Fisheries with respect to said bill during the present session, he declared in part as follows:

"I have always taken the position that unlimited authority to control the granting of radio privileges was too great a power to be placed in the hands of any one administrative officer and I am glad to see the checks and reviews which are placed upon that power in this bill."

President Kennedy's Reorganization Plan No. 2 violates the principles so well stated by Mr. Hoover 35 years ago. It places the granting of radio privileges in single administrative officers, either Commissioners or examiners as the Chairman may designate, and it destroys review as a matter of right by parties feeling aggrieved. any field that is wrong procedurally, to deny the right of review; in the field of public communications, it is the road to destruction of informed Government by the people.

In

Mr. Hoover went on to say:

I am opposed to the establishment of any new commissions or the creation of any new offices except in a case of vital necessity. However, after having for several years given this subject very earnest consideration, I have reached the definite conclusion that the interests of the public and of the various citizens engaged in the radio industry cannot be adequately and efficiently protected without the establishment of a quasi-judicial tribunal to deal with certain phases of the problem.

This Reorganization Plan No. 2 would result in practice in the deterioration of the Commission-type operation, as it would, in all likelihood, result in a one-man agency. Thus, Presidential or executive control would become a reality, and a strengthening of the executive at the expense of the legislative branch. This was neither intended at the time of the establishment of the Federal Communications Commission, nor is it required today.

Furthermore, the unlimited right of assignment by the Chairman violates well-established principles of equality of treatment and rotation. For example, under section 11 of the Administrative Procedure Act, examiners must be assigned "in rotation so far as practicable." It is well known that courts adhere to a strict rotation system to assure fairness. Why should not this same fairness and rotation be demanded of administrative agencies? Section 2 of the reorganization plan gives the Chairman too much power in these matters and should not be approved.

As to the abolition of the review staff, I have less opposition. In my opinion, this may be a worthwhile proposal as the review staff has functioned to acquaint the Commissioner with the facts and arguments in the cases. This function could be handled equally well by the Commissioners' personal staffs.

There is the possibility this change may actually prove beneficial in that the Commissioners will be responsible for writing their own opinions, thus assuring greater responsibility.

If the proposed reorganization plan should be disapproved, it must be either approved or disapproved in total. The arguments set forth above in answer to the proposals (1) to delegate powers and (2) to transfer functions to the Chairman are equally applicable to the CAB reorganization plan. This plan should also be disapproved.

The regulatory agencies serve a very important function in our system of government. I believe they can operate efficiently and economically without destroying their independence or creating one-man agency organization. The difference in these agencies are too great to be remedied by a single nostrum-rather, each agency's situation should be examined carefully in order to determine the appropriate remedy to be prescribed.

The CHAIRMAN. Thank you very much. We appreciate your views, Senator, and they will certainly be given full consideration by this committee.

The Chair regretfully announces that objections have been interposed to the committee proceeding with further hearings while the Senate is in session. Unhappily, therefore, we have to suspend and may not be able to resume today, although the Chair is going to tentatively set 2 o'clock this afternoon in the hope that we can proceed, that the present objector to the committee holding hearings while the Senate is in session will withdraw those objections and let us proceed.

These are privileged proceedings because there is a time limit and there is privilege to call up these resolutions at any time, I believe, after they have been before this committee for 10 days, as I recall.

Senator CASE of South Dakota. Mr. Chairman, I think that is correct, and I have hesitated to say anything about that, but I think in view of the lapse of time, I think one would have to assert his rights if the hearings will be unduly delayed.

Mr. CHAIRMAN. I understand that, but I do think in fairness to the Senate itself we ought to be permitted to make this record. Senator CASE of South Dakota. I thoroughly agree.

The CHAIRMAN. I believe I am completely impartial in the matter. I have certain concepts of what is fair and right in procedures and where certain rights of participants and people involved ought to be protected, and I have no preconceived judgment about these particular plans. I want to study them and I would like to have the benefit of testimony and I think all of the Senators would. If we are prevented from proceeding here, we are going to come to the deadline some day when you or others have the right or the privilege of bringing them to a vote, irrespective of whether we have held adequate hearings to inform the Senate on all of the issues that may be involved. I regret the interruption very much, but the Senate has certain rules and I am going to observe them. If somebody wants to take the responsibility for blocking this, they are Senators, too, and they have to be accountable for their own action. I think there is some misunderstanding. I hope we can clear it up when we get over there. We will try to and, if so, we will resume at 2 o'clock. The witnesses may keep in touch with the chief clerk of the committee and he will be able to advise you as soon as the Chair has determined the matter. Thank you very much, all of you, for your presence. We will stand in recess until 2 o'clock. If perchance we do not resume this afternoon, the committee will resume in the morning at 10 o'clock.

(Whereupon, at 11:30 a.m., the committee was recessed, to reconvene at 2 p.m. the same day.)

CHAIRMAN. The next witness is Mr. Cary, and you have Mr. Cohen, Mr. Loomis, and Mr. North with you. Are all of you gentlemen together?

Mr. CARY. Yes, sir.

The CHAIRMAN. Come up and have a seat.

Gentlemen, beginning with Mr. Cary, each of you identify yourself for the record, please.

STATEMENTS OF WILLIAM L. CARY, CHAIRMAN; MANUEL COHEN, DIRECTOR, DIVISION OF CORPORATE FINANCE; PHILIP LOOMIS, DIRECTOR, DIVISION OF TRADING AND EXCHANGES; WALTER NORTH, GENERAL COUNSEL; AND ARTHUR FLEISCHER, LEGAL ASSISTANT TO THE CHAIRMAN, SECURITIES AND EXCHANGE COMMISSION

Mr. CARY. Mr. Chairman, I am William L. Cary, State of New York. I appear as Chairman of the Securities and Exchange Commission.

Shall I introduce them?

The CHAIRMAN. Just let each one of them do it.