AMENDMENT NO. 1 On page 4, after line 6, insert the following: "(c) Exception.-Tax imposed by subsection (a) shall not apply to a person if the activity which otherwise makes him liable for such tax is a wagering enterprise licensed under the law of the State in which he engages in such enterprise. AMENDMENT NO. 2 On page 4, after line 6, insert the following: "(c) Persons Engaged in State-Licensed Activities.-In the case of a person whose activity which otherwise makes him liable for the tax imposed by subsection (a) has been licensed under the law of the State in which he engages in such activity to engage in such activity "(1) the tax imposed by subsection (a) (1) shall be $50 (in lieu of $1,000), and "(2) the tax imposed by subsection (a) (2) on a person who is a punchboard operator, pickup man or an employee shall not apply. Hon. JOHN L. MCCLELLAN, U.S. SENATE, Washington, D.C., June 2, 1969. Chairman, Criminal Laws and Procedures Subcommittee, DEAR MR. CHAIRMAN: I am writing to you in connection with our mutual desire to abate crime in America in general and illegal gambling in particular. I recognize that these objectives are foremost in your mind and the minds of the Subcommittee in hearings to begin this week on S. 1624. I regard the suppression of illegal gambling as a part of the nation's overall crime problem. This illegal activity contributes to the furtherance of narcotics, prostitution, and other evils which are financed by the profits from this multibillion-dollar operation. I am disturbed, however, that the bill under consideration does not distinguish between wagering which is conducted in a lawful, supervised, policed. and taxed manner and the illegal variety. Thus, unless amended, the bill would impose a stamp requirement twenty times in excess of the $50 annually now required for the policed and taxed legitimate operator, most of whom are small businessmen in my state. The illegal operator will, of course, seek to evade all taxes. I am aware that Senator Bible will offer an amendment excluding Nevada from the provisions of S. 1624. I certainly support him in this effort. Since I believe that there is a state's right question very much involved in this issue and that a tax increase of twentyfold is excessive, I would hope that the Subcommittee will consider a Nevada exclusion. I would also urge that the Subcommittee consider the following proposal as still another alternative: Since it is difficult legally to distinguish between the legal and illegal operator, I would propose that the Subcommittee consider the collection of the 10% federal wagering tax and any state taxes that may be collected as credits toward the thousanddollar tax requirement which would be imposed by the new legislation. It seems fair and reasonable to me that since the overall objective is one of regulation rather than revenue and since it is the illegal gambler who is the target of this legislation, my proposal would be fair and equitable. Trusting the Subcommittee in its wisdom will give proper weight and attention to the matter of the small and legal businessman who would be burdened and, in some cases, perhaps put out of business by this requirement, I am Sincerely, HOWARD W. CANNON. Senator MCCLELLAN. At the opening of hearings on this legislation I noted that for too long the problem of crime has been discussednot attacked. Let us hope that the result of our studies and deliberations on these proposals will contribute to the waging of a full-scale war on the forces of organized crime. Senator Hruska, any statement? Senator HRUSKA. No, thank you, Mr. Chairman, except to say I am gratified that we are embarking upon a continuation of these hearings. The program is a very big one. It is very important. With the cooperation extended by the Attorney General as well as the fine work of your staff, Mr. Chairman, I know that we're going to make good progress. Senator MCCLELLAN. Thank you very much. The Attorney General testified previously on S. 30 and other bills, but the Department of Justice had not had the opportunity to thoroughly examine and give us a formal report on S. 30. Subsequently, the Attorney General, on May 8, submitted to the committee the Department's analysis of the bill, with comments and recommendations. Without objection I will insert in the record at this point the full text of the Attorney General's letter and comments on S. 30. (The document referred to follows:) OFFICE OF THE ATTORNEY GENERAL, Hon. JOHN L. MCCLELLAN, Washington, D.C. DEAR SENATOR: Upon the conclusion of my statement before the Subcommittee on Criminal Laws and Procedure of the Committee on the Judiciary on March 18, 1969, in support of the objectives of S. 30, I advised you that I would send you the written views of the Department on it upon completion of our study of the bill. I am pleased to submit the attached memorandum setting forth in detail our views on the various provisions of S. 30, and I shall be happy to have appropriate representatives of the Department available to testify regarding this matter at your pleasure. Please let me know if I can be of any further assistance to you and the Subcommittee in effecting enactment of this vitally needed legislation. The Bureau of the Budget has advised that there is no objection to the submission of the views contained in this memorandum. Sincerely, JOHN N. MITCHELL, DEPARTMENT OF JUSTICE COMMENTS ON S. 30 TITLE I-GRAND JURY Tile I makes various changes in the law affecting the summoning, term, and powers of grand juries which would strengthen the powers and independence of grand juries. While we support most of the provisions contained in this Title, we have alternate proposals to offer as to certain others. Our views with respect to each Section of this Title will be set forth separately. Section 101 seeks to amend 18 U.S.C. 3321 (Number of grand juries; summoning additional jurors) by adding at the end thereof the following new sentence: "Members of a grand jury shall be selected in accordance with the provisions of Chapter 121." This provision refers to the chapter of Title 28 which specifies the manner of selecting jurors. For clarity it is recommended that the phrase "Title 28" be added after the words "Chapter 121." Section 102 would amend 18 U.S.C. 3322, which incorporates by reference Rule 6(a), Federal Rules of Criminal Procedure, which provides that "The Court shall order one or more grand juries to be summoned at such times as the public interest requires", to require the convening of a grand jury at least once during each eighteen month period by each district court. While the Department favors the convening of a grand jury at least once during each eighteen month period where the needs of justice require it, we are not aware that any serious problem exists in this regard in any district. The difficulty we have experienced in some districts, however, is obtaining a sufficient number of grand juries to accomodate at the same time the general needs of the district and the special needs of the typically lengthy organized crime investigation. To remedy this problem, we recommend that present Section 3322 of Title 18 be amended to provide in addition that a grand jury be impaneled in each district court in which the Attorney General certifies in writing to the chief judge of the district that in his judgment such a grand jury is necessary because of major organized crime activity in the district. We, therefore, recommend that the first sentence of the proposed revision of Section 3322 of Title 18 be amended to read as follows: Section 3322-Summoning and term (a) Each district court shall order one or more grand juries to be summoned at such time as the public interest requires, or whenever the Attorney General certifies in writing to the chief judge of the district that in his judgment a grand jury is necessary because of major organized crime activity in the district. Section 102 would also amend Section 3322 of Title 18 to provide that a grand jury may, by majority vote, extend its term of eighteen months for additional periods of six months, not to exceed a total term of thirty-six months. This provision appears to be desirable on several grounds. It would have the effect of stimulating prosectuors and investigators to take effective and timely action against organized crime in their districts. It would also insure that grand juries would stay in session long enough for the unusually lengthy period of time often required to build an organized crime case. Lastly, it would eliminate the possibility of arbitrary termination of a grand jury by supervisory judges. Section 103 would amend Section 3324 of Title 18, which incorporates by reference Rule 6(c) of the Federal Rules of Criminal Procedure, in five respects. Rule 6(c) presently states that "The court shall appoint one of the jurors to be foreman and another to be deputy foreman." There then follow other provisions which are not affected by the proposed amendment. The proposed Section 3324 (a) would provide that "Each grand jury when impaneled shall elect by majority vote a foreman and deputy foreman from among its members." While this proposal changes the existing rule, this is purely a matter of statutory law and policy. This provision appears to be desirable in that it increases the independence of the grand jury by removing it from any possible restrictive influence present as a result of selection by the court or at the court's direction by court personnel. In practice, the court or his delegate (the court clerk) examines the case history of each juror as to his education, profession, civic activities, etc., and many are interviewed personally. By this process a foreman and deputy foreman are selected. This screening process, however desirable, makes a person foreman who is acceptable to the court even though such a person may not reflect the attitudes or have the concerns of the community at large or the grand jury in particular. Proposed Section 3324 (b) provides that "It shall be the duty of each grand jury impaneled within any judicial district to inquire into each offense against the criminal laws of the United States alleged to have been committed within the district which is brought to the attention of the grand jury by the court or by any person." This provision is a statutory recognition of existing case law holding that the inquisitorial powers of a grand jury are virtually unlimited and that the grand jury can initiate a case on its own and investigate any alleged violation of Federal law within its jurisdiction. See Hale v. Henkel, 201 U.S. 43 (1906); Blair v. United States, 250 U.S. 273 (1919); United States v. Hartke-Hanks Newspapers, 254 F. 2d 366 (C.A. 5), cert. denied, 357 U.S. 938 (1958); In Re Grand Jury Investigation (General Motors Corp.), 32 F.R.D. 175 (S.D.N.Y.), appeal dismissed, 318 F. 2d 533 (C.A. 2), cert. denied, 375 U.S. 802 (1963); United States v. Smyth, 104 F. Supp. 283 (N.D. Calif.) 1952); United States v. Gray, 187 F. Supp. 436 (D.C.D.C. 1964). Consequently, we can sɛe no objection to this proposal. Section 3324 (c) provides that no person shall be deprived of opportunity to communicate to the foreman of a grand jury any information concerning any offense against the criminal laws of the United States alleged to have been committed within the district. Section 1504 of Title 18, United States Code, presently makes it an offense for anyone to attempt to influence the action or decision of any grand or petit juror upon any matter pending before it by a written com munication. This provision is apparently intended to make it clear that no viola tion of this Section is committed by a person who merely communicates to the foreman of a grand jury any information regarding any offenses against the laws of the United States. This provision could well encourage wider public participa tion in the fight against organized crime and we, therefore, support it. Section 3324(d) provides that when the grand jury determines by majority vote that the volume of its business exceeds its capacity to fulfill its obligations, it may apply to the district court to impanel an additional grand jury. Upon such application and a showing of need, the district court shall order an additional grand jury to be impaneled. If the court refuses to hear the application or refuses to impanel a new grand jury, the grand jury may appeal to the chief judge of the circuit who shall have jurisdiction to order a new grand jury impaneled. This provision seems reasonable, especially since the grand jury must make a showing of need to the court before the request may be granted. We support this provision. Section 3324 (e) provides that whenever a grand jury determines by majority vote that any attorney or investigative officer or agent appearing on behalf of the United States before the grand jury for the presentation of evidence with respect to any matter has not performed or is not performing his duties diligently and effectively, the grand jury may transmit to the Attorney General a written request, along with the reasons therefor, for a new attorney, agent or investigator. The Attorney General is then required to promptly inquire into the merits of the application and to take appropriate action to provide for prompt and effective representation on behalf of the United States. The Department is opposed to this provision on several grounds. First, it is felt that the provision is unnecessary since sufficient control over such personnel already exists in the Department. As a practical matter, moreover, the grand jury can at present undoubtedly make such a complaint to the Attorney General and appropriate action will be taken where merited. Second, it is felt that placing such an express power in the grand jury has too great a potential for mischief and might well tend to unduly limit the discretion of attorneys charged with investigation of unpopular or sensitive matters. Third, this provision could also be expected to invite the making of unfounded, though perhaps good faith, complaints in those hard or close cases where the layman grand jury refuses to accept the legal judgment of an experienced prosecutor that the evidence is insufficient as a basis for an indictment. For these reasons, then, the Department does not feel that this provision should be enacted. Section 104 would amend Chapter 215 of Title 18, United States Code, by adding at the end thereof a new section, Section 3330, entitled "Reports". This new Section 3330 would allow the grand jury, on majority vote of its members, to submit to the court a report: (1) concerning noncriminal misconduct, nonfeasance, or neglect in office by a public officer or employee as the basis for a recommendation of removal or disciplinary action, or (2) stating that after investigation of a public officer or employee it finds no misconduct, nonfeasance, or neglect in office by him, provided that such public officer or employee has requested the submission of a report, or (3) proposing recommendations for legislative, executive, or administrative action in the public interest based upon stated findings. Such a report shall be submitted to the court who will approve and accept it for filing only if the above requirements are met and if the report is based on facts revealed in the course of an authorized investigation and is supported by the preponderance of the evidence. A report concerning noncriminal misconduct of a public official can be accepted only if the named individual had been afforded an opportunity to testify before the grand jury prior to the filing of the report. Any other report must not be critical of a named individual. A public official may file an answer to a report critical of him and may also file an appeal to the circuit court. At the expiration of an appropriate time as set forth in the provision the United States Attorney must deliver a true copy of the report for appropriate action to the public officer or agency having removal or disciplinary power over the public officer named therein, but if a criminal action is pending the court may seal the report until the matter is disposed of. If the court is not satisfied that all these requirements are met, it may direct that additional testimony be taken before the same grand jury, or it may direct that the report be sealed and not filed as a public record. Finally, this provision defines public officer or employees as "any officer or employee of the United States, or any State or political subdivision, or any department, agency, or instrumentality thereof." This proposal would substantially change existing Federal law and procedure. See in general, Orfield, The Federal Grand Jury, 22 F.R.D. 343, 402 (1958). Two cases which are particularly illustrative of present judicial thinking that any grand jury action beyond indicting or refusing to indict is beyond the power of the grand jury are Application of United Electrical Radio and Machine Workers, 111 F. Supp. 858 (S.D.N.Y. 1953), and In Re Petition for Disclosure of Evidence Before October 1959 Grand Jury, 184 F. Supp. 38 (E.D. Va. 1960). In the former case, the court held that a grand jury report which made recommendations to the NLRB was beyond the powers of the grand jury, an abuse of the principle of separation of powers and a violation of the secrecy provision of Rule 6(e), Federal Rules of Criminal Procedure. In the latter case, the court held that a grand jury report on noncriminal conduct of state officials was likewise beyond the power of the grand jury, an infringement upon the provinces of State and local Governments and a violation of the secrecy provision of Rule 6(e). While the problem of secrecy under Rule 6(e) can be remedied by statute, the other problems must await judicial testing. The present proposal also goes beyond that of the President's Commission on Law Enforcement and Administration of Justice which recommended: When a grand jury terminates, it should be permitted by law to file public reports regarding organized crime conditions in the community. It is noted that this recommendation restricts the use of a report: (1) until the grand jury terminates, (2) to organized crime conditions, and (3) in a presumably general context. This type of report would apparently be unobjectionable in view of the dicta by the court in Application of United Electrical Radio and Machine Workers (supra) at 869, that "We are not here concerned with reports of a general nature touching on conditions in a community. They may serve a valuable function and may not be amenable to challenge." We believe that considerations of public policy and interest favor some expansion of the grand jury's power in this area, and though we recognize there are constitutional problems involved, we do not believe they are of an insuperable nature. The history of the growth and development of the grand jury system discloses that the issuing of reports has been an historic grand jury function in England for almost three hundred years. The practice of rendering reports on matters of public concern was also followed in the early American colonies, and today, despite the weight of authority against it, reports are authorized either by statute or by judicial decision in such States as New York, California, Illinois, New Jersey, Florida, and Tennessee. Despite this, however, and despite the fact that the grand jury has been described by the Supreme Court as a "prototype" of its ancient British counterpart, Blair v. United States, 250 U.S. 273, 282 (1919), its power to issue reports has not survived intact with its virtually unchallenged investigatory power. The principal objections to the use of grand jury reports seem to be that they violate the traditional secrecy of grand jury proceedings, they expose grand jurors to libel actions, they violate the principle of separation of powers, and, perhaps most importantly, they charge wrongdoing while effectively denying the use of a judicial forum in which to reply. Upon close examination, the first three of these reasons do not appear to have much merit. The problem of secrecy under Rule 6(e) of the Federal Rules of Criminal Procedure may, of course, be solved by statutory amendment. There is in fact already ample precedent under Rule 6(e) for violation of grand jury secrecy when the general welfare requires it. See, for example, In Re Petition for Disclosure of Evidence Before October 1959 Grand Jury, 184 F. Supp. 38 (E.D. Va. 1960), where Federal grand jury minutes were made available to Commonwealth Attorney for use in state grand jury proceedings. The libel objection can perhaps be discounted as the least troublesome since, in light of recent Supreme Court decisions on this subject, grand jurors actions in this regard are undoubtedly privileged. The argument that the grand jury reports contravene the principles of separation of powers proceeds on the theory that the grand jury, being an appendage of the court, should not invade the province of the legislative or executive branches and charge them with misconduct or inefficiency. This argument loses much of its force, however, when it is considered that historically the grand jury has for centuries exercised both the reporting and indicting functions, and |