REORGANIZATION PLANS OF 1961: NO. 1, SECURITIES AND EXCHANGE COMMISSION; NO. 2, FEDERAL COMMUNICATIONS COMMISSION; NO. 3, CIVIL AERONAUTICS BOARD; NO. 4, FEDERAL TRADE COMMISSION; NO. 5, NATIONAL LABOR RELATIONS BOARD

TUESDAY, JUNE 6, 1961

U.S. SENATE,

COMMITTEE ON GOVERNMENT OPERATIONS,

Washington, D.C.

The committee met, pursuant to notice, at 10:10 a.m. in room 3302, New Senate Office Building, Senator John L. McClellan (chairman) presiding.

Present: Senators, McClellan, Gruening, and Javits.

Also present: Senator Francis Case of South Dakota; Walter L. Reynolds, chief clerk and staff director; Ann M. Grickis, assistant chief clerk and Eli E. Nobleman, professional staff member. The CHAIRMAN. The committee will come to order.

The Chair will make a brief statement for the record. As announced on the floor of the Senate on May 18, these hearings have been scheduled to take testimony designed to assist the committee in determining the appropriate action to be taken on Senate Resolutions 148, 147, 142, and 143, expressing disapproval of Reorganization Plans No. 1, Securities and Exchange Commission; No. 2, Federal Communications Commission; No. 3, Civil Aeronautics Board; and No. 4, Federal Trade Commission of 1961, respectively. We will also hear testimony relative to plan No. 5 of 1961 dealing with the National Labor Relations Board, although no resolution of disapproval has been introduced in the Senate with respect to this plan, and I may say I have no information that such a resolution will be introduced. Since we are holding this series of hearings, I am going to hear testimony on it if anyone desires to comment with respect to that plan.

Following the reference of these plans to this committee, the respective chairmen of the Senate Committee on Banking and Currency, the Senate Committee on Commerce, and the Senate Committee on Labor and Public Welfare, which exercise oversight jurisdiction over the regulatory agencies which are the subject of these plans, were requested to submit their views and recommendations for consideration by this committee. The Committee on Commerce held hearings on plan No. 2, Federal Communications Commission, on May 23, 1961, and on plan No. 4, Federal Trade Commission, on June 1. Hearings on plan No. 3, Civil Aeronautics Board, have been scheduled for June 8, I understand, and after that committee has held those hearings, we will be glad to receive such findings and recommendations as it may desire

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to submit. The Senate Committee on Banking and Currency held hearings on plan No. 1, Securities and Exchange Commission, on June 2, 1961.

If the respective chairmen or other members of these committees desire to present their views in person, we will, of course, be glad to hear from them and accordingly an invitation has been extended to them to testify, if they so desire. If, however, they wish to submit the recommendations of their committees in written form, these will be incorporated in the record. As other Senators indicate their desire to be heard, they will be accommodated.

Also, letters were sent to each member of the regulatory agencies concerned, inviting them to submit their comments and recommenda tions on the plans affecting their respective agencies. In the case of plan No. 5, National Labor Relations Board, the views of the General Counsel to the Board were also requested. The comments and recommendations of the Chairmen and other members of these agencies will be inserted in the record at an appropriate place.

As indicated, the committees exercising legislative oversight over the regulatory agencies which are the subjects of these plans have held extensive hearings, or are in the process of doing so. It is not our intention to duplicate their work. This committee would be remiss, however, in its duty to the Senate if it did not conduct an independent examination of the major features of these plans so as to enable us to reach an informed decision on the pending resolutions and on plan No. 5. Accordingly, we have asked each of the regulatory agencies concerned to have present representatives who can summarize the positions of their respective agencies and be available to answer any questions which members of the committee may have. Where members of these agencies have indicated that they are not in agreement with the Chairman and the majority of the members of these bodies and have submitted their views, they will be included in the record.

Our first witness this morning will be Mr. James M. Landis, Special Assistant to the President. He will be followed by Senator Francis Case in support of Senate Resolutions 142 and 143. The committee will then hear from Mr. William E. Carey, Chairman of the Securities and Exchange Commission, accompanied by members of the Commission staff, Mr. Paul Rand Dixon, Chairman of the Federal Trade Commission, accompanied by members of the staff of that agency, and representatives of the Federal Communications Commission.

Tomorrow we expect to hear from the sponsors of two of the resolutions of disapproval, Senator Roman L. Ĥruska, in support of Senate Resolution 147, Federal Trade Commission, and Senator Homer E. Capehart, in support of Senate Resolution 148, Securities and Exchange Commission. They will be followed by Mr. Allen S. Boyd, Chairman of the Civil Aeronautics Board.

Although no resolution of disapproval of plan No. 5 has been filed in the Senate, the committee has extended an invitation to the Chairman and General Counsel of the National Labor Relations Board to testify on this plan. These witnesses will present their views this afternoon, if we can obtain permission for the committee to sit.

At this point I shall insert in the record Reorganization Plans Nos. 1 through 5-all of them to be inserted in numerical order-with their accompanying Presidential messages, and Senate Resolutions 148, 142, 143, and 147. Also, there will be inserted in the record immediately following those resolutions Staff Memorandums Nos. 87-115, dealing with Reorganization Plans Nos. 1 through 4 of 1961, dated May 15, 1961, and 87-1-30, dealing with plan No. 5, dated June 2, 1961, and the views of those members of the agencies concerned who have submitted their comments. Let those be inserted immediately following these other documents and printed in the record, as appropriate.

(Reorganization Plans Nos. 1 through 5, accompanying Presidential messages; Senate Resolutions 148, 147, 142, and 143, Staff Memorandums Nos. 87-1-15 and 87-1-30:)

REORGANIZATION PLAN NO. 1 OF 1961, PREPARED IN ACCORDANCE WITH THE REORGANIZATION ACT OF 1949, AS AMENDED, AND PROVIDING FOR REORGANIZATION IN THE SECURITIES AND EXCHANGE COMMISSION

APRIL 27, 1961.-Referred to the Committee on Government Operations and ordered to be printed

To the Congress of the United States:

I transmit herewith Reorganization Plan No. 1 of 1961, prepared in accordance with the Reorganization Act of 1949, as amended, and providing for reorganization in the Securities and Exchange Com

mission.

This Reorganization Plan No. 1 of 1961 follows upon my message of April 13, 1961, to the Congress of the United States. It is believed that the taking effect of the reorganizations included in this plan will provide for greater efficiency in the dispatch of the business of the Securities and Exchange Commission.

The plan provides for greater flexibility in the handling of the business before the Commission, permitting its disposition at different levels so as better to promote its efficient dispatch. Thus matters both of an adjudicatory and regulatory nature may, depending upon their importance and their complexity, be finally consummated by divisions of the Commission, individual Commissioners, hearing examiners, and, subject to the provisions of section 7(a) of the Administrative Procedure Act of 1946 (60 Stat. 241), by other employees. This will relieve the Commissioners from the necessity of dealing with

many matters of lesser importance and thus conserve their time for the consideration of major matters of policy and planning. There is, however, reserved to the Commission as a whole the right to review any such decision, report or certification either upon its own initiative or upon the petition of a party or intervenor demonstrating to the satisfaction of the Commission the desirability of having the matter reviewed at the top level.

Provision is also made, in order to maintain the fundamental bipartisan concept explicit in the basic statute creating the Commission, for mandatory review of any such decision, report or certification upon the vote of a majority of the Commissioners less one member. Inasmuch as the assignment of delegated functions in particular cases and with reference to particular problems to divisions of the Commission, to Commissioners, to hearing examiners, to employees and boards of employees must require continuous and flexible handling, depending both upon the amount and nature of the business, that function is placed in the Chairman by section 2 of the plan.

By providing sound organizational arrangements, the taking effect of the reorganizations included in the accompanying reorganization plan will make possible more economical and expeditious administration of the affected functions. It is, however, impracticable to itemize at this time the reductions of expenditures which it is probable will be brought about by such taking effect.

After investigation, I have found and hereby declare that each reorganization included in the reorganization plan transmitted herewith is necessary to accomplish one or more of the purposes set forth in section 2(a) of the Reorganization Act of 1949, as amended. I recommend that the Congress allow the reorganization plan to become effective.

THE WHITE HOUSE, April 27, 1961.

JOHN F. KENNEDY.

REORGANIZATION PLAN NO. 1 OF 1961

Prepared by the President and transmitted to the Senate and the House of Representatives in Congress assembled, April 27, 1961, pursuant to the provisions of the Reorganization Act of 1949, as amended

SECURITIES AND EXCHANGE COMMISSION

Section 1. Authority to delegate. (a) In addition to its existing authority, the Securities and Exchange Commission, hereinafter referred to as the "Commission", shall have the authority to delegate, by published order or rule, any of its functions to a division of the Commission, an individual Commissioner, a hearing examiner, or an employee or employee board, including functions with respect to hearing, determining, ordering, certifying, reporting or otherwise acting as to any work, business, or matter: Provided, however, That nothing herein contained shall be deemed to supersede the provisions of section 7(a) of the Administrative Procedure Act of 1946 (60 Stat. 241), as amended.

(b) With respect to the delegation of any of its functions, as provided in subsection (a) of this section, the Commission shall retain a discretionary right to review the action of any such division of the Commission, individual Commissioner, hearing examiner, employee