We agree with the objectives stated in the accompanying message, i.e., to provide for greater efficiency; to relieve the Commissioners from the necessity of dealing with the many matters of lesser importance; and to provide for greater flexibility in handling the business before the Commission. However, a close examination of the plan brings several important questions to mind. First, is the Commission being given the authority to delegate to an employee not only its administrative functions of lesser importance, but also any of its rulemaking and adjudicatory power as well? We wonder whether such blanket authority to redelegate legislative and quasi-judicial functions isn't much too broad? Decisions in these important areas can seriously affect the rights and obligations of the entire securities industry and the investing public. Should not affected persons, as a matter of right, be entitled to the benefit of Commission review of staff determinations? Second, in the rulemaking area, who, if anyone, has the right to petition the Commission for review of the exercise of this delegated rulemaking power? Third, in a rulemaking proceeding, if review of a delegated power is denied by the Commission, does an affected person have the right to appeal the denial of review to the courts? Is an appeal to the courts available from the determination of the matter itself? The exchange certainly does not want to create roadblocks to the commendable objectives of Reorganization Plan No. 1, but we do feel that it goes much further than seems necessary in permitting the delegation of Commission authority to the staff-especially where the right of review in matters of great importance is not clear. I sincerely hope that the Congress and your committee will take upon themselves the task of resolving these basic questions. Sincerely yours, G. KEITH FUNSTON, President. Hon. JOHN L. MCCLELLAN, SHIPLEY, AKERMAN & PICKETT, Chairman, Government Operations Committee, DEAR SENATOR MCCLELLAN: Our office does work with persons and companies subject to regulation by the Securities and Exchange Commission. It is our view that the Commission under existing authority can make all reasonable and necessary redelegations required to handle the matters before it expeditiously. Proposed Reorganization Plan No. 1 states that the Securities and Exchange Commission "shall have the authority to delegate *** any of its functions to *** 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." This would appear to permit an almost total redelegation by the Commission to subordinate employees not appointed by the President or confirmed by the Senate of all the authority vested in that agency by Congress. If so broad a redelegation of quasi-legislative and quasi-judicial responsibilities is to be authorized, the people's elected representatives in Congress should make this policy determination and not the members of the Commission. The Securities and Exchange Commission has over the years demonstrated that its staff personnel are professional men and women of the highest professional attainments and worthy of the great trust and power reposed in them. Nonetheless, these powers are of so important a nature that it would not appear consistent with the Federal Constitution to permit the Commission itself to redelegate authority delegated to it by Congress./ If existing authority delegated to the Commission is inadequate, Congress itself should undertake to amend existing legislation rather than permitting corrective action through the proposed Reorganization Plan No. 1, Very truly yours, CARL L. SHIPLEY. The CHAIRMAN. The next witness will be Mr. Geller and Mr. Cahill. I believe you are together. Will you come around, please? Have a seat, gentlemen, and Mr. Geller, will you identify yourself for the record? STATEMENTS OF HENRY GELLER, ASSOCIATE GENERAL COUNSEL, FEDERAL COMMUNICATIONS COMMISSION, PRESENTING THE VIEWS OF THOSE COMMISSIONERS WHO FAVOR PLAN NO. 2; AND GERARD M. CAHILL, ASSISTANT GENERAL COUNSEL, LEGISLATION, PRESENTING THE VIEWS OF THOSE COMMISSIONERS WHO OPPOSE PLAN NO. 2 Mr. GELLER. I am the Associate General Counsel of the Federal Communications Commission. The CHAIRMAN. Your name is Henry Geller? Mr. GELLER. That is right. And I am the Associate General Counsel of the Federal Communications Commission. The Commissioners in favor of Reorganization Plan No. 2 have designated me to come here today to speak for them. The CHAIRMAN. All right. How many are there? Mr. GELLER. There are three Commissioners, Mr. Chairman. Mr. GELLER. Chairman Minow, Commissioner Craven, and Commissioner Cross. These three support Reorganization Plan No. 2. The CHAIRMAN. Those three suport it. Who are the ones who do not? Mr. GELLER. There are four who do not. The CHAIRMAN. Four who do not? Mr. GELLER. Yes. The CHAIRMAN. Who are the four? Mr. GELLER. Comissioners Lee, Hyde, Bartley, and Ford do not support it. The CHAIRMAN. So we have here a majority opposition in the Commission itself? Mr. GELLER. That is right. The CHAIRMAN. Very good. Now Mr. Cahill, will you identify yourself for the record? Mr. CAHILL. My name is Gerard M. Cahill. I am Assistant General Council. I have been authorized to come here to present for the record the statements of the four Commissioners who are opposed to the plan. The CHAIRMAN. The four Mr. Geller just named in opposition? Mr. CAHILL. That is right. The CHAIRMAN. Very good. In presenting their views, as I understand you, you are bringing statements that they have prepared and presenting them for the Commissioners whom you represent? Mr. GELLER. That is correct. The CHAIRMAN. Those favoring the plan? Mr. GELLER. Yes, sir. The CHAIRMAN. Are you testifying in your own right as to your own views now, or are you merely representing this group of Com missioners? Mr. GELLER. What I am doing is representing this group of Commissioners. The CHAIRMAN. You are not presenting your views on it? The CHAIRMAN. Is that true for you? Mr. CAHILL. The same thing for me, Senator. I have not been authorized to place any further statements of the Commissioners in opposition or to interpret their statements, but simply to present their statements for the record. The CHAIRMAN. Simply to file their statements. Mr. CAHILL. That is right. The CHAIRMAN. Very good. Mr. CAHILL. However The CHAIRMAN. All right. Mr. Geller, you may file the statements of the three Commissioners in favor of the plan, and they will be received. (The prepared statements of Chairman Minow and Commissioner Cross are as follows:) MEMORANDUM Of Chairman NEWTON N. MINOW, FEDERAL COMMUNICATIONS COMMISSION, IN SUPPORT OF REORGANIZATION PLAN No. 2 of 1961 Section 1.-This section gives the agency much needed flexibility in handling its caseload. At the present time, the Commission must hear oral argument and pass on the exceptions in every adjudicatory case (see secs. 5(d) (1), 409 (b) of the Communications Act of 1934, as amended, 47 U.S.C. 5(d) (1), 409 (b)). And, even in the nonadjudicatory case where it may delegate its functions, the full Commission must then permit and pass upon an application for review (see sec. 5(d) (2)). In view of these restrictions, it is difficult, if not impossible, to alleviate the administrative lag or backlog, concerning which the Congress is so familiar (see, e.g., H. Rept. No. 2238, 86th Cong., 2d sess., p. 42; S. Rept. No. 168, 87th Cong., 1st sess., pp. 1, 2). Equally important, the Commissioners' time is so much taken with deciding routine cases that the consideration of major matters of policy and planning necessarily suffers (S. Rept. No. 168, 87th Cong., 1st sess., pp. 7-9). Reorganization Plan No. 2 would end this unfortunate situation. It would give the agency the discretion to handle each matter as it deserved. For example, when a petition for discretionary review of an examiner's initial decision in an adjudicatory case is filed, there would be the following possibilities: (i) Where the Commission (or at least five Commissioners), after examination of the petition, determines that the case involves no new important policy or legal consideration nor any significant factual error or departure from established policy or law, it will simply deny the petition, thus making the examiner's decision final and appealable to the courts. This, I submit, is wholly sensible. For, it is a waste of the time and energies of the parties, the agency, and, in effect, the public to insist that the administrative process continue before the full Commisison for another year or so, only to end with the same result and for the same reasons and findings (see S. Rept. No. 168, 87th Cong., 1st sess., pp. 7-9). (ii) If the Commission concludes that the case, although involving routine principles, does raise a serious question of factual error on some significant findings or a departure from established law or policy, review is of course called for. Where the facility or license at issue is a relatively unimportant one (as for example might be the case in many of the thousands of applications filed each year in the safety and special services field), the Commission could delegate such review to a board composed of specialized employees having no other duties. Any alleged error of this board would then be subject to discretionary review by the Commission. But if, as I would hope, the board had corrected the factual errors, if any, and reached a proper decision, the petition for discretionary review would be denied (by the vote of a majority plus one) and again the case would be ripe for review by the courts. (iii) Where the significant factual error or departure from established policy or law occurs in a case involving a valuable facility, the Commission might assign the case to a panel of three Commissioners. I would think that there would be included in this group a number of the standard broadcast and FM cases heard either on issues of comparative qualifications, allocations under section 307(b), interference, rules compliance, or the like. Many of the common carrier adjudicatory proceedings (see app. A for an illustrative list of such proceedings) could be heard by panels as could operator license cases of more than routine nature. Here again there would be discretionary review of the panel's decision by the full Commission, upon the vote of any three Commissioners. (iv) Finally, where the case raises important matters of policy or law, the full Commission would of course entertain the appeal. Further, I would expect that large, multiparty comparative television proceedings involving the assignment of television channels to major cities or proceedings to revoke or deny renewal of a broadcast station license would in most instances be considered and decided by the full Commission. Where the Commission grants the petition for discretionary review, exceptions will be permitted, either to the employee board, the division of Commissioners, or the full Commission (see sec. 8(b) o fthe Administrative Procedure Act, 5 U.S.C. 1007(b)). Oral argument would be allowed in every instance where it would serve a useful purpose. To hold such argument where it would serve no useful purpose where, for example, the issues are few and clearly grasped from the pleadings-would be unjustified. The test of any procedure in any given case must be whether it serves a public purpose. If it does, it will be utilized; if it does not, private parties or their counsel have no legitimate complaint in its rejection. Of course, in the cases heard by the Commission because of their important policy connotations, oral argument would continue to be the rule. Similarly, in the nonadjudicatory case, the Commission could now deny, without assigning reasons, the petition for discretionary review, and thus make the delegated decision its final action. I have set out in appendix B a few examples in just one field where such power would aid the Commission in the prompt dispatch of its business. The foregoing observations as to the possible application of the plan are necessarily tentative at this time. Further, I have not described all the procedural possibilities available under the plan, and could not do so. For, obviously, such procedures and applications will be gradually and carefully developed by the full Commission over the next few years. What the plan has done is to remove the present straitjacket, in order to enable the Commission to concentrate on important matters and to cut down the administrative lag. If we fail to make full use of this flexibility, the fault will be ours. But if flexibility is withheld, I do not believe Congress can fairly continue much of its criticism of the administrative process. It may be urged that the Commission will not review decisions containing factual errors or important policy questions. I do not think we will let a decision containing a significant factual error slip by, provided the petition for discretionary review calls it to our attention. But if we do, the courts will catch the error and remand the case to the Commission. As to the important policy question, I assure you that neither I nor my colleagues serve the Commission to "duck" important issues. To let an examiner or an employee board be the final word on the development of important policy would be incongruous and incredible. But it is just as incongruous (although unfortunately not incredible) that this Commission, which is faced with urgent problems in space satellite communications, TV allocations, and a host of other matters, must set aside almost a full hour to hear, and necessarily additional time to decide, whether the ship station license for a coastal fishing boat should be revoked or suspended for 3 or 6 months. I have set out in appendix C a list of the cases heard by the Commission in the last quarter of 1960. To give but one example of the effect of the plan, on the first day of argument in that quarter (October 13, 1960), the Commission heard argument on the following four cases, totaling 260 minutes or roughly 41⁄2 hours: 1. Springfield, Ill., deintermixture proceeding: In re amendment of section 3.606, table of assignments, television broadcast stations (Springfield, Ill.-St. Louis, Mo.), and proceedings pursuant to remand in Sangamon Valley Television Corp. v. United States and FCC, et al. (120 minutes consumed in oral argument.) 2. Patterson, La., ship radio revocation proceeding: In re Patterson Shrimp Co., Inc., in a show-cause proceeding why there should not be revoked the license for radio station WC-3826 aboard the vessel Howard Rochel at Patterson, La. (40 minutes consumed in oral argument.) (40 3. Proceeding in re application of James J. Williams for a construction permit for a new standard broadcast station at Williamsburg, Va. minutes consumed in oral argument.) 70910-61-5 4. Proceeding in re applications of Herbert T. Graham and Triad Television Corp. for construction permits for a new standard broadcast station at Lansing, Mich. (60 minutes consumed in oral argument.) The Commission then took additional time to discuss, decide, and prepare the decisions in these cases. Under the plan, the Commission would undoubtedly have heard the argument in the first case, the Springfield, Ill. deintermixture proceeding, since the proceeding involved important and unusual policy and factual matters. But in the next case, the question whether the ship station's license of a shrimp boat should be revoked did not involve any novel question whatever: Certainly an employee board could have disposed of the factual issues raised. And, just as clearly, a division of the Commission (or perhaps an employee board) could have dealt with the two following cases involving routine issues as to applications for standard broadcast facilities. If either the panels or the board erred, such error could be corrected by the Commission on petition for discretionary review. I think this example day, which would be multiplied many times in view of the roughly 50 cases in which oral argument was heard last year, illustrates the benefits the Commission would derive from its new found flexibility under the plan. Section 2.-This section provides that the Chairman shall assign the personnel, including Commissioners, "to perform such functions as may have been delegated by the Commission to Commission personnel, including Commissioners, pursuant to section 1 * * *." This provision is thus a housekeeping one: It is necessary that someone decide the makeup of the panels and boards and be responsible for the equitable and efficient allocation of such assignments. As the President pointed out in special message of April 13, 1961, that "someone" should be the Chairman—the agency's chief managerial officer. And, indeed, the act presently designates the Chairman as "the chief executive officer *** [with the] duty *** generally to coordinate and organize the work of the Commission in such manner as to promote prompt and efficient disposition of all matters within the jurisdiction of the Commission" (sec. 5(a)). Some of my colleagues have informed me of their opposition to this provision. They have stated that while they know that I would not abuse the power so bestowed (and I in turn have assured them that any assignments made would be on a rotational basis as far as practicable), in principle the provision shifts the agency from an independent bipartisan commission to an administrator within the executice branch; that it puts the Commissioners' time and energies completely at the disposal of the Chairman, and that it is open to abuse in that it permits the deliberate selection by a Chairman of Commissioners with predisposed ideas on certain subjects to sit on the panels. I respect the position of my colleagues, but I believe that their reservations are without foundation. First, under section 1 it is the Commission, not the Chairman, which has the complete control over whether a matter should be delegated. If, for example, my six colleagues thought the present system was ideal, they could vote to retain that system. I think that would be a mistake but it certainly shows that it is the Commission which is in control of this entire delegation matter. Suppose, further, that a Chairman did abuse his assignment powers, by either overburdening Commissioners or making assignments with a view to obtaining a certain outcome. The short answer is the Commission, which can vote to reconsider any action it takes, would simply reverse its delegation and take up the matters itself. Thus, as a practical matter, the Chairman must act fairly or the Commission will in effect withdraw his power to act in this area. In view of these considerations, the agency cannot be converted by this minor housekeeping pro vision. Second, the President was at pains to preserve the bipartisan nature of the agency. The plan specifically provides, "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." For this reason also, it would be senseless for the Chairman to abuse his assignment powers: By a vote of three Commissioners, his colleagues could and would bring the case to the full Commission. Indeed, the time of the full Commission was essentially wasted in case No. 3 because the voluntary dismissal of one of the competing applications a month after the argument rendered the comparative issues moot. |