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Once more, I am happy that we have a political government and the two parties have the political ideas so that the people can choose between political viewpoints where it comes to the conduct of affairs of the Nation. It ought to be like that and that is the glory of a democracy-its political aspects.

Mr. HOLIFIELD. I have before me the United States Code, Mr. Lyon. Here are several pages which outline how the inspection of locomotives, the use of unsafe locomotives, how the inspectors shall be appointed, and it also says that the ICC shall provide such legal, technical, stenographic and clerical help as the business of the Office of the Director of Locomotive Inspection and his assistants may require, and it is in that field which I am sure that the duties of the chairman would be, because it is in that field that your duties of the Commission as I read it, the first part of this plan only transfers to the chairman those responsibilities which the Commission has in the administrative and executive field only-the first part of the plan there. Now, we go down through this and the duties.

Mr. LYON. If I may interrupt there. You see, this thing I am talking about is set out in a subparagraph (c), follows (b) and it makes the flat statement, as broad as language can make it.

Mr. HOLIFIELD. Under the control and direction. I realize that. The point I am making is that you certainly do not mean to say that all these pages and pages of statutory law which have already been enacted on these particular functions of these inspectors, that the chairman of the commission could arbitrarily override them? In other words, do you mean to tell me that he is not bound by the obligation of his office to carry out these functions according to the statutory law?

Mr. LYON. Well, if he decided that there would only be a third of the work to be done or should be done in the future, he could make that decision.

Mr. HOLIFIELD. You think so?

Mr. LYONS. Yes, even though Congress has appropriated the money for it.

Mr. TAURIELLO. He cannot circumvent the statutory laws.

Mr. LYON. Of course the law itself does not say how frequently a lomocotive shall be inspected, or does not go into the details that have to be gone into in doing this work. If the man directing it says that part of it shall be done, or that we will do it in a different way than has been done in the past, we will do it.

Mr. KARSTEN. Continue your present directorship and say that effective tomorrow we will reduce our inspection 50 percent-they can do that if they want to.

Mr. LYON. Perhaps he could, but he is an expert in the field and knows something about that.

Mr. KARSTEN. The same power reposes right now in the directors to do it now.

Mr. LYON. That is all right. Leave it there. The man is competent and he has stood the test of time and has been appointed by the President and confirmed by the Senate.

Mr. KARSTEN. He has the power, too.

Mr. LYON. But he is an expert in this field.

The CHAIRMAN. Will you proceed, Mr. Lyon?

Mr. LYON. What we have said about locomotive safety applies also to the administration of other safety work. If all this work is placed under the direction and control of a chairman who may have little or no training and experience in the many technicalities which affect railway safety, the results cannot but adversely affect safety. A chairman with such broad authority and lacking familiarity with technical and practical matters would probably bring about chaotic conditions in the administration and enforcement of these important safety laws.

It appears to us that it is significant that the resolutions pending in both the Senate and the House of Representatives which would express disapproval of the Congress of this Reorganization Plan No. 7 have been introduced by the distinguished chairmen of the committees on Interstate and Foreign Commerce. These are the committees which have to do with legislation affecting the Interstate Commerce Commission. We respectfully suggest that if the Congress is to approve such far-reaching changes as Plan No. 7 would bring about that very careful consideration should be given by the committees of the Congress that normally deal with interstate commerce. If laws affecting interstate commerce are to be repealed or modified we think the regular legislative process should be followed.

We respectfully urge your committee to take favorable action on the pending resolution of disapproval.

The CHAIRMAN. Then you think that the Reorganization Act of 1949 was a mistake?

Mr. LYON. I think portions of it were; yes, sir. I think there is a procedural mistake.

Mr. HOFFMAN. The things that have come down under it were mistakes.

Mr. LYON. I think the law was a mistake, too.

Mr. HOFFMAN. So do I. I sure fought it as hard as I could, but I expected something like this was coming along.

The CHAIRMAN. We did not want to disappoint you, Mr. Hoffman. Mr. HOFFMAN. You have not, believe you me. Before they get through under this Reorganization Act, with the President making the law instead of Congress writing the law, you will find a mess.

The CHAIRMAN. We decided that the President could do it better than we could.

Mr. HOLIFIELD. Mr. Lyon, I want to say that if your contention is true, that by the passing of this plan we can do away with all of the protective statutory law in regard to this by the whim of one man without any relation to the action of the Commission as a whole, that you have brought up a point that should be very seriously considered. I certainly would not be for that type of procedure. I do say that this-I say frankly that I doubt your interpretation of it and I want more information on it.

Mr. LYON. Mr. Holifield, these railroad unions have spent years on railroad safety laws over a period of 50 years; they have gone into this in detail exhaustively and the need for this legislation. But the Congress did not act blindly when they set up these procedures of administration.

Mr. HOLIFIELD. Congress has not always acted wisely.

Mr. LYON. If a man is not competent and wants to undo all the work that Congress did and much work that our railroad unions have done in promoting railroad safety

Mr. HOLIFIELD. I would not support anything that would have that effect, but I want it proved to me that this would have that effect. I am still doubtful. I am going to question witnesses that come before us for passage of this plan very closely on that point, to find out if the contention that you have made is true.

Mr. HOFFMAN. Your contention is not that this would repeal the substantive law so much as it is that it would place the administration-the interpretation and the administration of the law in the hands of a man who might or might not be qualified.

Mr. LYON. That is right. The law itself does not do the job. You have to have it administered fairly and competently. The CHAIRMAN. Thank you very much, Mr. Lyon.


The CHAIRMAN. We have with us this morning Mr. J. C. Gibson, vice president and general counsel of the Atchison, Topeka & Santa Fe Railway Co. Mr. Gibson.

Mr. GIBSON. Mr. Chairman, my name is J. C. Gibson. I am appearing on behalf of the Association of American Railroads in opposition to Reorganization Plan No. 7. I am vice president and general counsel of the Atchison, Topeka & Santa Fe Railway Co. with headquarters at Chicago, Ill.

There are several reasons why we object to Reorganization Plan No. 7 and urge support of the resolution which has been introduced to disapprove it.

First, the plan substantially departs from the recommendations of the Hoover Commission by transferring the power of selection of the Chairman of the Interstate Commerce Commission from the members of that Commission to the President.

Second, the plan unnecessarily concentrates administrative powers in the hands of the Chairman of the Commission.

Third, the plan impairs the independence of the Interstate Commerce Commission and opens the way for executive domination of that agency which has always been and should continue to be a bipartisan arm of the Congress.

Fourth, there is serious cause for apprehending that the plan is the entering wedge for further encroachments upon the independence of the Commission.

Fifth, there is no substantial showing that adoption of the plan would bring about any economy whatever in the expenditure of public funds.

Before considering these objections in detail, it might be well preliminarily to review the duties of the Commission, the nature of its functions, and its organizational structure and then to analyze the changes which Reorganization Plan No. 7 is designed to produce.


Originally formed to regulate the railroads, the jurisdiction of the Commission today also extends over motor carriers, domestic water carriers, freight forwarders, as well as sleeping car, express, and pipeline companies. It exercises comprehensive regulatory authority over the railroads with powers over rates, fares, charges, the prescription of joint rates and their divisions, the prevention of undue discrimination, the provision of car service, joint use of terminals, construction of new rail lines and extension of existing lines, issuance of securities, consolidations and acquisitions of control, reorganization of bankrupt companies, accounting, and safety. It has similar authority although less extensive in scope over the other types of carriers.


Before passing to a consideration of the present organization of the Commission and the changes that would be wrought in it by plan No. 7, it might be well to review briefly the nature of the functions exercised by the Commission and to analyze the reasons why it may be important to avoid any change in organizational structure that would impair the traditional position of the commission as an independent agency responsible to Congress.

The Interstate Commerce Commission as it exists today is the product of a fairly long process of evolution. When the original Act to Regulate Commerce was under consideration in Congress there was a difference of opinion over the choice of the agency for the enforcement of the statute. One group, led by Senator Cullom, advocated the creation of a national railroad commission. Another group, headed by Representative Ragan, wanted to leave enforcement to the courts, which, he said, "are within convenient reach of the people and with whose methods of procedure they are familiar.”1

When the act was passed in 1887, the Commission form was adopted. To a certain extent the Commission was placed under the supervision of the Department of the Interior. Although it was not made a part of the Department it was nevertheless required to make an annual report to the Secretary of the Interior, and the statute imposed upon the Secretary the duty of furnishing the Commission with offices and office supplies and approving its expense vouchers.2

Within a few months the Secretary of the Interior recommended that the Commission be made wholly independent of the executive branch of the Government. The Commission joined in this recommendation.3 The act was amended in 1889 to effect the sepa

1 Lewis H. Haney, A Congressional History of Railways in the United tSates (1910), pp. 307, 308. 2 Act to Regulate Commerce, February 4, 1887, secs. 18 and 21.

3 Statement by Senator Cullom, Congressional Record, June 12, 1888, vol. 19, pt. 6, p. 5150. About a month later Senator Cullom explained the reason for transferring the Commission from the Interior Department as follows:

"Mr. COCKRELL. I should like to have the Senator explain why it is taken away from the Interior Department.

"Mr. CULLOм. The only reason is because the Secretary of the Interior as well as the Commission agree that it is only an incumbrance to the Secretary of the Interior to be imposing such duties on him. It is impossible for him to know very much about the matter, and it is a duty that is troublesome to the Commission to procure what seems to be unnecessary endorsement; and, finally, it is only superfluous work on the part of the Secretary of the Interior, and they both desire that this change should be made in the law" (Congressional Record, July 9, 1888, vol. 19, pt. 7, p. 6001).

ration and to require the Commission to report directly to the Congress.*

The original act contained the present provisions for bipartisanship out of which not more than a bare majority of the members of the Commission may be members of the same political party. Such an independence of political influence was regarded as a matter of great moment. Independence of executive domination seems to have been assumed in view of the bipartisanship character of the Commission, the staggered terms of its members reducing the number ordinarily appointed by any one President, and the requirement of the statute for judicial procedure. Apparently the Commission was regarded very much like a court and entitled to the same consideration.


The Commission is an independent regulatory agency performing quasi-legislative, quasi-judicial, as well as certain incidental administrative functions. Most of its duties are quasi-legislative as in the prescription of rates for the future. Some are quasi-judicial, such as the award of reparation because of the collection by a carrier of unreasonable rates. Since generally speaking the Interstate Commerce Act requires a public hearing of the parties before the entry of an order, most of its procedure is quasi-judicial even where the nature of the function exercised is not of that character."

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In following this procedure of deciding issues on their merits after a full hearing and conforming to the injunction of the Supreme Court that its powers "are expected to be exercised in the coldest neutrality," the Commission has come to be regarded as a body of experts "appointed by law and informed by experience." 8

It has achieved a high reputation for independence, fairness, and impartiality, as well as expertness. The conspicuous success of the Interstate Commerce Commission and the reputation that it built up for efficiency as well as expertness in the discharge of its duties contributed largely to the prestige of the independent regulatory commission and led to the creation of similar regulatory bodies in other fields of activity of the Federal Government.10

Its strength has been founded in the confidence of shippers and carriers and all who practice before it in its integrity, in its fixed practice of deciding a case on the facts submitted at a public hearing with an impartial weighing of those facts and with a final decision reached within the framework of the law. If the Commission were subject to executive direction or political influence, if it were made amenable to pressure to decide not on the basis of the law and the facts but on the basis of someone else's notion of the requirements of current public policy, then confidence in its impartiality would be gone and a large part of its usefulness would be destroyed.11

4 Act of March 2, 1889, 25 Stat. L. 855.

5 Robert E. Cushman, The Independent Regulatory Commissions (1941), pp. 61, 62. 6 Annual Report of the Interstate Commerce Commission, 1947, pp. 14-19.

I. C. C. v. Chicago, R. I. & P. Ry., 218 U. S. 88, 102.

8 Illinois C. R. Co. v. I. C. C., 206 U. S. 441, 454; Standard Oil Co. v. U. S., 283 U. S. 235. 238.

9 Hoover Commission Task Force Report on Regulatory Commissions (1949), p. 82. Emory R. Johnson, Government Regulation of Transportation (1938), p. 661. Harry C. Ames, ICC Practitioners Journal, September 1945, pp. 1149–1153. Charles Evan Hughes, address before American Law Institute, May 12, 1938.

10 Hoover Commission Task Force on Regulatory Commissions (1949), n. 82.

11 D. Philip Locklin, Ecconomics of Transportation, 3d ed., 1947, p. 298. Sharfman, The ICC, vol. 2, pp. 454, 488, 489. Lewis C. Sorrell, Reorganization of Transportation Regulation, May 1934.

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