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Laying aside for the moment any question of efficiency or economy, let us examine what could occur under this transfer of authority.

The Commission today has the power, under the act, to establish its divisions, boards, and bureaus, and to determine upon the jurisdiction and duties thereof. This power will pass to the Chairman.

To take one example, it would appear that the Chairman could transfer or abolish any of the presently established bureaus without consulting with the other Commissioners. Looking at this matter solely from the standpoint of the freight forwarding industry we think we have cause for alarm. When freight forwarders were regulated in 1942 we went to the Commission and requested that a bureau be provided, staffed with persons whose job it would be to acquaint themselves with our law and our problems, and to act as a liaison between the industry and the Commission. The general administration of part IV was, accordingly, vested in the Bureau of Water Carriers and Freight Forwarders, the two most recently regulated agencies of transportation.

We would be vitally opposed to the abolition of that Bureau, and yet one of the recommendations of the Hoover Commission task force not specifically incorporated in plan No. 7, but perhaps implicit in the general import of the plan, was that the Bureau of Water Carriers and Freight Forwarders be abolished and its duties transferred to other bureaus. Even if this should make for efficiency, as the report claims, it is not the kind of efficiency we want to see. We are a comparatively small industry, and we do not want our affairs to become lost in the shuffle, or administered by persons who have neither the time, nor perhaps the inclination, to acquaint themselves with our special problems.

Another important function of the Commission not specifically referred to in the plan, but undoubtedly transferred to the Chairman, is the appointment and supervision of hearing examiners. It seems rather clear that this function is transferred to the Chairman because in plans 1 to 6 it is specifically exempted from the transferred functions, whereas it is not mentioned in plan 7.

Now, these hearing examiners have important judicial functions, second only to those of the Commission itself. Their tenure and pay have been safeguarded to the extent possible by the Administrative Procedure Act and the civil-service laws, but they are still ICC examiners. They are appointed "by and for" the ICC. Granting them the greatest of integrity, is it realistic to suppose that these men could or would take a completely detached attitude toward the views and policies of a strong and all-powerful Chairman by whom they would be appointed?

In taking this stand with regard to the plan we do not wish to aline ourselves with those who take a do-nothing attitude toward the work and organization of the Commission. The great age and dignity of the Commission does not place it above criticism or beyond reproach. We think that improvements can be made without changing the basic structure of the Commission plan.

Undoubtedly the purpose of the plan is good, and it might accomplish many desirable objectives. The only question we raise is whether it would accomplish those objectives in the proper manner. We do not think it would.

Even if we were prepared to suggest a better way of accomplishing the objectives of this plan, this would not be the time or place to advance the suggestion. But I do not think we need be concerned lest the defeat of this plan be taken as an act of obstruction indicating dry rot among those concerned with the problem.

Today serious studies of the over-all trainsportation situation are being made both in and out of Congress. Independent groups of shippers, investors, and carriers are sitting down together and trying to work out improvements of policy and administration. Both of the Interstate Commerce Committees of the Congress are actively progressing broad studies of the subject. There is not any doubt that out of these studies will come some change. It will be change based on mature and considered judgment-based on compromise of viewpoints and on the give and take of the democratic processes.

Based on these considerations we suggest that it is unwise at this time to permit plan No. 7 to go into effect.

Mr. MORROW. I merely want to point out that I represent and speak for the freight forwarding industry, which is one of the four forms of transportation regulated by separate parts of the Interstate Commerce Act. Freight forwarders are regulated under part 4. It is a comparatively new industry to regulation.

My statement contains substantially the same objections to the plan that I have heard from other witnesses. My reasons for supporting the resolution are substantially the same as theirs, and my answers to questions would be substantially the same as theirs.

There is, perhaps, just one additional point that I can make representing the freight forwarding industry. I take it that under the powers transferred to the Chairman by this plan, the Chairman will have power to shift or abolish bureaus of the Commission. That is a power now residing in the Commission. It is not a power reserved to the Commission by the plan. I take it that it could be done without consulting the other Commissioners.

We made a very vigorous presentation to the Commission in 1942 when we were regulated for the establishment of a separate bureau for freight forwarders, and we did obtain a Bureau of Freight Forwarders. It is a combined bureau of water carriers and freight forwarders.

Now, we think it is highly important to our industry to have a place to

go where we can sit down across the table from experts whose duty it is to study our problems and to study the law as it affects us and act as a liaison between us and the Commission as a whole. However, one of the recommendations rather strongly stressed by the Hoover Commission task force, not spelled out in the plan as submitted but I assume there by implication, was that the bureaus such as the Bureau of Water Carriers and Freight Forwarders and the Bureau of Motor Carirers be abolished, and that only the functional bureaus like the Bureau of Accounts or something like that be maintained.

We are in vital opposition to that as a policy. We think it could be effectuated, however, very simply by a Chairman of the Commisison who would have these powers, and we fear that. We think that under the present plan, with il Commissioners we have a pretty good chance of retaining our Bureau, but with the Chairman coming in under the plan which adopts the purposes of the Hoover Commission report we think it would be quite logical that he would undertake to abolish that Bureau.

That is the only matter I wish to add, Mr. Chairman, and I thank you.

Mr. HOLIFIELD. Thank you, Mr. Morrow. Are there any questions? Mr. KARSTEN. I have no question.

Mr. HOLIFIELD. There is no other witness present at this time. The committee will stand adjourned until 10 o'clock tomorrow morning.

(Thereupon, at 2:40 p. m., Monday, April 24, 1950, an adjournment was taken, to meet at 10 a. m. Tuesday, April 25, 1950.)

REORGANIZATION PLAN NO. 7 OF 1950

TUESDAY, APRIL 25, 1950

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HOUSE OF REPRESENTATIVES,
COMMITTEE ON EXPENDITURES IN THE

EXECUTIVE DEPARTMENTS,

Washington, D. C. The committee met at 10 a. m., pursuant to recess, in room 1501 of the New House Office Building, Hon. William L. Dawson (chairman), presiding

The CHAIRMAN. The committee will be in order.

We have listed this morning Mr. C. A. Miller appearing for the American Bar Association and the American Short Line Railroad Association.

We will distribute to members of the committee statements so that each member will have a copy, and at this point in the record we will insert these statements for the record.

(The statements follow :)

STATEMENT FOR THE AMERICAN BAR ASSOCIATION BY C. A. MILLER

My name is C. A. Miller. My business address is 2000 Massachusetts Avenue NW., Washington 6, D. C.

I submit this statement on behalf of the American Bar Association, having been properly authorized to do so by the house of delegates of the American Bar Association through appropriate delegation of authority. My official connection with the American Bar Association at the present time is that I am chairman of the national committee of the administrative law section of that association.

This statement is in support of House Resolution 545 proposing that the House not favor Reorganization Plan No. 7 transmitted to the Congress by the President on March 13, 1950.

The opposition of the American Bar Association to these plans is related solely to the possibility that section 11 of the Administrative Procedure Act will be construed as being inapplicable to these agencies, if these reorganization plans are permitted to go into effect. Inasmuch as the possibility of such a construction exists also with respect to the agencies which are the subject of Reorganization Plans 10, 12, and 13, the American Bar Association opposes the adoption of the iatter plans as well.

The Administrative Procedure Act, which was approved by President Truman on June 11, 1946, was passed by both Houses of the Congress without a dissenting vote. The American Bar Association is vitally interested in the preservation of the integrity of that act, which was recently described by the Supreme Court of the United States in Wong Yang Sung v. McGrath, decided February 20, 1950, as "a new basic and comprehensive regulation of procedures in many agencies.” The Court there also said :

“The act thus represents a long period of study and strife; it settles long-continued and hard-fought contentions, and enacts a formula upon which opposing social and political forces have come to rest.

it would be a disservice to our form of government and to the administrative process itself if the courts 65835-50- -6

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should fail, so far as the terms of the act warrant, to give effect to its remedial purposes where the evils it was aimed at appear.”

Section 11 of the Administrative Procedure Act provides, in the respect here material, that

"Subject to the civil-service and other laws to the extent not inconsistent with this Act, there shall be appointed by and for each agency as many qualified and competent examiners as may be necessary for proceedings pursuant to sections 7 and 8, who shall be assigned to cases in rotation so far as practicable and shall perform no duties inconsistent with their duties and responsibilities as examiners.

For the purposes of this section, the Commission is authorized to make investigations, require reports by agencies, issue reports, including an annual report to the Congress, promulgate rules, appoint such advisory committees as may be deemed necessary, recommend legislation, subpena witnesses or records, and pay witness fees as established for the United States courts."

It is true that section 12 of the Administrative Procedure Act contains this provision :

“No subsequent legislation shall be held to supersede or modify the provisions of this Act except to the extent that such legislation shall do so expressly.”

That provision should be assurance that the law would not be amended by implication. However, there is the possibility that if these reorganization plans become effective, the chairmen of the reorganized agencies will feel that the Administrative Procedure Act is not applicable to them, so far as section 11, relating to the selection of hearing examiners, and the assignment of their work are concerned.

This situation is emphasized by reason of these facts: In House Document 504, where reference is made to Reorganization Plans Nos. 1 to 6, relating to the executive departments, it is said :

“These reorganization plans exclude from transfer to the department heads two classes of functions which are retained in the present status. These are the functions of the hearing examiners appointed under the Administrative Prucedure Act and the functious of Government corporations in the departments."

But no such statement is made in that same document so far as Reorganization Plans Nos. 7 to 13, relating to regulatory boards and commissions, are concerned. On the other hand, these plans, in brief, would vest in the chairman of each of the reorganized agencies, to be designated by the President, (1) the appointment and supervision of personnel employed under the commissions, and (2) the disposition of business among such personnel and among administrative units of the commission.

It will be readily apparent that the omission of the language respecting hearing examiners, so far as Reorganization Plans Nos. 7 to 13 are concerned, may well prove to be very significant. While we do not believe it would be sound or in accordance with the law, yet it is recognized that the chairmen of these reorganized agencies may take the position that section 11 of the Administrative Procedure Act does not apply to them, so far as the selection of hearing examiners is concerned and so far as the assignment of work to them is concerned.

But, the possibilities of danger do not stop there. 'In the case of some of the commissions, particularly the Interstate Commerce Commission, the examiners are subject to civil-service requirements only because of an agreement between the Interstate Commerce Commission and the Civil Service Commission, an agreement which could readily be abrogated, thus making all of the examiners subject to politics rather than to civil-service laws.

Therefore, because of the possible impairment of the integrity of the Administrative Procedure Act, the American Bar Association opposes Reorganization Plans Nos. 7 to 13, inclusive.

STATEMENT FOR THE AMERICAN SHORT LINE RAILROAD ASSOCIATION BY C. A. MILLER,

VICE PRESIDENT AND GENERAL COUNSEL, IN SUPPORT OF HOUSE RESOLUTION 545 AND IN OPPOSITION TO PRESIDENT'S REORGANIZATION PLAN No. 7

For the record, my name is C. A. Miller. I appear here in my capacity as vice president and general counsel of the American Short Line Railroad Association, with offices at 2000 Massachusetts Avenue NW., Washington 6, D. C.

The American Short Line Railroad Association has a membership of 317 common carriers by railroad. These carriers operate nearly 20,000 miles of railroad.

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