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Mr. DINGELL. That is comforting for me to hear.
Mr. Powers.
Mr. POWERS. In 1968, what did you do after you left the company?

Mr. BREWER. I went to New York and became Assistant Director of the Nixon for President Financial Committee.

Mr. POWERS. Did you hold any Government positions prior to your appointment to the ICC?

Mr. BREWER. Yes. For a brief period of time I was Deputy Administrator of SBA.

Mr. POWERS. When was this?

Mr. BREWER. I believe that, I was appointed to this Commission in July and I believe I went over on an acting basis in SBA in August the previous year.

Mr. POWERS. Of what year?
Mr. BREWER. It would be 1969.

Mr. POWERS. So you went to SBA as Deputy Administrator in August 1969? At that time, Mr. Allott was senior Senator from Colorado?

Mr. BREWER. Yes. But this is not a Presidential appointment. This was an appointment that was made by the Administrator of SBA.

Mr. DINGELL. It was a schedule C or schedule A, was it not?

So, essentially, it does require an affirmative push or clearance of a senior senator; is that correct?

Mr. BREWER. No; not in this instance, because I was sent there to do a special job and I was chosen to go over there to help work out a very difficult situation and I was called into the White House and they said go straighten out this, and I think you know what I am talking about. I hope you do. I can tell you in privacy sometime.

We had a problem that was quite difficult.

Mr. DINGELL. The committee is familiar with problems existing in that Agency for some years.

Mr. Powers.
Mr. POWERS. When did you leave SBA?

Mr. BREWER. I left SBĂ in June 1970, if my memory serves me correctly.

Mr. POWERS. Senator Allott did not recommend you for the position of Deputy Administrator of SBA; is that right?

Mr. BREWER. No, sir; absolutely.

Mr. POWERS. You had no contact with him prior to your appointment to SBA specifically regarding that?

Mr. BREWER. None whatever.

Mr. POWERS. Who was the Administrator down there then, Mr. Sandoval?

Mr. BREWER. Yes, sir.

Mr. POWERS. Mr. Brewer, how did you come to be the one who was assigned to find someone to carry out the position of special counsel?

Mr. BREWER. I believe you will have to ask our chairman that.

Mr. STAFFORD. It wasn't a question of him being assigned to find someone, to find the counsel. I asked him to serve as the administrative officer in charge of the 270, and this is not an unknown practice and he was in my opinion next on the list and there were no special

considerations given about who might end up being in some job or not in some job. That absolutely had nothing to do with it.

Mr. POWERS. When did this occur?
Mr. STAFFORD. Do you have the date?

Mr. BREWER. Yes. I have the communication here. I believe you have this group of copies of letters which we sent to you and the first letter was dated—I might say while we are looking at this, Commissioner Walrath who had been handling this was retired. That is one of the reasons it had to be reassigned.

On March 27, 1972, I wrote a letter to Chairman Stafford in which I said:

Supplementing my earlier report, I am happy to state that we have excellent indications that our request for funding for these proceedings will be granted probably with the understanding that some of the money be used in the area of cost funding.

Shall I read the entire letter?
Mr. POWERS. I am not familiar with it at all.
Mr. BREWER. It has been sent to you. The entire docket.
Mr. POWERS. Do you have an extra copy of that?

Mr. BREWER. Yes, sir. In that we outlined the money for funding; we outlined the entire study. We attached an appendix to it.

May I have an opportunity to read the appendix, which describes what we are trying to do?

Mr. Powers. May I see what you are trying to read? I am just not familiar with it.

Mr. BREWER. I am sorry. I am sure we did supply it in the first original request that you made. I started at the bottom, sir, and worked in chronological sequence.

Gentlemen, the Chair notes this is probably as good a point to recess as we can get.

Is 2 o'clock acceptable to you?
Mr. STAFFORD. Fine.
Mr. DINGELL. Could we gather back again at 2?
Mr. BREWER. Yes.
Mr. DINGELL. Gentlemen, we thank you for your patience.

If there is no further business at this time, the committee will stand in recess until 2 o'clock.

[Whereupon, at 12:30 p.m., the subcommittee adjourned, to reconvene at 2 p.m. this same day.]

AFTERNOON SESSION

Mr. DINGELL. The subcommittee will come to order.

This is a continuation of the hearings begun earlier today on the subject of ICC and its authority for contracts and its authority to scrutinize and investigate rate matters and other things of concern to the Small Business Committee and to this particular subcommittee.

The Chair is pleased to welcome our witnesses back. The Chair observes that you gentlemen have all been sworn, and you will continue under the understanding that you will consider yourselves still under oath.

In fairness to the other members of the Commission, I think there is one question that needs to be asked, and gentlemen, I'd just as

soon not bother swearing you individually on this one, I would just as soon do it in a group, so if you'll all come forward, we'll do that and we'll dispose of the other members of the Commission who have been gracious enough to be with us.

Ms. Brown, we're always glad to see you back before the committee.

You always improve the atmosphere, and if you would come forward a little bit and would everybody raise your hands.

Do you solemnly swear the testimony you'll give is the truth, the whole truth and nothing but the truth?

A chorus of affirmations.]

Mr. DINGELL. If you would each please identify yourself to the reporter for purposes of the record, and the Chair has just one question.

Ms. BROWN. I am Virginia Mae Brown, member of the Interstate Commerce Commission.

Mr. Wiggin. Chester A. Wiggin.
Mr. MacFARLAND. Alfred MacFarland.

Mr. DINGELL. Ladies and gentlemen, did you have any knowledge or participate in the formulation of the contract that is the subject of today's proceeding beyond the simple votes that you made with regard to whether or not the Commission would go in this matter?

Ms. BROWN. No.

Mr. DINGELL. Well, Mr. Powers reminds me, was there a vote on this contract in the Commission?

Was there ever a vote on the contract?
Ms. BROWN. I think the record shows what the voting was on.

Mr. DINGELL. Well, the committee thanks you and we appreciate your presence.

I assume your answer is the same or would be.
Mr. Wiggin. To that question my answer would be the same, yes.
Mr. MacFARLAND. Yes, sir.
Mr. DINGELL. All right.
We thank you and you can consider yourselves excused.
We thank you very much.
Mr. Powers?

Mr. POWERS. Mr. Brewer, I guess when we left off this noon, you had handed up here some memorandums that occurred in March 1972, regarding your appointment to handle the matter of procuring Special Counsel and inviting other members to submit suggestions of names, possible selectees to be so contracted with, or at least to ascertain whether or not they were interested in negotiating on this contract. This is all restricted to March of 1972, according to these documents.

Have any other memorandums to the Commission been sent out to your fellow Commissioners under your name since that time, concerning the letting of this contract?

Mr. BREWER. Yes, there have been.

There is a memorandum dated May 11, 1972, addressed to the Commission, which I have before me here. I'd be glad to read it to you if you would like for me to, or I can hand it to you for the record.

Mr. Powers. Can we submit that for the record?

Mr. DINGELL. Without objection, the documents will be inserted in the record at this point.

[The documents referred to follow :)

95-151473—8

OFFICE OF COMMISSIONER BREWER,

March 30, 1972. Ex PARTE No. 270—INVESTIGATION OF RAILROAD FREIGHT RATE STRUCTURE

ET AL. Memorandum to the Commission:

Reference is made to previous memoranda circulated within the past few days regarding the subject matter and particularly to the Chairman's memorandum of yesterday, March 29.

In our discussions, both Chairman Stafford and I agreed that the investigation in Ex Parte No. 270 is going to be difficult and of relatively long duration. It is not an assignment that any Commissioner would covet, in my opinion. I accepted the assignment with some reluctance recognizing that I am the junior member of this Commission and could only succeed in carrying out the administrative duties of the assignment with the wholehearted support and cooperation of each of the Commissioners and the Commission staff.

In my memorandum yesterday suggesting that Brother Walrath be authorized to make preliminary inquiries as to the availability of Judge Friendly, I did not in any way intend

to convey the thought that we should employ him but we had to start somewhere. Hopefully there will be many qualified candidates and certainly Chairman Stafford and I are in total agreement that we should obtain many names before a final decision is made. Prior to sending out my memorandum, I had a discussion with Brother Walrath and he indicated that he did not know Judge Friendly personally but that he would be willing to make appropriate inquiries into the matter and we both agreed that before doing so, he should have the approval of the entire Commission. I am personally pleased that the Chairman has asked the General Counsel to discreetly determine whether Judge Friendly is contemplating retirement.

Regardless of who is administratively responsible for this investigation, it should be pointed out that time is of the essence and urgency should be the password.

BREWER.

OFFICE OF COMMISSIONER BREWER,

March 30, 1972. To Commissioner BREWER:

The gist of this memorandum is that the General Counsel instead of Commissioner Walrath would find out whether Judge Friendly is really contemplating retirement. If the rumor is prevalent in judical circles this should not be too difficult a task. The essential point is that someone is making a move to find out whether Judge Friendly can be a candidate or not.

The Chairman also delineates the perimeter of the assignment of these proceedings for administrative handling. This seems essential since the minutes in this regard pertain more to cases involving hearing examiners and the minutes are not clear in a situation such as we have here. It seems well to get the rights and duties of all clearly defined in the initial stages.

DOLAN.

OFFICE OF CHAIRMAN STAFFORD,

March 29, 1972. Ex PARTE No. 270—INVESTIGATION OF RAILROAD FREIGHT RATE STRUCTURE Memorandum to the Commission:

In connection with Brother Brewer's memorandum of this date, I am pleased to confirm that I did request that he accept the assignment referred to and that he agreed to do so.

Since our earlier discussions had been informal and oral, I felt it only fair now to explain to each of you our basic understanding of the arrangement. His assignment will be to see that progress is made toward completion of the record at the earliest practicable date, but working closely with Division 2 on procedural steps and with Fred Dolan as our designated staff head. He will, of course, present for Commission approval from time-to-time, substantive decisions, such as approval of Special

Counsel and allocation of funds to be expended from the released funds and supplemental appropriation now hoped for, earmarked for this and related proceedings.

So far as Judge Friendly is concerned as a candidate for the position of Special Counsel, no final decision as to his selection has been made, nor is he even aware that his name is under consideration. You may have other qualified persons in mind, and both Brother Brewer and I earnestly solicit your suggestions.

I agree with Brother Brewer that we should move promptly to select someone of sufficient stature to command public respect as an impartial representative of the broad public interests involved in this proceeding. It is only fair that he, in turn, be given time to plan the selection and organization of his staff of cost experts, economists and attorney assistants within such budgetary restrictions as our special funds will permit.

At this point we have only hearsay evidence that judge Friendly is planning retirement from his active role as a member of the Federal bench. I have asked the General Counsel to find out discreetly whether this be a fact. It would be embarrassing, should we agree to approach the judge, to do so without prior assurance that he would be available for the position. This we should know in a matter of days. Brother Walrath agrees with me and Brother Brewer that Judge Friendly's broad experience with appeals involving ICC cases, and his national reputation as an able, fair and effective judge, makes him an outstanding candidate for Special Counsel. However, Brother Walrath does not know him personally, only through correspondence, and suggests that if the judge is to be approached, perhaps it should be by me and our General Counsel's office.

With Brother Brewer's approval, I am suggesting that any additional names for the job be submitted by noon Friday, March 31. By then we should have some confirmation of Judge Friendly's retirement plans.

STAFFORD.

OFFICE OF COMMISSIONER BREWER,

March 29, 1972.

Ex PARTE No. 270—INVESTIGATION OF RAILROAD FREIGHT RATE SI UCTURE

ET AL. Memorandum to the Commission:

The Chairman has assigned these proceedings to me for administrative handling. As mentioned in my memorandum of March 27, in view of the need for expedition I suggest that we commence the search for Special Counsel by requesting Brother Walrath to initiate the correspondence with Judge Friendly to determine whether he would be interested in this opportunity.

In the circumstances, unless I hear from you to the contrary by 4 p.m. today, I shall inform Brother Walrath that the Commission is in favor of this initial step.

BREWER.

OFFICE OF COMMISSIONER BREWER,

March 27, 1972.

Ex PARTE No. 270-INVESTIGATION OF RAILROAD FREIGHT RATE STRUCTURE

ET AL.

Memorandum to Chairman Stafford:

Supplementing my earlier report, I am happy to state that we have excellent indications that our request for funding for these proceedings will be granted, probably with the understanding that some of the money be used in the area of cost finding. I also understand that we will have to transmit a letter, possibly by the end of this week, explaining to the satisfaction of OMB on what projects, etc., we intend to obligate the $700,000 to be released from reserve. (DOT will informally be given until April 14 to provide their comments to OMB.)

Our need for additional funding was set forth in the letter from you to OMB dated January 3, 1972, and the accompanying statement entitled "Request For Release Of Reserve”. This includes choosing a proper Special Counsel and retaining his services. Some preliminary work has been performed in this regard; specifically the type of financial arrangement, the Special Counsel's role, his rights and obligations, and his staff and funds for studies deemed necessary in the course of this investigation (see Appendix A).

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