I am interested in your penalties for the unlawful use of these reports. I have great doubt in my mind as to whether they are enforceable with or without the $5,000 or $1,000 provision.

The prohibitory language here is that it should be unlawful for any person to inspect on pain of use for definite reasons. Suppose yousuppose the press, which is inclined to do, to come in and inspect the report or publish the report or at least the interesting parts of the report. Many people are going to read that, and what is to prevent them from using it?

Mr. HENDERSON. Well, I think that is a good question, Congressman. Do you mean for commercial purposes?

Mr. DANIELSON. For whatever purposes.

Mr. HENDERSON. For any of the prohibited purposes.

Mr. DANIELSON. Also for establishing the credit rate of any individual. It could be that when a number of the many readers of the Los Angeles Times read that I am flat broke, they're obviously not going to give me any more credit. Now, that should be subject to a $5,000 penalty under this bill.

Mr. HENDERSON. Well, I think that is a good question. I think there may need to be some changes made later, but the bill provides for that, The Director of the Office of Government Ethics and the Attorney General are required, under title II to come back to Congress and try to remedy some of these problem areas.

Mr. DANIELSON. Oh, I'm not picking on you there, but I think that in our zeal to become pure, we may become entirely sterile. I think the objectives are great here. The one thing I want is perpetual motion, but I'm not sure I'm going to get it. I just wonder if we aren't trying to do almost the same thing here, sometimes. We are seeking a degree of purity which even the Disciples didn't have. And while I have some lingering doubts in my mind that we are going to achieve this goal, I don't mind trying. I'm not going to delude myself in thinking that we are going to achieve it, necessarily.

I think one other point-the gentleman from the administrative office of the court, Mr. Spaniol, mentioned that on their financial records, he didn't want the judicial conference of judges to have to file them with this Government Ethics Office or the GAO or anybody outside the judicial branch.

I have heard, in conversation with people from the legislative branch, that they don't feel that they should have to file reports with another branch of the Government. This is where Mr. Spaniol was pointing out that he recognized the difference between substantive separation of powers here and procedural separation of powers.

Will you comment on the idea that a branch other than the executive, should have to file its reports with the executive branch?

Mr. HENDERSON. Well, I'll comment on it in the enforcement area. Obviously, for those who don't file and for which the Department of Justice cannot inspect, if necessary, when they're involved in a criminal investigation, it would be a disadvantage. So, from the enforcement aspect, it would be helpful if they all filed statements and the Department could have access to those disclosure statements.

Mr. DANIELSON. I didn't mean that they shouldn't all file. It's with whom do they file.

Mr. HENDERSON. I see.

Mr. DANIELSON. The judicial branch people feel that they should file it at all, with the judicial branch.

Mr. HENDERSON. I see.

Mr. DANIELSON. Many in the legislative branch feel that they should file with the legislative branch; and, of course, the executive department, if the President wishes that this new office be

Mr. HENDERSON. I wouldn't think that there would be any difference or any problem with the enforcement area, if the Department of Justice, when conducting a criminal investigation, had access to it. So, from an enforcement aspect, I don't see any problem with that.

Mr. DANIELSON. In other words, you wouldn't have any objections from your point of view to filing within the respective branch, provided that access was available for whatever

Mr. HENDERSON. That's right.

Mr. DANIELSON. Thank you very much, sir, for your help.

We now have the very great pleasure of the gentleman from Texas, Mr. Bob Eckhardt, who kindly consented to come over and give us his point of view on this bill.

TESTIMONY OF HON. BOB ECKHARDT, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF TEXAS

Mr. ECKHARDT. Thank you, Mr. Chairman.

With the committee's consent, I should like to file my statement. Mr. DANIELSON. Without objection, the gentleman's statement is filed and made a part of the record. And he may proceed at will.

Mr. ECKHARDT. Mr. Chairman, I have serious concerns with the strict prohibitions of H.R. 6954 against a person who has worked for an agency and possibly a person who has worked for a committee of Congress engaging in any attempt at influencing an agency for a year after he leaves that position.

I refer to the possibility a person who is active with a committee of Congress, in reference to the provision on page 3 of the bill, item 4, also employing including special Government employees and found in section 202 of title XVIII, United States Code, whose position is classified as GS-16, GS-17, GS-18, General Schedule, described by section 5632, title V, of the United States Code, or who is in a comparable position under another authority.

But whether or not it is so broad, it still seems to me that the prohibition is too broad. It would include the prohibition of a person who has worked for an agency appearing after going into private practice before an agency in area in which he had no real concern at all, even if he disclosed all of his prior connections with Congress-or rather, with the agency.

My subcommittee probably deals with more agencies of Government, particularly the independent regulatory agencies, which are extremely sensitive in this area, than any other subcommittee.

We have SEC. We have parts of the EPA. We deal with the Product Safety Commission, and, in fact, wrote the bill, created it. We have the Federal Trade Commission, and we also have the area of EPA which involves toxic substances, which is very comparable to regulatory agencies in general.

And I have also had an opportunity to know personally a number of persons, particularly who have come from the SEC, the quality of people they are, people like Charles Curtis, who used to be the principal counsel for the Committee on Interstate and Foreign Commerce, who is now in private law practice.

Now, this would probably not affect him and was perhaps insulated by the period of time when he represented the committee from any connection with SEC. But I use his name to indicate the quality of persons SEC is able to bring to that agency's service.

Persons like Harvey Rowen, a very fine expert in the area of securities, who has been with SEC and has also been on the staff of my committee.

The thing that concerns me is whether or not, with such a strict prohibition, agencies would be able to get the same high-class personnel that they can presently get, with the mandate of what amounts to a year's vacation in the area in which they are the most experienced. Now, whether we like it or not, our Government has become a very specialized type of operation. The lawyers dealing with our Government are likewise specialized, and if a person's experience is in the securities industry and with respect to securities control, it's not easy for him to enter into a new firm and examine abstracts for a year or try damage suits for a year or to engage in certain other areas in which his experience is no real qualification.

So, I would simply urge upon you to consider this question of balance, consider against the questions of a somewhat rigid protection against what is called the revolving door syndrome and I recognize it exists-recognize the balance between that and the desirability of getting very bright people in Government service for a period of time and permitting them, if they desire to do so, to progress elsewhere.

I think that we may overestimate the desirability of rigid controls in this direction; therefore, I would suggest in lieu of an absolute prohibition served against practicing before the agency one has served in for the year, the following procedures:

Monitoring former employee contact with the agency. This could be accomplished by requiring employees to maintain logs of telephone conversations for public inspection and to announce in advance meetings to be held with persons from outside the agency. Such meetings would, except in limited circumstances, be open for public observation. Some agencies, such as Consumer Product Safety Commission, currently follow these practices.

Two, prohibiting specific practices, which, in fact, are abuses. An example is prohibiting a contracting officer from subsequently dealing with the agency on behalf of parties to the contract and its beneficiaries.

Three, setting acceptable minimum standards of employee in postemployment conduct.

Four, requiring individuals appearing before the agency to file as a matter of course an affidavit regarding past employment. Affidavit would set forth the facts concerning the person's previous employment by the agency, including a brief description for matters worked on.

The employee would aver that, in dealing with the agency with matters at hand, the issue does not violate any confidence of the Government nor have an unfair advantage over other persons because of his former position.

So, I would very strongly urge that this committee consider these questions of balance when they ultimately mark up the bill. [The prepared statement of Hon. Bob Eckhardt follows:]

STATEMENT OF HON. BOB ECKHARDT, A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF TEXAS

Mr. Chairman, I appreciate the opportunity to comment regarding legislative proposals designed to preserve and promote ethical standards among Federal employees. Such legislation is important to assure public confidence in government, and to protect against improper influences. However, legislative requirements should not be imposed which will have an adverse impact and severely hamper the ability of the government to attract and keep qualified employees. This may be the unfortunate effect of proposals to prohibit post employment contacts with an agency by certain employees. Such a prohibition is contained in H.R. 6954, section 205 (amending 18 U.S.C. 207).

I serve as Chairman of the Subcommittee on Consumer Protection and Finance of the Interstate and Foreign Commerce Committee. The Subcommittee has jurisdiction, in whole or in part, over several independent regulatory agencies.1 As Chairman of the Subcommittee, I am anxious to insure that the employees of these agencies be free from possible conflicts.

However, I am also concerned about the impact which any legislation affecting the independent agencies may have upon the quality of their personnel and the effectiveness of the agency.

I have particular reservations about any provisions which would prohibit former agency employees from formally or informally making any contact for a specified period of time with their former agency in an effort to influence the agency in a matter pending before it. I am concerned that whatever the possible benefits of blanket restrictions such as that proposed in H.R. 6954 (section 207 amended), they are far outweighed by the potential disadvantages.

Proposals to prohibit post employment contact with an agency are a response to perceived problems associated with the "revolving door syndrome"-the practice of individuals working for government entering the private sector, and vice versa. In some cases, improprieties have occurred. For example, where a person continued to serve in the government and exercise regulatory control over a matter involving a company from whom the employee had accepted employment. Specific legislative or agency action should be taken to deal with such instances of impropriety. However, a broad brush approach of imposing an outright ban on all agency contacts presupposes the widespread existence of abuses which, judging from the experience of the agencies within the jurisdiction of my Subcommittee, do not exist.

On the contrary, the flexibility of individuals to enter and leave government service is salutary. The experience of one agency within the jurisdiction of my Subcommittee, the Securities and Exchange Commission, is illustrative. For years, the SEC has been recognized as a vigorous, effective and independent enforcer of the securities laws. Many consider it to be the most effective and responsive of all governmental agencies. Yet it is widely known that many of the Commission's brightest and hardest working employees are attracted to the agency in large part because of the potential opportunities for subsequent employment in the private sector. In fact, I would suggest that one of the strengths of the SEC is the potential for employment in the private sector which makes the agency experience so valuable. This is in contrast to those Federal bureaucracies whose staff have relatively few outside employment opportunities and which, without such stimulus, becomes somewhat bureaucratically entrenched and moribund.

The public benefits substantially from the services of many qualified and vigorous employees for the time they are employed at an agency-whether they stay for only a few years, or make government service a career. The public

1 These are the Securities and Exchange Commission, Federal Trade Commission, Consumer Product Safety Commission, Environmental Protection Agency, and the National Highway Traffic Safety Administration.

continues to benefit when employees leave the agency. For example, employees leaving the SEC have an up to date knowledge of a complex and frequently changing field. They are technicians who accurately understand the regulatory expectations of the agency and who can assist the private sector to conform to those expectations.

In addition, the flexibility to move in and out of government helps assure a larger pool of talent for the government, particularly at higher grade levels. Again, the experience with the Securities and Exchange Commission is instructive. I understand that President Carter's announcement of plans to restrict the post employment activities of Presidential appointees severely limited the number of candidates interested in filling the job as Chairman of the SEC. Virtual exclusion from the field for a period of time following governmental service was too high a price both monetarily and professionally-to pay, even for the opportunity to serve in an important policy-making and administrative position. Historically, members of the public have been willing to contribute their skills to public service for limited periods of time-it would be unfortunate if we were to discourage this contribution. Happily, in this particular case, the President recruited an able individual from the academic community. However, it is undesirable for government to limit itself to the academic community as a source of new blood. Government regulatory action has a significant impact on private business and the industrial sector. People who understand the practical aspects of how an industry or business operates add an important dimension to the regulatory process-government regulation should be imposed only with as thorough an understanding of the practical consequences as possible.

The flexibility to enter and leave government service helps preserve a sense of independence among agency employees. For example, an employee, knowing that if necessary, he or she can find employment in the field in the private sector will be much more willing to disagree with a superior on issues which are important to the public. If the alternative for outside employment is eliminated by an outright prohibition on appearing before the agency, a deeply entrenched bureaucracy, dependent upon the agency for its economic well being, will develop. Staff, anxious to secure their tenure, will "make as few waves" as possible.

In summary, the consequence of imposing a blanket post employment restriction may be that the best and brightest employees will simply bypass government altogether. The government does not pay as well as the private sector particularly at the higher levels. Faced with the choice, personal financial and career considerations too frequently will dictate that a person enter the private sector where he or she can expect the best remuneration for a job well done and a more extensive choice of job opportunities. A person selecting government service, particularly in the case of a highly specialized and rapidly changing field such as the securities laws, would essentially be precluded from pursing his/or her speciality, except in the government.

Imposing post employment restrictions only on the upper GS levels would seem, at first blush, to eliminate much of the problem. However, employees at the grade level immediately below the restricted grade level will be faced with making a premature career decision to continue government service or opt for a career in the private sector. In addition, such restrictions would effectively preclude more experienced people from entering the government at higher levels, and it is at these high grade levels that employee independence is most important. We shou'd experiment with various techniques for dealing with potential and actual abuses before taking such a broad prohibitive approach. Alternatives may include the following:

(1) Monitoring former employee contact with the agency. This could be accomplished by requiring employees to maintain logs of telephone conversations for public inspection, and to announce, in advance, meetings to be held with persons from outside the agency. Such meetings would, except in limited circumstances, be open for public observation. Some agencies, such as the Consumer Product Safety Commission, currently follow these practices.

(2) Prohibiting specific practices which in fact are abuses. An example is prohibiting a contracting officer from subsequently dealing with the agency on behalf of parties to the contract and its beneficiaries.

(3) Setting acceptable minimum standards of employee and post employment conduct.

(4) Requiring individuals appearing before an agency to file, as a matter of course, an affidavit regarding past employment. The affidavit would set forth the facts concerning that person's previous employment by the agency, including a brief description of the matters worked on. The employee would aver that in